It is well known that Bayer AG is one of the biggest pharmaceutical companies in the world. Among many other drugs, they produce Aspirin (acetylsalicylic acid), included on the WHO Model List of Essential Medicines, which lists the most important medications needed in a basic health system.
Just with this data, you may think we are facing a safe investment here. Do not lie to yourself. Safe investments do not exist. There was good proof of this last months. Bayer bought Monsanto and then faced million-dollar lawsuits against that company, resulting in severe downs in the stock market. However, it is a big company, so in principle, it seems safer than others.
Nowadays, the stock is at what seems to be an interesting price: EUR 60.62 at the time we wrote this piece. If you compare it to the price back in the beginning of 2018, around euros, the current 30% discount may seem like a bargain.
Well, Bayer did a low price around 50 euros some weeks ago. It started to rise up to 70 euros and now is correcting that last increase.
As usual, the issue is that we cannot know what will be the new low in this correction. At 60, it is just crossing the 30-week moving average which could work as a support. However, we see more safety in supports around 50 and 47 euros. If it gets close to them, it could be a nice buying opportunity, always keeping in mind that in case it loses the support, holding the stock would be very dangerous.
If you look at the chart with a ten-year perspective, you can see that the long-term trend is positive. Now, it has suffered a correction. And if you are able to spot when it will recover the uptrend, the profits can be amazing since we could expect it to get close to its historical max around 127 if we take dividends into consideration.
Be careful! We are not saying you should buy it right now because it can scare the living daylights out of you. Be cautious. We would only act when the lows get around 50 – 47 to minimize losses in case we need to execute our stop loss. If that is not possible, you may prefer to wait until the positive trend in mid-term is clearer, for example, after it surpasses the price of 70 euros.
NOTE: This is just our opinion about things that could or could not happen. Please inform yourself and make your own decisions. We do not intend to give you personal investment recommendations.