5 Stocks Under $50 to Buy Now

2. GlaxoSmithKline plc (NYSE:GSK)

Number of Hedge Fund Holders: 37

GlaxoSmithKline plc (NYSE:GSK) is a leading pharmaceutical giant whose shares have declined around 20% from 2012. Given that GlaxoSmithKline plc (NYSE:GSK) has a dividend yield of around 4.62% currently and the stock has been a substantial dividend payer in the past, the company’s total return over the last 10 years has still been positive, however. One reason for GlaxoSmithKline plc (NYSE:GSK)’s underperformance has been due to the stock’s 21.3% year to date decline due to litigation worries over Zantac.

Aristotle Capital commented on GlaxoSmithKline plc (NYSE:GSK) in a Q3 investor letter,

GSK plc (NYSE:GSK), the U.K.‐headquartered pharmaceutical company, was the largest detractor. GSK completed the demerger of its consumer health business in July, creating the independent, publicly traded company Haleon. As discussed below, we made Haleon a full position following the spinoff. We believe the separation unlocks value and allows remaining GSK to benefit from greater focus on biopharmaceuticals and vaccines. After managing the completed spinoff, CFO Iain Mackay announced his plans to retire in May 2023, to be replaced by Julie Brown. Having served in previous CFO posts at both the luxury goods brand Burberry, as well as the pharmaceutical firm AstraZeneca, we look forward to following Ms. Brown’s initiatives at GSK.

Moreover, the company has been advancing on our catalyst of market share gains for Shingrix, its vaccine to prevent shingles. Shingrix again delivered record sales growth and continues to be a key driver of GSK’s vaccine revenue expansion. Lastly, legal concerns related to potential side effects from the heartburn medicine Zantac made headlines. Although Zantac was marketed by several firms and its associated risks have been known for a number of years, upcoming lawsuits in the U.S. received media attention this quarter. We are closely following the litigation and may have more to share in future commentaries. In the interim, we find the price adjustment to be overdone. The largest side effect‐related drug settlements have been in the single‐digit billions, while more than £20 billion in market capitalization has been removed from GSK. Despite recent share price declines, we remain confident in GSK’s ability to further penetrate markets with its current products and evolve its pipeline of innovative medicines.