So why does David Herro, manager of the Oakmark International fund, say that Glaxo has all the qualities he's looking for in a long-term value play? Because the company has a diverse business, including vaccines and consumer products. (It has also taken steps to bolster its drug pipeline, most recently buying Reliant Pharmaceuticals, which markets four cardiovascular drugs in the U.S.) GlaxoSmithKline generates strong cash flow and has boosted earnings steadily over the past five years. On top of that, the stock is out of favor: It trades for 13 times projected 2008 earnings, lower than the pharmaceutical industry average, and it offers a rich 4.1% dividend yield. "We think they represent good quality and deserve attention," Herro says. "The company has managed to grow earnings pretty substantially."
Last updated December 14 2007: 11:42 AM ET