Proven to be a steady holding in this market

Novartis (NYSE: NVS)
Recent Share Price: $56.17
Below 52-Week High: 8%

Two-Minute Drill: Pharmaceutical behemoth Novartis trades, in our view, at an absurd discount to its peers, with a price-to-earnings ratio well below industry averages despite profitability metrics -- returns on assets and equity -- that trounce the broader market's average. What gives?

Our take is that Novartis's biotech arm is its headline proposition for Wall Street investors, and as an established player in a racy industry, the company doesn't pack the appeal of the purer-play competition. Indeed, while analysts have high double-digit hopes for Novartis this year, they're rather somber when it comes to out-year projections.

To our way of thinking, that merely underscores the analyst disconnect when it comes to this company -- and the appeal for patient investors as well. Long-term numbers aren't generally worth the spreadsheets they're calculated on, and particularly in a market like this one, we'll gladly take a company with seven consecutive years of top-line revenue growth (and nice free cash flow figures) over the biotech industry's scruffier rumors any day of the week.

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Najarian also said keep an eye on Johnson & Johnson(JNJ), Novartis(NVS) and Myriad Genetics(MYGN).

With pharma shares down only 11% in a year that has seen many stocks crater by 30% or 40% or 50%, the industry's charms aren't exactly undiscovered. Still, Roche Holdings (RHHBY) and Novartis (NVS) remain in the Morgan Stanley European model portfolio, and could continue to outperform, Draaisma says. GlaxoSmithKline (GSK) derives about 45% of sales from the U.S., and also could be helped by a higher buck. Historically, price increases in all three drug stocks have been among the most highly correlated with a rising dollar.

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3.2%

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From a recent Mad Money show: "What's not to like about these drug stocks? Every day people come in and sell them, that's a mistake."

For a trade, I also like Apple as well as Novartis [NVS], Najarian says.

drug potential