Schering Plough (SGP: chart, web, Y!) just can’t win, and I’m happy I decided to sit on the sidelines to watch the show. The more they try to pump the Vytorin drug, the lower the stock sinks.

Last week the stock got ploughed after doctors revealed they wouldn’t recommend the drug to their patients. Ouch!

So now Schering has resorted to cutting jobs in order to save money. Not good. Not good at all.

This certainly doesn’t look like a good buy-it and forget-it stock.

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I’ve been watching Schering-Plough (SGP: chart, web, Y!) since I started looking for my next buy-it and forget-it stock. The stock price has fallen considerably since then on news that a company study produced disappointing results on the effects of Vytorin, a next generation cholesterol drug.

They study showed that Vytorin had no benefit on the buildup of artery plaque over the older drug Zocor. The silver lining to this story that is easily glanced over is that Vytorin cut bad cholesterol 40% more than Zocor or Zetia (Vytorin is a combo pill of Zetia and Zocor).

Opportunity Knocks?

I view these situations as opportunities. Schering is a strong company, whose stock price is being affected by panic selling stimulated by an initial communication from the FDA concerning the results of this inter-company study.

The fact is, Schering isn’t relying on the success of Vytorin to keep the company afloat, just like Merck (MRK: chart, web, Y!) didn’t bet the farm on Vioxx (which they ended up with tens of thousands of liability claims).

Schering is sitting on a P/E of 14.8, which is fairly low for big-pharma players, and the stock price has been driven down by higher than average volume on the news. I suspect that a good portion of the money that’s fleeing the company stock belongs to institutional investors already gun shy about overall market health.

The downside to SGP is that it doesn’t have the return on revenue that other, bigger pharmaceutical players like Pfizer (PFE: chart, web, Y!), GlaxoSmithKline (GSK: chart, web, Y!) and Merck, sitting at just 10.6% compared to 22.8%, 23.2% and 19.8%, respectively.

Buy-it and Forget-it?

I’m still not sure this is a buy-it and forget-it stock. The financial health of the company is good, but there are others out there that are better. However, it may be prudent to take advantage of the stock price while it’s down. Once the whole Vytorin issue blows over, like the Vioxx debacle did, I think there is some considerable upside to the stock itself. After all, there is an inherent upside of nearly 70% if you consider the recent highs of $32 per share.

Schering Plough has been beaten down by over reaction to headlines and overall market sentiment. This could be the kind of opportunity you want to take advantage of in times like these.

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Back in October, I started looking for the next buy-it and forget-it stock. My initial thoughts were Southern Copper (PCU: chart, web, Y!) and Schering-Plough (SGP: chart, web, Y!). However, through comments on that post, Mike chimed in and mentioned Walgreen Co. (WAG: chart, web, Y!).

At the time Mike mentioned the stock, it was around $39 per share, and has since dropped a bit more and is starting to show signs of increasing value. I must disclose that Mike says he is a pharmacist and individual investor, and worked for almost all of the chain pharmacies (like Walgreens).

Financial Summary

The stock has a 3-month average volume of 9.2 million shares traded per day with a current market cap of $36.8 billion. The company is paying a $0.095 per share dividend on a quarterly basis, which translates into a 1% annual yield.

The price to earnings ratio (P/E) is 18.3 as of the writing of this post, which is a significant discount to the rest of the companies in the sector. The average P/E ratio in the sector is 29.82.

Earnings growth is 18.6 as compared to a 21.41 average for the sector.

Earnings per share (EPS) is $2.03 and continues to increase quarter to quarter.

A few quick facts about the company…

• Walgreen Co. was incorporated as an Illinois corporation in 1909 as a successor to a business founded in 1901. Walgreens is the nation’s largest drugstore chain (based on sales) and recorded its 33rd year of consecutive sales and earnings growth. During the year, the company opened or acquired 563 stores for a net increase of 478 stores after relocations and closings, not including 58 locations acquired from Option Care, Inc. The total number of locations at August 31, 2007 was 5,997 located in 48 states and Puerto Rico. Aggressive growth will continue as the company anticipates operating more than 7,000 locations in 2010.

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