The Best Low-Risk, High-Reward Stocks in the World

Ten years and $1 billion – that's all it takes.

That's the average time and cost to bring a new drug from research laboratory to pharmacy counter. But, it's not so bad when you can charge big bucks for that pill once it's on the market, right? Not so fast...

For every 10,000 new drug candidates that start down the innovation pathway, only one eventually wears a price tag. Financially speaking, the situation reeks of risk. Throw in legislators tinkering with Medicare laws, a fickle FDA, expiring patents, and plump conspiracy-theory filmmakers (Sicko), and it's easy to see why Big Pharma has fallen from grace.

While I believe several Big Pharma companies are still great long-term investments, there's a much simpler way to profit from the world's demand for newer, more effective drugs... invest in the process of drug development rather than the outcome.

Medical Investor readers are taking exactly this route with our positions in Pharmaceutical Product Development Inc. (PPDI) and Covance (CVD). Here's why they make perfect drug investments...

Drug companies spent $60 billion on research and development last year... and a huge chunk of that cash went straight to contract research organizations – or "CROs."

CROs handle most of the drug development work for Big Pharma today – from early stage animal experiments to running late-stage Phase III trials. The best part – CROs get paid whether a drug makes it to market or not.

Covance and PPDI are two of the biggest and best CROs in this multibillion-dollar industry. Both of these low-risk, high-reward stocks have produced double-digit gains since we jumped in early this year.

As the cliché goes, the best way to make money in a gold rush is to profit on the sales of the "picks and shovels." Sure, a few California 49ers struck it rich as miners, but those who peddled tools to the starry-eyed masses made big profits with much less risk. That's why the no-brainer investments for the next decade are companies so intricately tied to the inner workings of the health care system, it would be impossible for the industry to operate without them.

For example, another Medical Investor portfolio company distributes more than 1.5 million drugs and supplies to more than 75,000 different sites every night, from Wal-Mart to the Department of Veterans Affairs. In the process, it rings up a little less than $2 billion per week in sales. Yes, that's $2 billion a week. It's probably the most important company you've never heard of.

But, my most recent Medical Investor recommendation is the ultimate picks-and-shovels play on the entire health care system – from lab bench to doctor's office – here in the U.S. and throughout the world. I believe it's the perfect low-risk, high-return way to participate in the health care boom.

Two salesmen started the company more than 100 years ago. The partnership initially served as an importer of thermometers and hypodermic needles from France. Ten years later, the company was producing syringes and needles from its own manufacturing plant, the first of its kind in the U.S.

Today, the company remains the industry leader in the syringe, needle, and catheter markets, with roughly 25,000 employees in more than 50 countries.

To complement its hugely successful needle business, it sells various other products throughout the entire health system. Its catalog includes diagnostic equipment and an entire line of safety products for health care workers and patients. More than half its sales come from outside the U.S., so it's also a great play on improving living conditions around the world.

As I've written before in The Growth Stock Wire, worldwide health care spending – already at $2 trillion per year – is projected to grow at least 7% a year for the next decade. The surest way to make a fortune from this trend will be from owning companies like the ones I've just described.

Good investing,

Rob Fannon
Editor, The Medical Investor