One of the largest pharmaceutical companies in the world, Pfizers name awareness has increased more recently with the introduction of its COVID-19 vaccine.
Over the past 12 months, Pfizers shares have gained about 47%. To put this into context, consider that the benchmark S&P 500 index rose only 17% over the same period.
If Pfizer’s stellar performance inspires you to invest your money, here’s how to buy Pfizer stock.
How to Buy Pfizer Stock (PFE)
1. Do your homework
Before you start buying Pfizer stock, you need to do some research. The goal is to understand the company’s financial performance, business structure and future plans, not to mention competitive threats.
As a publicly traded company, you can view Pfizers’ annual and quarterly reports on its Investor Relations website or on the United States Securities and Exchange Commission (SEC) database.
In 2021, Pfizer reported annual revenue of $106 billion ($81.3 billion). According to Mike Clulow, Chartered Financial Analyst (CFA) and Portfolio Manager at EFG-CapitalPfizer probably has a promising future.
An investment in Pfizer could act as a shock absorber for your portfolio, in case this pandemic lasts longer than expected,” says Clulow. He points out that Covid-related products, such as the Pfizers Comirnaty vaccine and the Paxlovid antiviral pill, are expected to account for around 50% of the company’s revenue in 2022.
Although Pfizers’ post-pandemic future is less certain, Clulow is optimistic. Pfizer is taking the savvy approach of redeploying this short term [COVID-19] a windfall in longer-lived biotech assets [through mergers and acquisitions]he said.
2. Choose a brokerage
To buy Pfizer shares, you need to open a brokerage account. A broker acts as an intermediary between you and the stock market, making it easier to buy and sell securities like stocks and bonds.
If you don’t already have a brokerage account, look for ones that have no trading fees and low investment minimums. Don’t know where to look? There are several top online brokers in Canada including Questrade, WealthSimple, TD Direct Investing, Interactive Brokers and many more.
3. Choose an account
Most brokerages offer several account options, and you should choose the one that best suits your financial goals. If you’re saving for retirement, choose an RRSP. An RRSP is a tax-deferred savings account that allows you to build wealth up to an annual limit ($29,210 in 2022). You don’t have to pay tax on the growth of your RRSP until you start withdrawing from it. You can withdraw funds at any time, but you must start withdrawing before the end of the year in which you turn 71.
If you want to invest to grow your money but don’t have a specific goal in mind and don’t want to worry about withdrawal penalties or investment limits, another option is to open a taxable investment. There are no tax advantages, but you are not limited in how you use the money or how much you can have in your account.
4. Determine how much you can invest
Once you have a brokerage account, consider how much money you can afford to invest in Pfizer stock. When deciding how much to invest, consider the following:
- Take care of your budget first. After paying your bills, be sure to set aside funds for retirement and your emergency fund. Then decide how much money you have left after taking care of these three things to invest in stocks like Pfizer.
- Think about your investment strategy. Once you have decided to buy shares of Pfizer, you must choose whether to invest in a lump sum or to use the cost averaging. Some people prefer to invest as a lump sum if they feel the stock price is particularly low, while dollar cost averaging allows you to buy stocks at regular intervals and potentially reduce your risk.
- How would Pfizer fit into your overall portfolio? Before investing in individual stocks, think about your goals and the rest of your portfolio. Placing too much of your portfolio in one company can be risky; for the most part, it’s better to have a wide range of different assets.
5. Place an order for Pfizer
After deciding how much to invest in Pfizer, it’s time to buy the shares. Log in to your brokerage account and enter the ticker symbol PFEPfizers plus the number of shares you wish to purchase. If your platform allows you to buy fractional shares, enter the dollar amount you want to invest in Pfizer. In Canada, only Interactive Brokers and WealthSimple offer the possibility of buying fractional shares.
When buying stocks, you usually choose one of the two most common order types: a limit order or a market order. Market orders are executed immediately at the current price, while limit orders are only processed when the stock reaches a price you set. If you expect the price to change, a limit order might be a useful option.
Pfizer is listed on the New York Stock Exchange (NYSE), the largest stock exchange in the world. Its trading hours are Monday through Friday from 9:30 a.m. to 4:00 p.m. EST, but you can also take advantage of after-hours trading on most brokerage platforms.
6. Keep currency conversion fees in mind
If you buy US stocks with Canadian dollars, your brokerage will charge you a currency conversion fee. These fees range from 1% to 4% and are charged when you convert Canadian dollars to US dollars at the time of purchase, then when you sell your shares and your US dollars are converted back into Canadian dollars.
These currency conversion fees are in addition to the normal exchange rate, but can be avoided. You can either open a US dollar bank account at a Canadian bank and keep the US money you use to buy US stocks in US dollars, or save on currency conversion fees by performing Norbert’s Gambit.
Norbert’s Gambit consists of buying a stock or an ETF interlisted on the American and Canadian stock exchanges. You buy Canadian stocks of those stocks, then ask your brokerage to “log” your Canadian stocks to the US listing and convert them to US stocks of the same stock. You then sell your US stocks and can use the resulting US dollars to buy any US stock or ETF you want (including Pfizer) without converting currency.
How to Sell Pfizer Stock
Eventually, you will want to sell your Pfizer shares. The process is simple: open your brokerage platform, enter the number of shares you wish to sell and the Pfizers stock symbol and sell at the current price, or set a minimum sale price.
If your investment has increased significantly in value, you may want to consult with a tax professional, such as a Certified Public Accountant (CPA), before selling your shares. Selling at a profit leads to capital gains taxesso that a CPA can explain your options and discuss how to reduce your taxes.
You will likely only pay capital gains taxes to the CRA, as a Canadian investor in US stocks, unless you own a US corporation of 5% or more and the assets principal of the company is real estate located in the United States.
You will also have to pay IRS estate tax if you earn $5 million or more on your US investments when you die.
How to Invest in Pfizer Through Mutual Funds and ETFs
Pfizer is a big company that’s been around for decades. However, this does not mean that Pfizer is guaranteed to continue to perform well. Like any other public company, Pfizer faces competition and market hurdles that could affect its future.
Pfizer has been one of those winners of the pandemic and represents a potential victim of its own success, Clulow said. With the company on track to manufacture one billion doses of the vaccine per quarter in 2022, it will be nearly impossible to sustain this momentum in 2023 and beyond. Will investors remain patient until the longer-term story unfolds? That is the question.
To reduce your level of risk, it’s a good idea to invest in multiple companies rather than just one. Although you can invest by buying individual stocks of different companies yourself, mutual funds and exchange-traded funds (ETFs) can be a more effective alternative. These funds invest in hundreds or even thousands of companies at once, giving you instant diversification. And, many include Pfizer as one of their holdings.
For example, investors who want to invest in Pfizer could buy shares of the BMO Equal Weight US Health Care Hedged To CAD Index ETF or the iShares S&P Global Healthcare ETF (CAD-hedged), which is designed to replicate the S&P 1200 Healthcare Index. .