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Actionable news in BMY: BRISTOL-MYERS SQUIBB CO.,

This Well-Known Dividend Giant Is On Sale

If a Blue Chip stock suddenly drops 16% in one day, what do you do? Do you rush to buy? Do you step aside and wait for the dust to clear? Or do you give up on the stock altogether?

There is no single one-size-fits-all answer. Even in our daily lives, we don't generally buy something simply because it's on sale. Still, many of us start our shopping trips with a sales rack and make our decisions on a case-by-case basis.

Similar logic applies to the stock market. Costs matter, but so do the reasons why a stock gets a discount.

In the case of one of the most recent recommendations in my premium newsletter, The Daily Paycheck, I think bargain-shopping is perfectly appropriate motivation.

When shares of Bristol-Myers Squibb (NYSE: BMY) plunged on August 5, there were good reasons why investors suddenly dumped the stock. On that Friday, the company announced that its leading immuno-oncology drug, Opdivo, had failed in one of its trials.

To see what the news meant for the stock, we need to first put it in context.

[More from One Of The Best Places For Income In Today's Market]

Bristol-Myers is a global pharmaceutical company and -- just as with many companies in its industry -- had faced patent expiration and profit declines in the last few years. Its answer to the challenges it faced was to concentrate research efforts on priority areas.

So the $98 billion powerhouse focused its considerable resources on areas of the highest unmet medical needs where the company thought it could generate the greatest value. These included heart failure, fibrosis, rare genetic diseases, and immuno-oncology.

In immuno-oncology, Bristol-Myers had already become an undisputed leader.

Immuno-oncology, which is widely considered a breakthrough in cancer treatment, addresses cancers from the...