Gilead Sciences Inc. (GILD)

(A Top Pick May 1/14. Up 32.55%.) He really likes the biotech sector. Breadth has been expanding very nicely. The stock has consolidated over the last 4 months, and is breaking out today to the upside. Feels there are some potential M&A opportunities they may have. Has just bought more shares today.

(A Top Pick April 9/14. Up 43.18%.) AbbVie (ABBV-N), a competitor in hepatitis C, will probably grab about 20% of that market share. Their drugs are probably not as effective so will probably not be recommended as much. Still trading at 10X forward PE with probably a 15% long-term growth rate. PEG ratio is well below 1.0.

A world leader in HIV and hepatitis. Trades at almost a 10% free cash flow yield and just started paying a dividend this year. Thinks it has a fair bit of upside. This is a really good sector that generates a lot of free cash flow. Q1 sales could exceed expectations. (See Top Picks.)

(A Top Pick Feb 13/14. Up 25.41%.) They have another drug which is a little bit cheaper. He still likes this. Very cheap trading at 11X forward price earnings. Still trading with a 25% estimated long-term EPS growth rate. It puts it at a PEG ratio below .5.

They are getting competition now so they have to charge less for their products. He has been very skittish and cautious on this company. What you saw on the surface was this fast growing low multiple company, which looked almost too good to be true. They charge an enormous amount of money for their hepatitis C drug, but they are now getting a lot of competition. Insurers are now negotiating with their competition.

(A Top Pick Feb 13/14. Up 27.33%.) Had a little bit of volatility in the last few months, but still likes the stock quite a bit. You are paying 11X earnings for stock that is probably going to grow at 25% earnings per share growth. PEG ratio is below 5, which is pretty rare in the S&P 500.

Has a major, very expensive drug for hepatitis C and is in competition with AbbVie (ABBV-N). They are getting dropped by pharmacy benefits managers which has hurt the stock price. Even though it looks cheap on a multiple basis this one is too hard for him to figure out.

Phenomenal business. The wonder is their cure for Hepatitis. From a cash flow basis it is hard to predict. Made an announcement today that they will be the exclusive supplier of the drug to CVS-N.

In almost all of these companies, they are very, very highly valued, at 8X Book and more. Because of that, they had better be profitable. This one is. The FMV would give him an upside of pretty close to 50% presently. There is good technical support at $90-$92. There is also a nice momentum on the earnings.

A big pharmacy benefits manager in the US, Express Scripts (ESRX-Q) decided not to provide coverage for this company’s Hep C drug. Have gone to a rival drug provided by AbbVie (ABBV-N), and the stock fell by over 15% today. Stock had a nice run from April up to the end of November, but the chart shows an almost classic head and shoulders pattern now, implying that the price of the stock could go lower. This is a biotech sector stock that is not acting well, unlike others which are acting much better.

Health care has been about the best performing sector. An interesting company because they have lots of products and there are lots of catalysts coming. This is where money is going during the rally.

He has concerns. This company is often recommended, but he feels the stock price has been largely built on Solvaldi, a hepatitis C drug, which has been incredibly successful, but they have built their financial fortune on the fact that they sell it for $1000 a day in the US. There are competing products coming to market. One is through AbbVie (ABBV-N) and one through Merck (MRK-N). He fears the competitive landscape will change and, although Solvaldi will continue to be an effective drug, it will not get anywhere near the $1000 a day, which will be a big financial headache for the company. If you own, he would recommend that you take profits.

Loves this company and thinks it is going a lot higher. A fantastic story in so many ways. A great stock and is generating a ton of shareholder wealth for owners. It is solving a lot of big health problems in the world. This has been the HIV drug leader globally for many years. Continues to produce better medicine in the HIV category. Launched a new revolutionary hepatitis drug called Solvaldi in January, and it looks like it is going to be the most successful 1^st year launch of a drug in history. Over $10 billion in sales over 1 drug is pretty rare. They have followed that up by a 2^nd hepatitis drug in October, and between the 2, the company is growing like a weed. While the stock has done well, it has not caught up with the fundamentals. Stock is trading at 10X next year’s earnings and generates a ton of free cash flow. They are buying back stock.

This is his top healthcare/biotech name in his portfolios. This is one that you want to continue owning. Fairly cheap in terms of valuation. Trading at 13X PE with probably a 25% long-term growth rate.

Not a dividend paying health care company so he can’t hold it. From a PE basis it looks rich bit the sheer strength of the HEP-C drug is driving the growth. No one is close to them. It is in his growth portfolio.