Gilead Sciences Inc. (GILD)

Gilead is trading at 10.5x next year's earnings, and just increased its dividend. They're losing sales on their hepatitis C franchise which was a winner for them three years ago. But they have advances in oncology through a recent purchase. Good, new drug products are coming out which could lead to growth. Lots of free cash flow and some buybacks. They need, however, growth to justify high valuations. This will be a slow road, but a good one. (Analysts' price target: $85.72)

It has been in the news a lot. They own technology that is a cure for Hep-C. There is a lot of controversy as they are expensive and a cure costs about $90,000. Lobby groups have negotiated better pricing. It has had huge cash flow and great earnings but is falling dramatically.

They took a huge hit with their hepatitis C drug, their key product, facing generic competition, while they have nothing else in the pipeline. They need to acquire or do something with their cash to grow. Sales are flagging.

He thinks the downward pressure is almost done on price. They are building an arsenal in the oncology and HIV areas. They have a good pipeline of opportunities and he likes management. He would buy it here.

It's been painful to own. Their primary drug cured hepatitis C, the holy grail. But there's little recurring revenue here, and it disappointed investors by not reinvesting their cash. However, their new HIV franchise could take market share. A hated stock for a long time, but that sentiment is now changing. Your patience is now being rewarded.

He likes the company. It had some difficulties but is recovering slowly. He likes the prospects for the business. (Analysts’ price target is 89$)

(A Top Pick June 2/17 Up 28%). He still likes this company and sees it as a value play. His model price is $100. He would love to see another pullback to $65 to buy more, but suspects it will continue to move higher.

(A Top Pick Feb.23, 2017, Up 23%) Their HIV business continues to grow. Their Hep C business was so good it was curing people too quickly, so their revenue declined. He bought it when the market was undervaluing both businesses. Meanwhile, GILD had lots of cash, so he expected them to do a deal. They did one for a company treating blood cancer, and that's working well. Should continue to grow rapidly and make another acquisition.

Really good valuation, but down 30% from highs three years ago. Known as the hepatitis C virus company, but the constant push-down on this stock is competition on the hepatitis C program. Done some M&A which pleased investors.

Owned it when a lot of people exited pharma during the U.S. election when candidates threatened these stocks. Better investments in other sectors like tech. That said, he doesn't own it now, but would love to own it later.

Issues about competition with its drugs. Earns 26% ROIC, EBITDA has come down. In a good area, including oncology and HIV. A good pipeline, cash flow and valuations. Likes it a lot.

(A Top Pick January 16/17. Up 14.3%) A pharmaceutical company. It collapsed at that time and that is why they bought it trading at 8 times earnings. It has a good dividend yield. It has two drugs. One of the drugs is curing everybody and revenue coming from there was falling and the market people overemphasize that. They have a lot of cash on hand. They think it could buy more things like a recent very good acquisition of a company with a new technique to fight cancer.

They had a great pop. He stepped out of Biotech and healthcare as a sector went to a neutral. He is more cautious on this as the entry gets higher.

(A Top Pick Dec 30/16. Up 3%.) A biotech company. Had 2 big products, a hep C drug and an HIV drug. The HIV drugs are doing quite well. The hep C drug is so good it cured people faster than expected. The stock ran up on the hep C drug, and is now declining. They have a lot of cash and acquired a pharmaceuticals company, which is a good acquisition for them. Good dividend yield and they should benefit from tax reform. He still likes this.

Has always shied away from this. They had a very successful ramp with their HEP C drug portfolio, a peak, followed by a fairly rapid decline. The decline came on a couple of issues. It was a total cure so there wasn't a recurring customer. Also, a number of other pharmacies came out with products that competed effectively, so there was price competition. The HEP C portfolio is falling about 40% year-over-year.

Has a very strong balance sheet, and is looking for future growth. They’re not able to satisfy that organically, so are going out to make acquisitions. They announced one a few months ago, and expects they are going to continue to look. However, they are not cheap, so Gilead may have to pay a very full price. The company is well-managed and owns fine assets, but she would wait.