jeudi 30 avril 2015

Load the truck with Gilead, holy fuck!

For a while, I've been a fan of Gilead (GILD), a very large biopharma with a market cap of about 150 billions dollars.

I don't really understand why the valuation of this company is so cheap. In the last year, the valuation has been around 12-15 times earnings for a company that defecates cash like diarrhoea.

Here's some good points about the company:

1- Sector: Healthcare (best sector if you ask me);
2- Very High ROE (average = 50 for the last 5 years)
3- High growth (2010 EPS = 1,66$ and EPS should be around 12-13$ in 2015)
4- Very low price (PE = 9 at the time of this writing)
5- Great pipeline of products
6- Has a lot of cash
7- Buybacks and respectable dividend are effective

My only two negative points are:

1- Probability of patent losses and growing competition (main reason why the stock price is so low)
2- Very large cap (usually, you don't get rich with very large caps).

I firmly believe that the positive points destroy without any resistance the two negative points. The last results show it.

Oh yeah, the results of GILD were out today and it's so fucking great, I won't understand if you don't sell a kidney or some valuable part of your anatomy tomorrow morning to buy for a couple of thousands of dollars of shares.

Excluding items, Gilead earned $2.94 per share in the first quarter, beating the average Wall Street estimate of $2.32, according to Thomson Reuters 
EPS are up 108% over same quarter a year ago
Cash on hand: 14,5 Billion dollars

Follow the money. And money is at Gilead. You'll pay an extra cheap price for a company that gets so much money each quarter. So cheap in such an expensive market.

Someday, the market will wake up. Maybe not tomorrow, but surely one day. Same fucking story as Home Capital Group or Apple a couple of years ago: great results but little enthusiasm in the markets.

1 commentaire:

  1. Oui, je ne sais pas comment les actions peuvent rester a 100-105 $ apres ces nouvelles?? Il a fallu en acheter davantage. Pas de choix. Can't wait to see our buddy on Market Call Tonight. Would be weird if he doesn't pick the same 3 as he did a few days ago (HCG, MDA, GIB), but with earnings out recently perhaps he changed his mind. We shall see.