Top Picks 2021: Gilead Sciences

Gilead Sciences (GILD) is under severe pressure and many investors don’t think it’ll ever come back which is almost always an excellent contrarian buying signal.

The company popped nearly a year ago last March when Covid-19 broke and, in doing so, set a new 52-week high of $85.97 based on investor expectations associated with Remdesivir. Since then, Gilead’s been scrapping along at bottom of the barrel prices.

I think the stock could easily return to $85 a share within the next 12-24 months and top $100+ for a double in 36 months. Like so many stocks I am evaluating at the moment, this company has a lot going for it that the markets do not recognize immediately but will.

Gilead is what I call a “virus+” investment. Consider:

• Gilead has a massive oncology portfolio including Yescarta and Tecartus which may produce $2+ billion in sales with additional treatments and approvals on tap in 2021. That’s in addition to what could be a $10 billion oncology portfolio a decade from now if company data proves out like I think it will.

• The company’s HIV treatment is the industry’s leading choice and, despite a Federal HHS lawsuit, a significant revenue driver with sales of $20+ billion.

• Gilead spent $27 billion acquiring five significant choices in 2020 including Forty Seven, Pionyr Immunotherapeutics, Tizona Therapeutics, Immunomedics and Myr GmbH that should provide a powerful launching point for entirely new drug channels.

• All of this comes at a time when Gilead’s scientists are learning a lot from the Covid-19 fight that can potentially be applied to the company’s entire portfolio.

• Yield is a healthy 4.79% as of this writing and an appealing choice for income starved investors at a time when rates will remain low for the foreseeable future.

• The PEG ratio is a very appealing 0.42 which suggests extraordinary value for expected growth.

Action to Take: Gilead could fall further if investors stay focused on Covid-19 vaccines but that’s a tremendous opening in the scheme of things to my way of thinking. Cancer isn’t going away any time soon. Anything under $60 is a serious bargain in the offering with the right perspective and time frame.

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Disclosure: Keith owns and trades shares of Gilead as do members of his family.

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