Find The Best Stocks With Perfect Trade Setups In Minutes A Day

Stop wasting time looking for the right stocks.  Free training on how to find perfect stock trades that can move 300-1,500%.  Learn the # 1 key to successful stock investing and how to find success even If the market is crashing, rebounding… or just going sideways. (ad)

Do Not Delay - Click Here Now

 

Is GILD a bargain – or a big risk?

It seems that the only news anybody really cares about right now is the trade war. China announced yesterday that it would impose $60 billion of retaliatory tariffs against the U.S. after the Trump administration increased already imposed duties from 10% to 25% at the end of last week. That has propelled the market to a decline in the S&P 500 index of nearly 5% since the beginning of the month – with the biggest portion of that drop coming in the last three days. Is it finally time for investors to be running for the exits? Is this the proverbial straw that finally breaks the camel’s back after a decade of nearly uninterrupted prosperity and growth?


Hey, did you know if you really want to retire early, this free training lays it all out for you! Check it out here.


There are certainly no lack of fear-mongers and naysayers out there that would like you to believe just that; and I do think that at least some of what we’re seeing is the inevitable drawdown of a bull market run that until this month has seen massive rally since bottoming on Christmas Eve 2018. From that point, as measured by the SPY, the ETF that tracks the S&P 500, the market is still up nearly 17% in less than six months – and that is still taking into consideration the market’s drop since the beginning of May. Could the drop extend even further? Certainly; the more the U.S. and China keep sniping at each other and a deal isn’t reached, the more on edge the market will remain, and I believe that instead of pricing in the expectation of a deal, as has happened until now, we may see investors begin discounting the market based on the fear of the worst.

This kind of uncertainty is one of the reasons that I like to try to pay attention to stocks that are already trading at the lower end of their historical ranges; while it isn’t a given they won’t continue to go down if the overall market is bearish, the fact is that these kinds of stocks are generally far less at risk for the kind of free-fall to which I believe other stocks you’ll find coming off of all-time highs right now are staring directly in the face.

That leads me to the stock I’m focusing on today. Gilead Sciences Inc. (GILD) is a large-cap biopharmeceutical stock with a major presence in some of the most cutting-edge areas of bioscience. The stock is more than -28% off of the high it reached at the beginning of 2018, and is in a long-term downward trend from that point; but it also looks like that trend is starting to flatten out, and the stock is showing very strong support only a few dollars below the stock’s current price. The stock has some interesting elements showing a significant level of strength, however, including a very strong balance sheet. Does the stock’s relatively low current price, and fundamental strength create a compelling value? Let’s take a look.

Fundamental and Value Profile

Gilead Sciences, Inc. is a research-based biopharmaceutical company that discovers, develops and commercializes medicines in areas of unmet medical need. The Company’s portfolio of products and pipeline of investigational drugs includes treatments for Human Immunodeficiency Virus/Acquired Immune Deficiency Syndrome (HIV/AIDS), liver diseases, cancer, inflammatory and respiratory diseases and cardiovascular conditions. Its products for HIV/AIDS patients include Descovy, Odefsey, Genvoya, Stribild, Complera/Eviplera, Truvada, Emtriva, Tybost and Vitekta. Its products for patients with liver diseases include Vemlidy, Epclusa, Harvoni, Sovaldi, Viread and Hepsera. It offers Zydelig to patients with hematology/oncology diseases. Its products for patients with various cardiovascular diseases include Letairis, Ranexa and Lexiscan. Its products for various inflammation/respiratory diseases include Cayston and Tamiflu. It had operations in more than 30 countries, as of December 31, 2016. GILD has a current market cap of $81.8 billion.

Earnings and Sales Growth: Over the past year, earnings increased almost 22%, while sales increased modestly, at 3.79%. In the last quarter, earnings increased a little more than 24.57%, while sales dropped by almost -9%. The company operates with a very healthy margin profile that appears to be getting even stronger; in the last twelve months, Net Income was more than 26% of Revenues, while in the last quarter that number increased to just over 37%.

Free Cash Flow: GILD’s Free Cash Flow is generally healthy, at about $6.6 billion. On a Free Cash Flow Yield basis, that translates to 7.92%. It should be noted that this number has declined steadily since the beginning of 2016, when Free Cash Flow peaked at $19.5 billion. This is a red flag, but given some of the other numbers I’m about cover I don’t believe it is a major cause for concern.

Debt to Equity: GILD has a debt/equity ratio of 1.09, which is a bit higher than I prefer to see; but by itself this number doesn’t really tell the whole story. Their balance sheet shows almost $28 billion in cash against $24 billion in long-term debt. Along with their very strong margin profile, this is a good indication that the company has plenty of financial flexibility, not only to service their debt, but also keep funding the strategy they’ve been following for a while, which is to grow earnings via acquisition, and returning value to shareholders via stock buybacks and dividend payouts..

Dividend: GILD pays a dividend of $2.52 per share, which translates to an annual yield of about 3.84% at the stock’s current price.

Price/Book Ratio: there are a lot of ways to measure how much a stock should be worth; but one of the simplest methods that I like uses the stock’s Book Value, which for GILD is $17.37 per share. Their historical Price/Book ratio is 5.3, which actually means GILD is currently trading at a discount of almost 44% from par with that average. That’s pretty compelling, and could make GILD a very interesting stock to watch, even under current market conditions.

Technical Profile

Here’s a look at the stock’s latest technical chart.

Current Price Action/Trends and Pivots: GILD’s downward slide from January 2018 to December of last year is easy to see. From that trend low at around $60, the stock rallied to about $70 by the beginning of February, but then dropped back again. Since the beginning of March, the stock has begun to define a consolidation range, with top-end resistance at around $67 and support around $62. A break above $67 could mark an early indication that the downward trend could be reversing back to the upside, with room to run to the 38.2% Fibonacci retracement line shown at around $71.50 in the near term.

Near-term Keys: Given current market conditions, it may seem a little odd to suggest that a bearish, short-term trade on GILD Is a low-probability risk right now; but the fact is that unless the stock breaks its multi-year low around $60, its downward trend is unlikely to extend much further. That doesn’t mean that it won’t break that level; that is always a possibility. The stock’s consolidation range right now, however, and the fact that it is extending into a time range of near three months right now, provides an increasing likelihood the stock is setting up for a major bullish reversal. Even so, the best signal for a bullish short-term trade on the stock won’t be seen unless the stock breaks above $67 per share; if that happens, you should take it as a good signal to buy the stock, or to work with call options with a near-term exit price in the $71.50 range. What about the stock’s long-term prospects? The value proposition is very intriguing; and if you aren’t afraid of a fair amount of volatility, both from the stock and the broad market right now, this is a stock that offers an impressive dividend yield for those who are willing to be patient and hold on for the ride.

By the way, if you liked this article, you'll LOVE this Meaty free training I just published on the top 3 questions and challenges every investor faces AND how to overcome them. It's titled "10k into $2.4 Million in 18 months" and you can grab it for free here

There are risks inherent in all investments, which may make such investments unsuitable for certain persons. These include, for example, economic, political, currency exchange, rate fluctuations, and limited availability of information on international securities. You may lose all of your money trading and investing. Do NOT enter any trade without fully understanding the worst-case scenarios of that trade. And do NOT trade with money you cannot afford to lose. Past performance of an investment is not necessarily indicative of its future results. No assurance can be given that any implied recommendation will be profitable or will not be subject to losses. Information provided by the Company is not investment advice. The Company is not a registered investment adviser, stock broker, or brokerage. You agree that the Company does not represent, warrant, or take responsibility that any account will or is likely to achieve profit or losses similar to those shown. Examples published by the Company are selected for illustrative purposes only. They are not typical and do not represent the typical results of all stocks within the Companys software or its individual scans and searches. No independent party has audited any hypothetical performance contained at this Web site, nor has any independent party undertaken to confirm that they reflect the trading method under the assumptions or conditions specified.

FREE TRADING WEBINAR - TRADERSPRO PRESENTS: Starting With Only $10,000 Retire With $2.4 Million? Click Here Now

Join Us Now
X