Top Stock to Buy #3 – Gilead Sciences (GILD)
On Nov. 19, 2012, I recommended Gilead Sciences (GILD) at $37.20, because I thought that the large-cap biotech was well-positioned to gain market share. On Aug. 9, at $58.82, I noted, “GILD is up 60% from our initial buy point. Investors who bought in November should protect their positions by writing calls or buying puts. Any weakness in the stock that results in a pullback to its 50-day moving average — around $55 — should be used to buy new shares.” On Aug. 15, the stock retreated to $55.96, its 50-day moving average, and advanced to over $60.
S&P estimates operating earnings will increase 42% in 2013 and 50% in 2014. And EPS is estimated to be $1.86 in 2013 and $2.78 in 2014. New hepatitis C drugs and stabilization in market share for their leading HIV drug are expected to enhance future earnings; thus, GILD should be high on the list of biotech stocks in investors’ portfolios.
Technically, the stock is in a clearly defined bull channel with support at its 50-day moving average at $57. With its internal indicators (MACD, stochastic, etc.) positive, investors who do not own the stock should take a position at the current market price and those who have already purchased should hold. The trading target is $67, but GILD should be positioned as a long-term hold with a 12-month target of over $80.