Grab Gilead Sciences Stock Before Its Next 66.5% Climb (Nasdaq: GILD)

Sometimes Washington triggers a stock move that can hand us outsized gains. That's exactly what happened with Gilead Sciences Inc. (Nasdaq: GILD).

In March 2014, U.S. Rep. Henry Waxman (D-CA) lashed out at the cost of Gilead's newly approved Hepatitis C (HCV) drug, Sovaldi. Sovaldi runs $84,000, or $1,000 a pill.

But Waxman missed the obvious. Sovaldi (and its newer version Harvoni) cures 90% of HCV patients. That means patients can avoid the need for a liver transplant - an operation that runs $250,000 if an organ donor is found. And that price doesn't include antirejection drugs and antibiotics people must take for the rest of their lives.

Still, Gilead sold off on fears that its high cost would make Medicare look to another HCV drug maker with a less expensive solution. GILD stock lost 13% of its value in a matter of days.

Wall Street was dead wrong...

Medicare actually spent $4.6 billion on Hepatitis C treatments in the first six months of this year. That's almost as much as the agency spent in all of 2014. Gilead accounted for 66% of all covered prescriptions.

And since April 2014, Gilead has gained 66.5% - more than four times that of the S&P 500.

Simply put, Gilead dominates the HCV sector. And as I'll show you today, opportunities for the firm are growing faster...

The Profit Power of Gilead's (GILD) HCV Domination

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HCV is known as a "silent killer" because it often takes many years for symptoms to emerge. In the worst case, the body can't fight the blood-borne infection, which begins to destroy the liver, causing cirrhosis or cancer.

According to the World Health Organization, 130 million to 150 million people globally have HCV, including up to 3 million here in the United States. Between 350,000 to 500,000 people die each year from HCV-related causes.

The U.S. Centers for Disease Control recommends that every one of the nation's roughly 76.5 million Baby Boomers get tested for HCV. Federal officials are worried that many got the disease through contaminated blood supplies.

Gilead's pair of HCV products make up about 60% of its revenue and brought in $4.8 billion in revenue in the third quarter. Overall, the products generated $12.5 billion in 2014 and $9.5 billion in the first six months of 2015. That makes the pair among the most successful new drugs ever launched.

And Gilead's value goes beyond just those two products...

Gilead's Deep Pipeline of New Drugs

On Oct. 28, Gilead sought FDA approval for a combination of compounds that would provide an effective treatment against all six HCV genotypes.

And the company doesn't stop there. It has a deep pipeline of new products in the works that should generate more sales for years to come.

Consider that in the field of AIDS/HIV, the firm has completed phase 3 clinical trials on three new compounds. It is seeking approval to market two of them in both the United States and Europe while the third is focused on American patients.

For liver disease, it has three new drugs in phase 2 clinical trials for the treatment of Hepatitis B. In the cardiovascular field, it has one drug in phase 3 trials and two more in phase 2.

Gilead has 11 drugs under development for blood diseases and cancer and seven more covering respiratory problems and anti-inflammatories. In all, the company has roughly three dozen drugs in its pipeline.

And there's always the possibility the company could extend its reach even further through acquisitions. It has more than $16 billion in cash on hand and recently raised another $10 billion through a bond sale at low interest rates.

This is a company that clearly cares about shareholder value. In the third quarter, it produced $4.1 billion in operating cash. It bought back $3.1 billion of its stock and paid cash dividends totaling $627 million.

Then again, this is a company that sees its shares as undervalued, and rightfully so, given its stellar financials.

In the third quarter, revenue grew 37% from the year-ago period to $8.2 billion, beating forecasts. Net income rose 70% to $4.6 billion.

The stock is priced to move. It has a PEG ratio of just .54, almost half the "fair value" ratio of 1. It trades at just nine times forward earnings, less than half the S&P 500's ratio of 18.7.

With a market cap of $162 billion, GILD stock currently sells for $108. It has 67% operating margins and a 100% return on stock holders' equity.

Michael Robinson has pinpointed a way to invest in the hot biotech sector that offers generous returns and high liquidity - for a fraction of the cost. It's part of his just-released report that you can access right now - plus receive Strategic Tech Investor, Michael's free, twice-weekly guide to the most lucrative tech trends - by clicking here.

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About the Author

Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...

  • He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
  • He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
  • As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.

This all means the entire world is constantly seeking Michael's insight.

In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.

Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.

And even with decades of experience, Michael believes there has never been a moment in time quite like this.

Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.

To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.

His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.

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