Diversity Helped Us Out Today

Today was a good lesson on the benefits of diversification. Even though Baxter International (BAX) got severely pounded (-13.3%), our Buy List, as a whole, didn’t do so poorly. All told, we were down -0.20%.
It’s not great but it could have been a lot worse. Several of our stocks closed at new 52-week highs like Bed, Bath & Beyond (BBBY), Fiserv (FISV), Joe Banks (JOSB), Sysco (SYY) and Wright Express (WXS). Plus, Reynolds American (RAI) and SEI Investments (SEIC) made new highs earlier in the day.
Joe Banks is now a 51.62% winner on the year for us. Also, if you’re looking for a solid dividend, you might want to check our Reynolds American. The current yield is about 6.3%.
Finally, Barron’s had some nice things to say about Gilead:

HIV drugs are Gilead’s bread and butter. The company’s top two HIV treatments — Truvada and Atripla — accounted for 69% of revenue in 2009. Strong demand for the drugs has helped Gilead build a cash hoard of $4.6 billion. Sales of the company’s antiviral products rose 19% in the first quarter.
But with patent expirations looming over the next decade for the company’s top three HIV drugs, investors are no longer giving the company full credit for its powerful earnings stream. The stock fetches just 11.2 times 2010 estimates.
Carr says the market is overlooking the company’s recent progress on follow-on drugs to the current regimen. “Assuming development continues to go well, they will be on the market and well established before Atripla patent expiration,” Carr says.
Gilead is already the dominant leader in HIV treatment. In the U.S., for instance, of the 581,000 patients being treated for HIV, 76% of those patients are on a Gilead product, the company says.
Gilead’s key advantage is its unique once-a-day HIV pill. “Right now they have the best shot at launching the next two one-pill-once-a-day drugs for HIV,” Carr adds.
As the company’s pipeline comes into focus over the next year, investors’ confidence in Gilead should improve, driving the price/earnings multiple higher.

Posted by on April 22nd, 2010 at 5:59 pm


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