Saturday, April 22, 2017

Is it time to buy this stock, that's only crime is that their product works to well? The answer is YES! It is time for the patient investor to buy shares of Gilead Sciences (GILD).

Dow Jones Industrial Average 20,547.76 (Down) Week ending 04-21-2017
S & P 500 Average - 2348.69 (down)

Guilty as charged. Gilead Sciences (Symbol GILD, $65.95) cured the Hepatitis C virus with there regiment of medications,  Sovaldi and Harvoni. Because of this,  there is not a continuing use of the drug and therefore no repeat business with that patient. That's GREAT, but not so good for the earnings report. 

However, this lowering of earnings has gone on for two years and into next year. This downside earnings number next year is looking like $7.62 per share in earnings with a forward PE of 8.76 in stock market that trades at 17-18 times earnings. Normally a stock with those earnings would trade for $110.00 to $130.00 per share. GILD reports earnings on May 2nd, 2017.

In the last three months insiders by 30-18 have been on the buy side of this stock. The company operates on a Return on Equity of 83.5%. It pays a 3.15% dividend why you wait. Unless you are retiring in the next 2 years, it is time to buy this stock right here. I have already purchased it myself personally for my IRA account. What I am looking at is the eventual slowing of the earnings decline. The company also trades at a Price to Free Cash Flow of 6.4.

and, this is not a company standing still.
They have a very robust pipeline, , and plenty of cash if they want to go out and purchase another company. What if they got together with like a Bristol Myers Squibb, (Symbol BMY).  

It is time to look at the glass half filled, not half empty! This company has many options to be successful.

So let spring time arrive here in April , and pick up a nice bargain for your long term retirement portfolio. Buy GILD here at the market.



Sunday, April 2, 2017

I was reading "The Little Book of Value Investing" by Christopher H. Browne,(Tweedy Browne & Co LLC.), and he likes Value stocks with a Price to Free Cash Flow below 10. I came up with Manulife Financial Corporation, (MFC), with a P/FCF of 3.01.

Dow Jones Industrial Average 20,663.22  (Down) Week Ending 03-30-2017
S &P 500 average 2362.72 (Down)

The past few weeks in the stock markets here in the US have been like a poker game where everybody keeps getting bad cards and throwing them in, (with nobody winning). Well at least as far as Value investors. The market keeps running up a select group of growth stocks to unsustainable highs. This is a time that test Value investors meddle. It is a time to be patient and keep 20% in cash until the time is right to buy and there is an adequate Margin of Safety.

I continue to read the books of classic Value investors, such as the managing directors of Tweedy Browne, to refine my discipline in this area. One area Christopher Browne brought up in his book, (among many other good Value investing ideas), is to look at Price to Free Cash Flow and stocks that are listed with a P/FCF of less than 10. This led me to the following stock.

ManuLife Financial Corporation, (Symbol MFC $17.74, US Dollars, NYSE)   Manulife Financial is a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. Manulife Financial more recognized operations in the USA are John Hancock Life Insurance and John Hancock Wealth Management. While these are important, 

The real key to ManuLife Financial going forward though is the offering of Insurance and Wealth Management to the very burgeoning markets of Asia. This according to their brand new President, Roy Gori. 

 So the first important number I am going to look at and the theme of this post is the Price to Free Cash Flow which is currently 3.01. Very good being under 10. The company also trades at a current price to book value of 1.21. The PEG Ratio is 1.47 and and ROE of 7.3%.

ManuLife Financial also pays a handsome dividend of 3.53%.
The company did $39.96 Billion dollars in sales ad quarter over quarter sales were up 413.4%. 2016 sales were up 59.2%.

Earnings per share for 2017 are projected are anywhere from $1.76 to $2.18 to $2.39 per share according to different sources with a forward PE below 10.

The IBD ranking on the stock is "94 "and "A". It is ranked #2 in its sector in IBD.  The analyst have 10 buy ratings and 3 outperform and 5 hold ratings on the stock.

So a new tool to add for our evaluation of Value stocks, Price to Free Cash Flow to go along with PE, PEG Ratio, Return on Equity, and Price to Book. (A little bit of Revenue growth doesn't hurt the cause either!).  I would rate ManuLife Financial, (MFC),  a buy here and a fine addition to your portfolio.

April has arrived and the flowers and the green leaves cannot be far behind. Hopefully this market will also come into bloom.

Spring greetings to you and all the best with your investments,