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I follow quite a lot of companies -- some closer than others -- so the usefulness of a watchlist to me cannot be overstated. Without my watchlist, I'd be unable to keep up on my favorite sectors and what's really moving the market. Even worse, without my watchlist, I'd be lost when it came time to choose what stock I'm buying or shorting next.
What I intend to do as an experiment is to make every Wednesday "Watchlist Wednesday," where I'll discuss three companies that have crossed my radar in the past week and at what point I may consider taking action on these calls with my own money. Keep in mind these aren't concrete buy or sell recommendations, nor do I guarantee I'll take action on the companies being discussed weekly. What I can promise is that you can follow my real-life transactions through my profile, and that I, like everyone else here at The Motley Fool, will continue to hold the integrity of our disclosure policy in the highest regard.
Gilead Sciences (Nasdaq: GILD )
Let me be the first to point out that I was dead, dead wrong on Pharmasset (Nasdaq: VRUS ) , which turned out to be a big gainer for optimists this week. Gilead Sciences agreed to purchase Pharmasset for a whopping $11 billion which, as fellow Fool David Williamson pointed out, is 59% higher than Pharmasset's all-time high. The purpose of the acquisition was to get its hands on PSI-7977, Pharmasset's oral experimental drug to treat hepatitis C, which has shown fewer side effects than recently approved hep-C drugs from Merck (NYSE: MRK ) and Vertex Pharmaceuticals (Nasdaq: VRTX ) .
Personally, I think Gilead is out of its gourd. Paying $11 billion for an experimental drug that isn't even out of phase 2 clinical trials is an absurd gamble in my book. Gilead could easily have had Pharmasset for less than it paid, and it also sends a message that it wasn't confident in its own line of hepatitis C hopefuls. The entire hep-C sector is looking frothy if you ask me, and Gilead puts may soon be on order for my personal portfolio.
Chico's (NYSE: CHS )
Make no mistake about it, Chico's didn't have a particularly strong quarter based on the results reported yesterday. But investors would be foolish (with a small "f") to write Chico's off as a lost cause among clothing retailers.
Same-store sales rose 3.7% for the third quarter despite higher discounting at its flagship Chico's stores. Whereas competitors Coldwater Creek and Talbots (NYSE: TLB ) are struggling to even survive, Chico's continues to turn profits and reward shareholders. The company repurchased 4.7 million shares during the quarter and authorized an additional $200 million repurchase program. Also, given yesterday's drop, Chico's dividend yield crossed the 2% mark. Chico's has proven for years why it's the name to own in mature-women's apparel, and I don't think one average quarter changes that. It's on my buy radar.
Teva Pharmaceutical (Nasdaq: TEVA )
I really don't understand how you can go wrong over the long term by buying into one of the world's largest generic-drug producers. Next to death and taxes, the only other guarantee I can offer is that all drug patents will eventually expire, leaving Teva with a seemingly endless stream of potential generics to produce.
What makes even less sense to me is how Teva's forward earnings multiple of seven is lower than many larger pharmaceutical companies that have upward of 25%-50% of their revenue stream at risk due to patent expirations in the next few years. Teva is a cash flow machine and its dividend is just warming up, mark my words. At some point I plan to make Teva a core holding in my portfolio.
Is my bullishness or bearishness misplaced? Share your thoughts in the comments section below and consider taking my cue by adding these three companies to your free and personalized watchlist to keep up on the latest news with each company.