When to sell a winning stock is one of the toughest questions for investors to answer. Selling a stock that is reaching for new highs might be the right decision sometimes, but other times it might mean getting out of a long-haul opportunity too early. With that in mind, we asked three Motley Fool analysts to tell us which high-flying companies they'd keep in their portfolios. Read on to learn which companies they picked.
Todd Campbell: Celgene's (NASDAQ:CELG) shares have jumped more than 52% since their low in April, trouncing the S&P 500's otherwise respectable 13.6% return during the period. That spike has Celgene trading at record highs, but despite a sky-high share price investors may be best served holding on rather than heading for the exits.
Celgene's built an enviable business on the back of Revlimid, its highly successful multiple myeloma therapy. Revlimid's $4 billion in annual sales has allowed Celgene to develop other top-selling drugs including Abraxane and Pomalyst. In the third quarter, sales of the cancer drug Abraxane totaled $212 million, suggesting that it may become a billion dollar blockbuster soon. And Pomalyst, a multiple myeloma drug, saw its sales jump 102% from a year ago to $181 last quarter, which means that it may hit that billion dollar plateau someday, too. Celgene also believes that Otezla, a treatment for psoriasis that won FDA approval this year, could eventually become a top seller as well. With that kind of a product lineup and analysts thinking Celgene will deliver EPS of $4.88 next year, up 34% from this year, I'm content to focus on this company's long-term opportunity, rather than today's share price.
Cheryl Swanson: Up, up, and away. That's been the flight trajectory of Gilead Sciences' (NASDAQ:GILD) this year, with its soaring stock price closely following the fortunes of its hep-C megablockbuster Solvadi.
Solvadi is likely to overtake the $10 billion marker in its first year on the market, but sales haven't always lived up to expectations. And when Solvadi sold $2.8 billion last quarter, against expectations of $2.96 billion, Gilead's stock price hit an air pocket. What was missed was that doctors were warehousing patients, waiting for Gilead's new hep-C wonder cocktail, Harvoni, to gain approval.
Harvoni boosts cure rates to 94-99%. Analysts expect now approved Harvoni -- which combines Sovaldi with NS5A inhibitor, ledipasvir -- to outstrip solo Sovaldi as the fastest-growing drug of all time.
Gilead's total revenue for last quarter more than doubled to $6 billion from a year earlier, making it the world's biggest biotech. Its hep-C drug pricing is in the nosebleed category, but competitors' treatments come up shy in efficacy, so they shouldn't seriously dent Gilead's market share.
Gilead has a solid product pipeline, with a number of drugs in late-stage clinical trials for 2015. With Harvoni winning EU approval on November 18th, this company still looks like a good bet moving forward.
George Budwell : AbbVie's (NYSE:ABBV) shares have risen by 35% in the past year, and are now pushing through their all-time highs in recent sessions. Despite this rapid price appreciation, I think AbbVie is on track to continue its upward trajectory for a good while longer, and Wall Street apparently shares my view. In the third quarter, top notch hedge funds like Paulson & Co. and Soros Fund Management, among others, took out huge positions in the drugmaker, upping overall institutional ownership by roughly 12%.
What appears to be attracting these top investors is AbbVie's stellar growth profile and rising dividend yield. Per the third-quarter, for instance, the company grew its revenue by 7.8% year over year, and increased its dividend by 17% to $0.49 per share. Going forward, AbbVie is expected to grow its diluted EPS by a noteworthy 27% next year, fueled largely by the commercial launch of its new hepatitis C therapy, and another year of double-digit sales growth for its flagship anti-inflammatory drug Humira. AbbVie's shares are thus presently trading at a modest 15.5 forward P/E ratio, suggesting that the stock still has plenty of room to run.
Todd and Cheryl own Gilead Sciences and Celgene. George owns Gilead Sciences. The Motley Fool recommends Celgene and Gilead Sciences. The Motley Fool owns shares of Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.