A few months ago, I finally decided to purchase shares in Gilead Sciences (NASDAQ: GILD), which was a stock I'd had on my radar for a long time, but I had just never been smart enough to add it to my personal portfolio. Thankfully, that's no longer the case, and I'm happy to now count myself as a shareholder.
However, with the market's recent craziness and the company's great recently-reported results, I think it's time to go back to the well and add some more of my capital to this wonderful name. Here are five reasons I'll be adding more Gilead shares to my portfolio.
1. A strong history of market-thumping returns
I'm a big believer in buying into companies that have a history of winning in the market, as winning stocks tend to keep on winning for a long period of time. Over any long stretch of time, Gilead has proven itself to be one heck of a great investment.
Investors who got in at the IPO are now sitting on a gain north of 17,000%, making it one of the market's best stocks to own over that time period. That's a great sign, in my book.
2. Diversified portfolio of products
Gilead has long dominated the HIV market with a number of best-selling treatments like Atripla, Truvada, Stribild, Complera/Eviplera, and Viread. More recently, the company has taken over the hepatitis C market with megablockbuster drugs Sovaldi and Harvoni.
All in all, the company offers a great lineup of products that treat a variety of diseases.
In total, these products generated more than $24 billion of revenue during 2014, and for 2015, management expects that number to grow to more than $29 billion. That's simply a fantastic growth rate for a company Gilead's size.
3. A strong pipeline
A strong product portfolio is great to have, but the world of biotech moves fast, so having a big pipeline of potential is critical. Gilead is in great shape here, as the company boasts 37 active clinical trials or pending regulatory approvals. In addition to creating products that extend its leadership position in its core markets, the company is also looking to make a big push to create treatment options for indications such as hematology/oncology, cardiovascular, and inflammation/respiratory.
4. An experienced, shareholder-friendly management team
I like to see stability at the top of companies that I own, and we're in great shape here as well -- Gilead's longtime CEO, John Martin, has been at the helm for nearly two decades, and his leadership and acumen for making smart acquisitions has greatly benefited shareholders.
More recently, the company has made strides to return a huge amount of cash directly to shareholders, as the company has authorized a monstrous $15 billion share repurchase program alongside a recently-initiated dividend payment that gives the stock a yield of around 1.6%.
5. All for a fair price
Even though Gilead's stock has been a huge winner over the past five years, its valuation has steadily been looking more and more attractive thanks to the company's enormous profit growth. When a stock is beating the market and is still getting cheaper, you can bet I pay attention.
At a time when many biotech stocks are fetching huge premiums, Gilead is bucking the trend and is currently trading for around 11 times trailing earnings. I'd say that's a perfectly fair price to pay.
The bear case
Of course, Wall Street is certainly aware of all of this information, so how could a company as big and well-known as Gilead be trading for such a cheap price? I think it largely boils down to worries over competition for Gilead's drugs, with the current worries particularly focused on competing hepatitis C treatments such as Viekira Pak, made by fellow industry giant AbbVie. Investors are worried that AbbVie could start undercutting Gilead's pricing in an effort to steal market share. Meanwhile, down the road, other companies are certainly looking to enter the hepatitis C market as well.
So far, this risk appears to be overblown, but it's certainly something investors need to keep an eye on.
Adding it all up
Gilead offers investors a wonderful combination right now: growth, value, and even a little bit of income. That's simply too much for this investor to pass up -- I'll be adding more shares to my portfolio.