2 June Bargains With Up To 7.6% Yield

seekingalpha06-15

There are always opportunities in this market for stocks despite high total market valuation.Gilead Sciences offers strong growth potential with a well-covered dividend yield of 4.8% and a promising ...

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href=https://seekingalpha.com/article/4699392-2-june-bargains-with-up-to-7-6-percent-yield><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>There are always opportunities in this market for stocks despite high total market valuation.Gilead Sciences offers strong growth potential with a well-covered dividend yield of 4.8% and a promising ...</p>\n\n<a href=\"https://seekingalpha.com/article/4699392-2-june-bargains-with-up-to-7-6-percent-yield\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"IE00B19Z9P08.USD","symbol_name":"LEGG MASON CLEARBRIDGE US AGGRESSIVE GROWTH \"A\" (USD) 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SGD-H"},"translate_title":"6月2日特价，收益率高达7.6%","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"XPH":1,"MPLX":1,"SPY":1,"TJX":1,"US10Y.BOND":1,"US12M.BOND":1,"GILD":1,"US2Y.BOND":1,"ENB":1,"US30Y.BOND":1,"US3Y.BOND":1,"US5Y.BOND":1,"US6M.BOND":1,"US7Y.BOND":1,"XLE":1,"OEF":0.6,"OEX":0.6,"SDS":0.6,"SH":0.6,"SPXU":0.6,"SSO":0.6,"UPRO":0.6,"IVV":0.6,"ESmain":0.6,".SPX":0.6},"content_text":"There are always opportunities in this market for stocks despite high total market valuation.Gilead Sciences offers strong growth potential with a well-covered dividend yield of 4.8% and a promising pipeline.Enbridge provides stable income with a 7.6% dividend yield, strong growth prospects, and trades below historical valuations.   Supertruper People sometimes ask me when is a good time to invest, and my answer is almost always “now, at the present time”. That’s because while the overall market may be trading at high valuation, there’s almost aways sectors and individual stocks that are temporarily out of favor for one reason or another. That’s why I like to think of it as being a market for stocks rather than the stock market. Much like treasure hunting at a discount store like TJX (TJX), one of the thrills of investing is being able to find quality companies trading at discounted prices. This brings me to the following 2 picks, both of which trade at compelling valuations compared to their own respective histories and that of the market at present, resulting in well-covered dividend yields ranging from 5-8%. Let’s explore what makes each an attractive ‘buy’ at present! #1: Gilead Sciences Gilead Sciences (GILD) is a large biopharmaceutical company that has a portfolio of drugs that prevent and treat life threatening illnesses that include HIV, viral hepatitis, and cancer, generating $27.5 billion over the trailing 12 months. I last covered GILD in October of last year, highlighting the quality of its pipeline, strong profitability and growing HIV drug franchise. GILD stock hasn’t been a great performer as of late, to say the least, with a price return of -11% since my last piece, and -19% over the past 12 months. This may have been driven by negative market sentiment around growing competition for its cancer drug Trodelvy. As shown below, GILD has underperformed both the S&P 500’s (SPY) 24% and SPDR Pharmaceuticals ETF (XPH) over this timeframe. GILD 1-Yr Price Return (Seeking Alpha) Despite what GILD’s underwhelming price performance might suggest, it’s actually demonstrating respectable top line growth, with produce sales excluding Veklury (GILD’s COVID medication also known as Remdesivir) grew by 6% YoY to $6.1 billion in Q1 2024. This was driven by a strong showing from Biktarvy, GILD’s HIV medication, which saw 10% YoY sales growth to $2.9 billion, and very strong oncology sales growth of 18% YoY to $789 million. GILD remains highly profitable with adjusted gross margin of 85.4% in the first quarter, falling by 120 basis points from the prior year period due to product mix. GILD retains a robust A+ grade for Profitability, with EBITDA and FCF margins of 46% and 30%, respectively, sitting well above that of the sector median, as shown below. Seeking Alpha Management is guiding for 4-6% sales growth this year excluding Veklury. It’s worth noting that the bottom end of GILD’s full-year adjusted EPS guidance was lowered from $6.85 (in February) to $3.45 (post-Q1 results) due to the $3.9 billion CymaBay acquisition. While this transaction is near-term dilutive, it brings with it Seladelpar, a drug that helps GILD to address a significant unmet need in liver disease. Moreover, GILD’s forward outlook is supported by potential for new indications for Trodelvy with the potential to treat 5 tumor types including Breast, Bladder, and Lung Cancer. Trodelvy is seeing strong demand in U.S. and internationally, with 39% revenue growth over the trailing months. It’s also seeing strong market share growth in its leading HIV treatments, Bktarvy and Descovy. As shown below, they carry market share ranging from 40-50% with total market growth between 3-11% over the past 12 months. Investor Presentation Other potential catalysts include GILD’s oral GLP-1 candidate, with 12-week trial data expected in the second half of this year, and with GILD set to release new preclinical data next week at the American Diabetes Association’s annual scientific meetings. Meanwhile, GILD maintains a BBB+ rated balance sheet and still has $4.7 billion of cash after the CymaBay acquisition (down from $8.4 billion at the end of 2023). It also generated $2.4 billion of operating cash flow during Q1, enabling it to pay $990 million worth of dividends and repurchase $400 million of stock. As shown below, GILD’s share count has materially declined over the past 10 years, from 1.53 billion to 1.25 billion, equating to an 18% reduction. CompaniesMarketCap GILD also yields a respectable 4.8% and the dividend is covered by a 75% payout ratio. At the current price of $64.83, GILD represents a good value for income and value investors. While its forward PE of 17x doesn’t scream cheap on the surface, that’s due to the near-term dilutive effects of the CymaBay acquisition. Analysts estimate EPS bounce back to $7.19 in 2025, equating to a forward PE of 9x based on 2025 figures. With long-term EPS growth expectations of around 5% by sell side analysts who follow the company, GILD could deliver either market-level or market-beating returns given its strong dividend yield and potential catalysts from newer drugs including its GLP-1 candidate. #2: Enbridge Enbridge (ENB) is another giant in its respective industry that has seen share price weakness over the past. I last covered ENB back in February, noting strengths from its expanding natural gas presence, LNG export capacity, and greenfield opportunities in renewable energy projects like RNG (renewable natural gas). While the S&P 500 (SPY) has risen by 8%, ENB has moved up by just 2.3% since my last piece. But thanks to dividends ENB has given a 6.2% total return. It seems that the market hasn't been too keen to give ENB a bid due to lower oil prices since the start of the year, but it's worth noting that most of ENB's cash flows are fee-based or contracted (more on that later). As shown below, ENB’s share price has declined by 6% over the past 12 months, underperforming the 24% and 10% rise in the S&P 500 (SPY) and SPDR Energy Sector ETF (XLE), respectively, as shown below. ENB 1-Yr Price Return (Seeking Alpha) ENB is a leading North American energy company with moat-worthy assets that include pipelines (liquids and natural gas), gas utilities, and renewable energy infrastructure. ENB can be viewed as being at the intersection of energy midstream and utility companies with a debt-to-equity ratio of 4.7x, which fits within the 4.5x to 5.0x company target, and in between the two industry segments, as shown below. Investor Presentation ENB’s dual utility and midstream focus means that it enjoys highly income streams, with 98% of its cash flows being either cost-of-service or contracted. Plus, over 95% of ENB’s customers carry investment grade credit ratings and 80% of EBITDA having inflation protection, all while just 5% of ENB’s debt is exposed to floating rates. These factors have enabled ENB to continuously produce steady growth, as reflected by 11% and 4% YoY adjusted EBITDA and distributable cash flow growth, respectively, during Q1 2024. When new projects just coming online are excluded, ENB’s Q1 DCF per share growth rises to an impressive 8% compared to the prior year period. This was driven by high utilization rates, including over 3.1 million barrels of liquids transported per day on the Mainline during Q1. ENB is guiding for 5% annual EBITDA growth over the next 3-5 years. This is comprised of 3% growth from project backlog and 1-2% annual growth from operating efficiencies and contractual revenue escalators. Projects that will contribute to cash flow include offshore wind in France and enhanced presence in the prolific Permian basin with the formation of the Whistler JV with peer MPLX LP (MPLX) to transport natural gas from the region. Importantly for income investors, ENB currently pays an attractive dividend yield of 7.6% at the current price of $35.04 as of writing. At this price, ENB trades at a Price-to-Cash Flow of just 7.1x, sitting well below its historical P/OCF ratio of 9.4x over the past 10 years, as shown below. FAST Graphs With a 7.6% dividend yield and reasonable expectations for around 5% annual DCF per share growth, as noted earlier, ENB could produce market-beating results even without a reversion to its mean valuation, making ENB an appealing choice for income and value investors. Investor Takeaway Both Gilead Sciences and Enbridge present terrific investment opportunities for those seeking value and income at present. Gilead is undervalued due in part to short-term challenges around top-line sales including Veklury, yet it boasts robust profitability and promising growth prospects with its strong pipeline and existing portfolio in HIV and oncology.  Similarly, Enbridge, a dominant player in the energy sector, offers a stable, high dividend yield supported by its diverse and resilient assets in pipelines, utilities, and renewable energy. Trading below historical valuations, both companies offer attractive dividend yields ranging from 5-8% and potential for long-term appreciation, making them appealing choices for investors focused on finding quality stocks at discounted prices.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.2","shortVersion":"4.24.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2443641659"}