T. Rowe Price Health Sciences
Ticker: (Fortune 500),
Sector pick: Health care
Kris Jenner, a former doctor, has operated the white-hot T. Rowe Price Health Sciences Fund ( since 2000. With $4.9 billion in assets, it has delivered an annualized 13.6% gain for the past decade, drubbing its peers' 9.0%. Jenner's prescription: shares of biotech giant Gilead Sciences, one of his fund's largest positions. Gilead made its mark with a once-a-day HIV pill, and Jenner thinks it can repeat that success with a new treatment for hepatitis C. Known as sofosbuvir, it has a higher cure rate with less toxicity than interferon, the standard treatment, he says. )
The market is huge: More than 4 million people have hepatitis C in the U.S. "The hepatitis C market will be in excess of $10 billion," says Jenner, "and we are at the dawn of that market." He believes Gilead's revenue could rise 16% a year through 2016, with earnings per share soaring 27% annually. At a recent $75, the shares aren't cheap -- they're up 84% since the beginning of 2012 and trade at 20 times this year's consensus forecast. Jenner advises waiting for a pullback before buying. But be patient. "In its peer group," he says, "it's going to be unrivaled in terms of its revenues and earnings growth."
Beware of munis priced at bubble levels. They'll always pop in the end.