Exelixis is a biopharmaceutical firm that discovers, develops, and commercializes treatments for cancer. It has very strong fundamentals. It’s Net Margin is 49%. Return on equity is 49%. However, it is not longer cheap. It is currently traded at x23.5 Price-to-Free-Cash-Flow.
On 17 November 2018 I posted a bullish call on EXEL. On the chart below you can see the most reliable setup I know. You can see a very strong rally clearly subdivided into three subwaves (A)-(B)-(C). That is wave ( 3 ) up that topped in October 2017 .
Then we got a corrective looking decline in the wave ( 4 ) down shaped as (A)-(B)-(C). That corrective structure bottomed in October 2018. The decline bottomed at 66.7% retracement of the wave ( 3 ) up. The gap up off that low looked very promising and indicated that the new rally most likely had begun.
Back then EXEL traded at $17.90. Last Friday it closed at $23.76. It rallied 32% in two months. While all the indices declined. This is the power of the value investing. This is why I focus on undervalued companies generating massive free cash flow.
As you can see on the updated chart below, the price has still not arrived at the red target box. If it comes back down in the wave ( B ) that would be a gorgeous long setup. If you are long I would suggest to wait until price tags at least the minimum target of 25.10.