The coronavirus pandemic has resulted in constant drag-downs of several stock market indices, particularly in the month of September. Over the period, Nasdaq has lost 7.4%. Similarly, Dow Jones has seen a decline of 1.8% while the S&P 500 Index fell 6.1% over the timeframe.
Despite a series of temporary market rebounds, investor sentiments remained muted through the month of September with the new wave of coronavirus cases erupting in Europe and many regions of the United States leading to another slew of layoffs. Added to this is the threat of the rapid gene mutation of SARS-CoV-2, which is thwarting all efforts toward determining a confirmed timeline of the vaccine and therapeutic advancements. The growing political tension in the run-up to the elections is weighing on markets as well.
Per a report by Fitch Ratings published in September, global GDP is expected to contract as much as 4.4% in 2020.
MedTech Scenario Remains Stable
In the early months of the pandemic, the MedTech sector had to bear the brunt due to worldwide manufacturing and supply chain disruptions as well as deferral of elective medical/surgical procedures.
However, in the second quarter of the year, several major firms reported improvement in segmental performance on the launch of several COVID-19 diagnostic tests and solid consumer adoption of remote monitoring technologies.
Companies like Abbott Laboratories ABT, LabCorp LH and PRA Health Sciences PRAH in particular noted significant rebound in their second-quarter performances.
Best Strategy for MedTech Investors Now
However, the apparently-stable MedTech space could not defy the September meltdown induced by overall panic selloff. This has been dragging down share prices of a number of fundamentally-solid stocks, making them attractive picks for value investors. It is to be noted that during the pre-pandemic time, most of such stocks were actually pricey on account of their otherwise robust long-term growth parameters.
Hence, it is advisable for investors to zero in on stocks which are currently trading at a discount but have earnings growth potential. Value stocks are undoubtedly the best bet now on the fact that they are most likely to outperform the market once the economic mayhem draws to an end.
3 Stocks to Bet On
The following are a few MedTech companies with a Value Style Score of A or B. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.
NextGen Healthcare, Inc. NXGN: This Zacks Rank #2 company announced the availability of the next generation of its behavioral health suite last month. This health suite, backed by a renowned electronic health record (EHR) and practice management system, is the industry’s only platform that combines comprehensive physical, behavioral and oral health into one software solution.
It has a value Score of B. The company’s P/B and P/S ratios are both discounted compared to the industry, indicating that the stock is currently trading cheap. For fiscal 2022, the company’s earnings growth rate is anticipated at an impressive 8.9%.
DaVita, Inc, DVA: This Zacks Rank #1 company’s Kidney Care segment continued delivering strong performance with respect to treatment of Chronic Kidney Disease (CKD) as well as End Stage Renal Disease (ESRD) and transplant. In May 2020, DaVita launched the DaVita Venture Group (DVG), through which it plans to accelerate efforts to develop and deploy solutions aimed at improving the health care and quality of life for patients of kidney diseases and related chronic conditions. DaVita Kidney Care also provides support to nephrologist-led organizations like Nephrology Care Alliance (NCA) in their endeavor to treat patients with chronic kidney diseases.
For the next five years, earnings growth rate is anticipated at 11.9% which is favorable compared to the industry’s 10.6%. It has a Value Score of A. The company’s PE and PEG ratios are both discounted compared to the industry.
Anthem, Inc. ANTM: This Zacks Rank #2 company recently collaborated with Quest Diagnostics DGX to improve health outcomes for several consumers across the United States. Anthem and Quest have collaborated to utilize a diverse range of tools and programs. The partnership is not only expected to reduce healthcare costs but also provide operational efficiencies and pricing transparencies.
For the next five years, the company’s earnings growth rate is anticipated at 14.6%, which is favorable compared to the industry’s 13.8%. It has a Value Score of A. The company’s PE and PEG ratios are both discounted compared to the industry.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, SherazMian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
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Quest Diagnostics Incorporated (DGX): Free Stock Analysis Report
DaVita Inc. (DVA): Free Stock Analysis Report
Abbott Laboratories (ABT): Free Stock Analysis Report
Laboratory Corporation of America Holdings (LH): Free Stock Analysis Report
PRA Health Sciences, Inc. (PRAH): Free Stock Analysis Report
Anthem, Inc. (ANTM): Free Stock Analysis Report
NEXTGEN HEALTHCARE, INC (NXGN): Free Stock Analysis Report
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