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3 GARP MedTech Stocks to Snap Up Despite Pandemic Woes
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The pandemic-induced disruption had triggered severe economic volatility in the United States last year. However, the passing of historical $1.9 trillion stimulus package (signed by the President on Mar 12), which intends to boost the economy and put an end to the pandemic, has provided much-needed relief.
Following the passing of this package, another financial stimulus package of $2 trillion (unveiled on Mar 31), known as the American Jobs Plan, and another stimulus (anticipated to focus on healthcare and childcare) that is on the cards have helped to buoy investor sentiments.
MedTech Scenario So Far
The pandemic led to a change in business models, with companies leaning toward virtualized, remote-operated business models for medical care that have helped them recover and attain pre-COVID-19 levels.
Also, the importance of digital health (contributed significantly to MedTech’s performance last year) cannot be overstated amid this crisis and hence, companies involved in telemedicine and artificial intelligence will continue to reap benefits.
Additionally, with the passing of the stimulus package, the companies involved in the diagnostic testing space, vaccine distribution and manufacturing of personal protective equipment (PPE) will get a significant boost. For instance, Becton, Dickinson and Company (BDX - Free Report) , which has been at the forefront of the fight against the pandemic, stands to gain immensely from the package as it will be able to boost its testing capabilities further.
However, the resurgence in number of cases might again lead to some of the major MedTech players to repeat its dismal 2020 performance.
3 GARP Stocks to Add to Your Portfolio
With the pandemic still raging, the market is bracing for a widespread and stretched panic selling of MedTech stocks. On top of that, the aforementioned mixed MedTech scenario might keep investors on the edge over investing in the same.
Let’s see how this can be made easier for investors who are gradually adapting themselves to the “new normal” economy while looking for long-term returns to their portfolio.
In this scenario, a hybrid investment strategy called GARP (growth at a reasonable price) comes into play. Often known as a special case of growth and value investments, GARP, helps seek out stocks with solid long-term prospects that are selling cheap thanks to the economic uncertainty.
To narrow down the list, we have selected those with a Value 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.
Here we also emphasise on stocks with discounted PEG (Price-Earnings-Growth) ratio which holds a growth parameter in it.
Owens & Minor, Inc. (OMI - Free Report) : The global healthcare solutions company delivered record fourth-quarter and 2020 results, with significant earnings growth and margin improvement (driven by favorable product mix). The company, with a Value Score of A, saw revenue growth courtesy of higher demand for PPE — both through its medical-distribution channel and direct to customers,and strength in its home healthcare business.
Notably, for 2021, the company projects adjusted net income per share of $3-$3.50, suggesting growth of 33-55% on a year-over-year basis. The stock’s PEG ratio stands at 0.76, which is currently trading at a discount to its industry’s 2.57. Moreover, the P/E stands at 11.44, trading at a discount to its industry’s P/E of 29.63. The company projects 15.1% earnings growth for the next five years.
Shares of the Zacks Rank #1 company have gained 38.3% on a year-to-date basis compared with the industry’s growth of 4.5%.
Hologic, Inc. (HOLX - Free Report) : Hologic’s management is impressed with continued growth in the core molecular diagnostics sub-segment, which accounted for 88.2% of total Diagnostics revenues in the fiscal first quarter of 2021. Molecular Diagnostics sales soared 448.7% at constant exchange rate or CER. Global revenues for molecular diagnostics increased a whopping 779.8%. Robust demand for COVID-19-related products and ongoing recovery in other arms have enabled Hologic to provide a strong fiscal second-quarter outlook, instilling investors’ confidence.
Notably, for second-quarter 2021, the company projects revenues within $1.50-$1.56 billion (projection of 98.4-106.3% growth rate). The growth rate is projected to be 93.9-101.9% at CER and within 96.2-104.3%, organically. The adjusted earnings per share is estimated within $2.56-$2.68, with projected growth of 349.1-370.2%. The stock’s PEG ratio stands at 0.55, which is currently trading at a discount to its industry’s 3.05. Moreover, the P/E stands at 8.44, trading at a discount to its industry’s P/E of 42.82. The company, with a Value Score of A, projects earnings growth of 15.4% for the next five years.
Shares of the Zacks Rank #2 company have lost 0.1% on a year-to-date basis compared with the industry’s decline of 3.2%.
QIAGEN N.V. (QGEN - Free Report) : QIAGEN’s fourth quarter 2020 results reflected high demand for products used in COVID-19 testing, which has more than offset the weaker trends in other areas of the business. In this period, the company continuously launched new COVID-19 solutions, which has non-COVID-19 applications as well. QIAGEN has also experienced further improvements in non-COVID-19 areas of the portfolio and robust demand for product groups addressing the COVID-19 testing requirements.
The stock’s PEG ratio stands at 1.11, which is currently trading at a discount to its industry’s 1.55. Moreover, the P/E stands at 19.87, trading at a discount to its industry’s P/E of 26.07. The company projects earnings growth of 17.8% for the next five years.
Shares of the Zacks Rank #2 company, with a Value Score of B, have lost 3.9% on a year-to-date basis compared with the industry’s decline of 5.4%.
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3 GARP MedTech Stocks to Snap Up Despite Pandemic Woes
The pandemic-induced disruption had triggered severe economic volatility in the United States last year. However, the passing of historical $1.9 trillion stimulus package (signed by the President on Mar 12), which intends to boost the economy and put an end to the pandemic, has provided much-needed relief.
Following the passing of this package, another financial stimulus package of $2 trillion (unveiled on Mar 31), known as the American Jobs Plan, and another stimulus (anticipated to focus on healthcare and childcare) that is on the cards have helped to buoy investor sentiments.
MedTech Scenario So Far
The pandemic led to a change in business models, with companies leaning toward virtualized, remote-operated business models for medical care that have helped them recover and attain pre-COVID-19 levels.
Also, the importance of digital health (contributed significantly to MedTech’s performance last year) cannot be overstated amid this crisis and hence, companies involved in telemedicine and artificial intelligence will continue to reap benefits.
Additionally, with the passing of the stimulus package, the companies involved in the diagnostic testing space, vaccine distribution and manufacturing of personal protective equipment (PPE) will get a significant boost. For instance, Becton, Dickinson and Company (BDX - Free Report) , which has been at the forefront of the fight against the pandemic, stands to gain immensely from the package as it will be able to boost its testing capabilities further.
However, the resurgence in number of cases might again lead to some of the major MedTech players to repeat its dismal 2020 performance.
3 GARP Stocks to Add to Your Portfolio
With the pandemic still raging, the market is bracing for a widespread and stretched panic selling of MedTech stocks. On top of that, the aforementioned mixed MedTech scenario might keep investors on the edge over investing in the same.
Let’s see how this can be made easier for investors who are gradually adapting themselves to the “new normal” economy while looking for long-term returns to their portfolio.
In this scenario, a hybrid investment strategy called GARP (growth at a reasonable price) comes into play. Often known as a special case of growth and value investments, GARP, helps seek out stocks with solid long-term prospects that are selling cheap thanks to the economic uncertainty.
To narrow down the list, we have selected those with a Value 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.
Here we also emphasise on stocks with discounted PEG (Price-Earnings-Growth) ratio which holds a growth parameter in it.
Owens & Minor, Inc. (OMI - Free Report) : The global healthcare solutions company delivered record fourth-quarter and 2020 results, with significant earnings growth and margin improvement (driven by favorable product mix). The company, with a Value Score of A, saw revenue growth courtesy of higher demand for PPE — both through its medical-distribution channel and direct to customers,and strength in its home healthcare business.
Notably, for 2021, the company projects adjusted net income per share of $3-$3.50, suggesting growth of 33-55% on a year-over-year basis. The stock’s PEG ratio stands at 0.76, which is currently trading at a discount to its industry’s 2.57. Moreover, the P/E stands at 11.44, trading at a discount to its industry’s P/E of 29.63. The company projects 15.1% earnings growth for the next five years.
Shares of the Zacks Rank #1 company have gained 38.3% on a year-to-date basis compared with the industry’s growth of 4.5%.
Hologic, Inc. (HOLX - Free Report) : Hologic’s management is impressed with continued growth in the core molecular diagnostics sub-segment, which accounted for 88.2% of total Diagnostics revenues in the fiscal first quarter of 2021. Molecular Diagnostics sales soared 448.7% at constant exchange rate or CER. Global revenues for molecular diagnostics increased a whopping 779.8%. Robust demand for COVID-19-related products and ongoing recovery in other arms have enabled Hologic to provide a strong fiscal second-quarter outlook, instilling investors’ confidence.
Notably, for second-quarter 2021, the company projects revenues within $1.50-$1.56 billion (projection of 98.4-106.3% growth rate). The growth rate is projected to be 93.9-101.9% at CER and within 96.2-104.3%, organically. The adjusted earnings per share is estimated within $2.56-$2.68, with projected growth of 349.1-370.2%. The stock’s PEG ratio stands at 0.55, which is currently trading at a discount to its industry’s 3.05. Moreover, the P/E stands at 8.44, trading at a discount to its industry’s P/E of 42.82. The company, with a Value Score of A, projects earnings growth of 15.4% for the next five years.
Shares of the Zacks Rank #2 company have lost 0.1% on a year-to-date basis compared with the industry’s decline of 3.2%.
QIAGEN N.V. (QGEN - Free Report) : QIAGEN’s fourth quarter 2020 results reflected high demand for products used in COVID-19 testing, which has more than offset the weaker trends in other areas of the business. In this period, the company continuously launched new COVID-19 solutions, which has non-COVID-19 applications as well. QIAGEN has also experienced further improvements in non-COVID-19 areas of the portfolio and robust demand for product groups addressing the COVID-19 testing requirements.
The stock’s PEG ratio stands at 1.11, which is currently trading at a discount to its industry’s 1.55. Moreover, the P/E stands at 19.87, trading at a discount to its industry’s P/E of 26.07. The company projects earnings growth of 17.8% for the next five years.
Shares of the Zacks Rank #2 company, with a Value Score of B, have lost 3.9% on a year-to-date basis compared with the industry’s decline of 5.4%.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.
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