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5 Probable MedTech Winners Post-COVID on Discounted PEG
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Americans are set to head into the post-pandemic phase of trade and development. The newly-released jobs report for the month of May further lifts the market sentiment. The report is being touted as a jumping-off point for increased spending on infrastructure and education. Added to this, yesterday, the Bureau of the Fiscal Service along with the treasury department revealed the disbursement of the fourth stimulus check of over 2.3 million as additional Economic Impact Payments under the American Rescue Plan, which further buoyed optimism.
Apart from infrastructure and education spaces, sectors like MedTech, which has been on a rollercoaster ride through the past one-and-a-half year, balancing between new opportunities and base business disruption, might get a major boost from this overall improving economic scenario.
However, amid the overall positive market sentiment, investors are concerned about the President’s infrastructure spending package. The proposal, if and when passed, is expected to provide a significant thrust to the post-pandemic U.S. economy. The impact of this deliberation regarding the stimulus packages on the MedTech space is still unclear. However, restarting the economy via vaccination drives is expected to provide a major boost to this space.
MedTech Snapshot in 2021
Key MedTech players recently released their earnings, which gave investors an insight into their current financial health. Market watchers are impressed with the robust performances of companies in the post-pandemic era when majority of the players have adjusted their business model in accordance with the continued business challenges. MedTech biggies like Medtronic plc (MDT - Free Report) reported stellar fourth-quarter fiscal 2021 results. Further, the results reflected a strong recovery from the impact of the COVID-19 pandemic on elective procedures that the company experienced in April 2020. Year to date, this stock has risen 6.5% compared with the industry’s 2.5% rise.
On the other hand, companies like Intersect ENT, Inc. are still reeling under the pandemic-led challenging business environment. Although the company’s revenues from its PROPEL and SINUVA product lines were robust, its adjusted net loss was wider than expected in the first quarter of 2021. Year to date, this stock has lost 27.6% compared with the industry’s 1% fall.
Investing in PEG Ratio-Driven MedTech Stocks the Best Option Now
Amid the overall unclear MedTech outlook, the price/earnings to growth (PEG) ratio provides a clearer picture of the stock's value as it factors in the company's expected earnings growth. Factoring in future growth adds an important element to the valuation of a stock as equity investments represent a financial interest in a company's future earnings.
So, given that the PEG ratio provides an idea about a stock’s financial health, it might turn out to be prudent investment criteria to reap long-term gains. Under the current volatility, it would be wise to choose stocks having a lower PEG ratio as it indicates that a stock is undervalued.
5 Stocks to Buy
Listed below are five companies with a favorable Zacks Rank and discounted PEG ratio that investors can consider during these trying times.
A well-known and rapidly growing optical retailer in the United States, National Vision Holdings, Inc. (EYE - Free Report) is our first pick. This Zacks Rank #1 (Strong Buy) company reported solid first-quarter 2021 results in May with robust growth in comparable store sales and adjusted comparable store sales. The Zacks Consensus Estimate for the company’s 2021 earnings per share (EPS) implies an improvement of 19.8% from the year-ago reported figure.
Image Source: Zacks Investment Research
Its PEG ratio stands at 1.9 compared with the industry’s 2.3. Year to date, the stock has gained 7%, underperforming the S&P 500 composite’s 13.6% rise. You can see the complete list of today’s Zacks #1 Rank stocks here.
The next stock that investors can choose is renowned global health care provider, DaVita Inc. (DVA - Free Report) . This Zacks Rank #2 (Buy) company, this month, launched virtual support groups through DaVita Care Connect (a mobile health platform for home dialysis patients) to help create community and belonging for those being treated at home. In May, DaVita announced the expansion of its home kidney care program to include the HomeChoice Claria Automated Peritoneal Dialysis system enabled by Baxter’s Sharesource remote patient monitoring. The Zacks Consensus Estimate for the company’s 2021 EPS indicates an improvement of 22.6%.
Image Source: Zacks Investment Research
Its PEG ratio stands at 0.9 compared with the industry’s 1.2. Year to date, the stock has gained 3.8%, underperforming the S&P 500 composite’s 13.6% rise.
Our next pick is key animal health player, Elanco Animal Health Incorporated (ELAN - Free Report) , having a Zacks Rank #2. The company, in May, launched ZoaShield in the United States, thus offering poultry producers a flexible zoalene solution that keeps coccidiosis (parasitic disease of the intestinal tract of animals) under control. Further, Elanco Animal Health reported robust first-quarter 2021 results in the same month, which was driven by the inclusion of the Bayer Animal Health business. The Zacks Consensus Estimate for the company’s 2021 EPS indicates improvement of 117%.
Image Source: Zacks Investment Research
Its PEG ratio stands at 0.9 compared with the industry’s 1.2. Year to date, the stock has gained 9.5%, underperforming the S&P 500 composite’s 13.6% rise.
The next stock that might be a prudent choice for investors is key global distributor of health care products and services, Henry Schein, Inc. (HSIC - Free Report) . This Zacks Rank #2 company acquired majority ownership position in eAssist Dental Solutions and Jarvis Analytics in June and May, respectively. Also in May, the company’s Henry Schein One announced the availability of a new software module that integrates dental and medical patient records. The Zacks Consensus Estimate for the company’s 2021 EPS suggests an improvement of 34.3%.
Image Source: Zacks Investment Research
Its PEG ratio stands at 1.75 compared with the industry’s 1.81. Over the past six months, the stock has rallied 15.4%, underperforming the S&P 500 composite’s 16.6% rise.
Phibro Animal Health Corporation (PAHC - Free Report) , a Zacks Rank #2 company, is our final choice. This well-known global diversified animal health and mineral nutrition player reported strong third-quarter fiscal 2021 revenues on the back of improvement in the Performance Products and Mineral Nutrition segments. The Zacks Consensus Estimate for the company’s fiscal 2021 EPS implies an improvement of 16.7%.
Image Source: Zacks Investment Research
Its PEG ratio stands at 2.2 compared with the industry’s 2.3. Over the past year, the stock has gained 16.9%, underperforming the S&P 500 composite’s 41.6% rise.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Image: Bigstock
5 Probable MedTech Winners Post-COVID on Discounted PEG
Americans are set to head into the post-pandemic phase of trade and development. The newly-released jobs report for the month of May further lifts the market sentiment. The report is being touted as a jumping-off point for increased spending on infrastructure and education. Added to this, yesterday, the Bureau of the Fiscal Service along with the treasury department revealed the disbursement of the fourth stimulus check of over 2.3 million as additional Economic Impact Payments under the American Rescue Plan, which further buoyed optimism.
Apart from infrastructure and education spaces, sectors like MedTech, which has been on a rollercoaster ride through the past one-and-a-half year, balancing between new opportunities and base business disruption, might get a major boost from this overall improving economic scenario.
However, amid the overall positive market sentiment, investors are concerned about the President’s infrastructure spending package. The proposal, if and when passed, is expected to provide a significant thrust to the post-pandemic U.S. economy. The impact of this deliberation regarding the stimulus packages on the MedTech space is still unclear. However, restarting the economy via vaccination drives is expected to provide a major boost to this space.
MedTech Snapshot in 2021
Key MedTech players recently released their earnings, which gave investors an insight into their current financial health. Market watchers are impressed with the robust performances of companies in the post-pandemic era when majority of the players have adjusted their business model in accordance with the continued business challenges. MedTech biggies like Medtronic plc (MDT - Free Report) reported stellar fourth-quarter fiscal 2021 results. Further, the results reflected a strong recovery from the impact of the COVID-19 pandemic on elective procedures that the company experienced in April 2020. Year to date, this stock has risen 6.5% compared with the industry’s 2.5% rise.
On the other hand, companies like Intersect ENT, Inc. are still reeling under the pandemic-led challenging business environment. Although the company’s revenues from its PROPEL and SINUVA product lines were robust, its adjusted net loss was wider than expected in the first quarter of 2021. Year to date, this stock has lost 27.6% compared with the industry’s 1% fall.
Investing in PEG Ratio-Driven MedTech Stocks the Best Option Now
Amid the overall unclear MedTech outlook, the price/earnings to growth (PEG) ratio provides a clearer picture of the stock's value as it factors in the company's expected earnings growth. Factoring in future growth adds an important element to the valuation of a stock as equity investments represent a financial interest in a company's future earnings.
So, given that the PEG ratio provides an idea about a stock’s financial health, it might turn out to be prudent investment criteria to reap long-term gains. Under the current volatility, it would be wise to choose stocks having a lower PEG ratio as it indicates that a stock is undervalued.
5 Stocks to Buy
Listed below are five companies with a favorable Zacks Rank and discounted PEG ratio that investors can consider during these trying times.
A well-known and rapidly growing optical retailer in the United States, National Vision Holdings, Inc. (EYE - Free Report) is our first pick. This Zacks Rank #1 (Strong Buy) company reported solid first-quarter 2021 results in May with robust growth in comparable store sales and adjusted comparable store sales. The Zacks Consensus Estimate for the company’s 2021 earnings per share (EPS) implies an improvement of 19.8% from the year-ago reported figure.
Its PEG ratio stands at 1.9 compared with the industry’s 2.3. Year to date, the stock has gained 7%, underperforming the S&P 500 composite’s 13.6% rise. You can see the complete list of today’s Zacks #1 Rank stocks here.
The next stock that investors can choose is renowned global health care provider, DaVita Inc. (DVA - Free Report) . This Zacks Rank #2 (Buy) company, this month, launched virtual support groups through DaVita Care Connect (a mobile health platform for home dialysis patients) to help create community and belonging for those being treated at home. In May, DaVita announced the expansion of its home kidney care program to include the HomeChoice Claria Automated Peritoneal Dialysis system enabled by Baxter’s Sharesource remote patient monitoring. The Zacks Consensus Estimate for the company’s 2021 EPS indicates an improvement of 22.6%.
Its PEG ratio stands at 0.9 compared with the industry’s 1.2. Year to date, the stock has gained 3.8%, underperforming the S&P 500 composite’s 13.6% rise.
Our next pick is key animal health player, Elanco Animal Health Incorporated (ELAN - Free Report) , having a Zacks Rank #2. The company, in May, launched ZoaShield in the United States, thus offering poultry producers a flexible zoalene solution that keeps coccidiosis (parasitic disease of the intestinal tract of animals) under control. Further, Elanco Animal Health reported robust first-quarter 2021 results in the same month, which was driven by the inclusion of the Bayer Animal Health business. The Zacks Consensus Estimate for the company’s 2021 EPS indicates improvement of 117%.
Its PEG ratio stands at 0.9 compared with the industry’s 1.2. Year to date, the stock has gained 9.5%, underperforming the S&P 500 composite’s 13.6% rise.
The next stock that might be a prudent choice for investors is key global distributor of health care products and services, Henry Schein, Inc. (HSIC - Free Report) . This Zacks Rank #2 company acquired majority ownership position in eAssist Dental Solutions and Jarvis Analytics in June and May, respectively. Also in May, the company’s Henry Schein One announced the availability of a new software module that integrates dental and medical patient records. The Zacks Consensus Estimate for the company’s 2021 EPS suggests an improvement of 34.3%.
Its PEG ratio stands at 1.75 compared with the industry’s 1.81. Over the past six months, the stock has rallied 15.4%, underperforming the S&P 500 composite’s 16.6% rise.
Phibro Animal Health Corporation (PAHC - Free Report) , a Zacks Rank #2 company, is our final choice. This well-known global diversified animal health and mineral nutrition player reported strong third-quarter fiscal 2021 revenues on the back of improvement in the Performance Products and Mineral Nutrition segments. The Zacks Consensus Estimate for the company’s fiscal 2021 EPS implies an improvement of 16.7%.
Its PEG ratio stands at 2.2 compared with the industry’s 2.3. Over the past year, the stock has gained 16.9%, underperforming the S&P 500 composite’s 41.6% rise.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>