The global economy is recovering from the damage caused by the COVID-19 pandemic as vaccine rollouts continue apace and the recent federal recovery package provides a much-needed economic boost. Consequently, many companies that suffered the pandemic-driven recessionary headwinds are expected to return to their pre-pandemic performance. In anticipation of this, investors have already begun rotating away from the high-growth, stay-at-home stocks to the potential post-pandemic winners, gradually driving these stocks to their fair values.
The shift to value from growth is evident in the SPDR Portfolio S&P 500 Value ETF’s (SPYV) 12.5% gains over the past three months. In comparison, the SPDR Portfolio S&P 500 Growth ETF’s (SPYG) has gained just 5.1% over the same period.
However, some of the potential winners in the economic recovery phase are still trading at reasonable valuations. Alexion Pharmaceuticals, Inc. (ALXN), Orange, S.A. (ORAN), Molina Healthcare, Inc. (MOH), and Albertsons Companies, Inc. (ACI) are cases in point. They have significant potential for gains, and they are trading at discounts to their peers. So, we think these stocks could be solid bets now.
Alexion Pharmaceuticals, Inc. (ALXN)
ALXN develops and markets biopharmaceutical therapeutic products. The company is well known for its Soliris drug. ALXN has gained 70.7% over the past year to close Thursday’s trading session at $153.21.
ALXN has entered an agreement to be acquired by AstraZeneca. The move is likely to further support the company’s financial and strategic development.
In terms of non-GAAP forward price/earnings, ALXN is currently trading at 11.78x, which is 51.6% lower than the industry average 24.35x. In terms of non-GAAP forward price/sales, ALXN is currently trading at 5.09x, 30.8% lower than the industry average 7.35x.
ALXN is expected to see a revenue growth of 9.7% for the quarter ended March 31, 2021 and 8.6% in 2021. The company’s EPS is estimated to grow 4% in 2021 and 8.8% per annum over the next five years.
ALXN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
It has a grade of A for Quality and Value. In the Biotech industry, it is ranked #17 of 486 stocks.
In total, we rate ALXN on eight different levels. Beyond what we stated above, we also have given ALXN grades for Stability, Momentum, Growth, and Sentiment. Get all the ALXN ratings here.
Orange, S.A. (ORAN)
ORAN provides mobile telecommunications, data transmission, and other related services. The company has worldwide operations.
ORAN’s non-GAAP forward price/earnings of 11.17x is 44.4% lower than the industry average 20.09x. The company’s forward price/sales of 0.65x is 66.9% lower than the industry average 1.97x. ORAN’s stock price has increased 4.2% year-to-date and its last closing price was $12.36.
The company has successfully launched 5G networks in five European countries. The company is also in talks to acquire Telekom Romania.
It’s no surprise that ORAN has an overall B rating, which equates to Buy in our POWR Ratings system. ORAN has an A grade for Value and Stability, and B for Sentiment. In the B-rated Telecom – Foreign industry, it is ranked #18 of 51 stocks.
Click here to see the additional POWR Ratings for ORAN (Momentum, Growth, and Quality).
Molina Healthcare, Inc. (MOH)
MOH delivers managed healthcare services under the Medicare and Medicaid programs. MOH is a Fortune 500 company. It has returned 78.2% over the past year to close last Thursday’s trading session at $235.48.
The stock’s non-GAAP forward price/earnings is currently at 18.2x, which is 25.3% lower than the industry average 24.35x. In terms of non-GAAP forward price/sales, MOH is currently trading at 0.57x, which is 92.3% lower than the industry average 7.35x.
MOH recently donated $100,000 to the Foundation for Appalachian Kentucky to support Kentucky residents who are struggling from recent flooding. The company has also partnered with CVS to provide flu shots during a drive-through event.
MOH is expected to see revenue growth of 33.4% for the quarter ended March 31, 2021 and 23.5% in 2021. Analysts expect the company’s EPS to grow 21.2% in 2021 and 11.3% per annum over the next five years.
MOH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary ratings system. MOH has an A grade for Value and B for Quality. In the B-rated Medical – Health Insurance industry, it is ranked #5 of 10 stocks.
Beyond what we stated above we also have given MOH grades for Growth, Momentum, Sentiment, and Stability. Get all the MOH ratings here.
Albertsons Companies, Inc. (ACI)
ACI operates as a food and drug specialty retailer. The company has operations primarily in the United States.
ACI’s revenue is expected to grow 11.3% in 2021. The company’s EPS is estimated to grow at a rate of 19.1% per annum over the next five years. ACI’s stock has gained 19.1% over the past year and its last closing price was 18.4%.
In terms of forward price-to-earnings, ACI is currently trading at 9.87x, which is much lower than the industry average of 23.86x. Also, ACI’s price/sales ratio of 0.12x is significantly lower than the industry average 1.72x.
ACI and Google have entered a multi-year partnership to help consumers in the United States meet their shopping needs. The company, in partnership with Tortoise, is developing last-mile remote automated delivery solutions.
The POWR Ratings are also high on ACI as it has an Overall Rating of A which translates to a Strong Buy. ACI also has a Value rating of A along with Growth, Sentiment, and Quality ratings of B. In the A-rated Grocery/Big-Box Retailers industry, it is ranked #4 of 40 stocks.
Click here to see the additional POWR Ratings for ACI (Momentum and Stability).
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ALXN shares were trading at $153.81 per share on Monday morning, up $0.60 (+0.39%). Year-to-date, ALXN has declined -1.56%, versus a 8.83% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More...
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