3 A-Rated Value Stocks to Buy Right Now

NASDAQ: GILD | Gilead Sciences, Inc. News, Ratings, and Charts

GILD – Investors have favored value stocks over growth stocks so far this year with the expectation that an economic recovery will lead to a solid rebound for these stocks. Gilead Sciences (GILD), Honda Motor Company (HMC), and Regeneron Pharmaceuticals (REGN) are fundamentally sound and are currently trading at discounted valuations. So, we think they could be solid bets to benefit from investors’ rotation into value names.

Investors’  rotation away from pricey growth stocks to undervalued turnaround candidates has been the trend so far this year. Investors expect a coronavirus-vaccine-driven economic recovery to help fundamentally strong value stocks to return to their fair values. This is evidenced by the SPDR Portfolio S&P 500 Value ETF’s (SPYV) 5.2% gains so far this year versus the SPDR Portfolio S&P 500 Growth ETF (SPYG) 3.2% loss.

Even though many growth stocks from the technology space are expected to continue their rally due to the continuation of the pandemic-driven trends even in a post-pandemic world, their momentum is expected to slow.  Conversely, a solid growth in revenues and earnings on the back of an economic recovery and increased consumer spending should drive value stocks to fair prices. After all, betting on good bargains usually leads to higher returns in the long run.

Shares of Gilead Sciences, Inc. (GILD), Honda Motor Company, Ltd. (HMC), and Regeneron Pharmaceuticals, Inc. (REGN) are trading at discounts to their peers. Moreover,  we think these stocks are sufficiently sound fundamentally to ride high on an economic recovery.

Gilead Sciences, Inc. (GILD)

GILD is involved in developing, manufacturing, and marketing biopharmaceutical products in untapped areas. The company has a  focus on HIV/AIDS, cardiovascular conditions, and respiratory diseases. GILD’s stock has gained 8.5% year-to-date to close yesterday’s trading session at $63.23.

GILD recently acquired  MYR GmbH for  1.45 billion euros. The acquisition allows GILD to add Hepcludex, a treatment for  chronic hepatitis delta virus (HDV) to its  portfolio. GILD  also recently partnered with Gritstone to develop a treatment for HIV infection.

For the quarter ended December 31, 2020, GILD’s  total sales grew 26% compared to the same period last year. The company’s diluted EPS grew 99% during the same period.

In terms of non-GAAP forward price/earnings, GILD is currently trading at 8.82x, 62.7% lower than the industry average  23.65x. In terms of forward price/sales, GILD is trading at 3.2x, 59.66% lower than the industry average of 7.93x

GILD is expected to see  revenue growth of 20.5% for the quarter ended March 31, 2021 and 0.4% in 2021. Its  EPS is estimated to grow 20.8% for the quarter ended March 31, 2021 and at a rate of 2.8% per annum over the next five years.

GILD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong 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 an A grade  for Value, and B for Growth, Sentiment, and Quality. In the Biotech industry, it is ranked #2 of 488 stocks.

In total, we rate GILD on eight different levels. Beyond what we stated above we have also given GILD grades for Stability and Momentum. Get all the GILD ratings here.

Honda Motor Company, Ltd. (HMC)

HMC develops and markets motorbikes and automobiles. The company has global operations. HMC has returned 10.1% over the past year, and the stock closed yesterday’s trading session at $28.6.

HMC  recently began selling  its  new automobile model, called Legend, which comes equipped with Honda Sensing Elite. The company’s HondaJet Elite  recently received its certification for sale in  Russia.

For the quarter ended December 31, 2020, the company saw an increase in sales revenue of 0.6% versus  the same period last year, despite challenges posed by the pandemic. The company’s operating profit gained 66.7% during the same period. Its  EPS is expected to rise 21.8% per annum over the next five years.

HMC’s non-GAAP forward price/earnings of 12.01x is 37.75% lower than the industry average  19.3x. Its  forward price/sales of 0.40x is 69.15% lower than the industry average 1.3x.

It’s no surprise that HMC has an overall rating of A, which equates to Strong Buy in our POWR Ratings system. HMC has an A  grade for Value, and B for Stability, Momentum, Growth, Sentiment, and Quality. In the B-rated Auto & Vehicle Manufacturers industry, it is ranked #1 among 52 stocks.

Regeneron Pharmaceuticals, Inc. (REGN)

REGN is involved in developing biopharmaceutical treatments for serious ailments. The company’s existing portfolio consists of treatments for eye diseases and high LDL-cholesterol . REGN’s stock has returned 11.6% over the past two years and its last closing price was $449.38.

The company’s treatment for advanced non-small cell lung cancer, called PD-1 inhibitor Libtayo, has received approval from the U.S. FDA. The FDA has also accepted for review the company’s DUPIXENT for the treatment of children with moderate-to-severe asthma.

For the quarter ended December 31, 2020, the company’s revenues increased 30% versus  the same quarter in 2019. Its  net sales increased 7% during the same period.

In terms of forward price/earnings, the stock is currently trading at 10.08x, which is much lower than the industry average 23.65x. The stock is trading at a discount in terms of price/sales also(3.90x vs. 7.93x).

REGN is expected to see a revenue growth of 45.6% for the quarter ended March 31, 2021 and 40.4% in 2021. Its EPS is estimated to grow 42.3% in 2021 and 11.1% per annum over the next five years.

REGN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating,  which equates to Strong Buy in our proprietary ratings system. REGN has an A grade for Value, and B for Growth, Sentiment, and Quality. In the Biotech industry, it is ranked #3.

Beyond what we stated above we also have given REGN’s grades for Stability and Momentum. Get all the REGN ratings here.

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

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GILD shares were trading at $64.37 per share on Friday afternoon, up $1.14 (+1.80%). Year-to-date, GILD has gained 10.49%, versus a 1.82% 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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