2020 was largely dominated by growth stocks, with the tech sector at the forefront. However, with a mass inoculation drive and fiscal and monetary policy support, the economic landscape looks encouraging in the United States. This environment has motivated investors to rotate away from expensive growth stocks to quality value stocks.
As a result, value stocks are back in the limelight after underperforming the broader market last year. This is evidenced by the SPDR Portfolio S&P 500 Value ETF’s (SPYV) 14.2% returns over the past three months versus the SPDR Portfolio S&P 500 Growth ETF’s (SPYG) 4.1% gains. While the economy has begun to recover in the United States, the health crisis is far from over and there is still a sense of uncertainty in the markets. Experts also worry that another stock market correction could be in the offing. Therefore, picking fundamentally strong undervalued stocks could be a smart strategy at this juncture.
Hologic, Inc. (HOLX)
HOLX develops, manufactures, and supplies diagnostics products, medical imaging systems, and surgical products for women in the United States and internationally. The company operates in four segments: Diagnostics, Breast Health, GYN Surgical, and Skeletal Health.
Last month, , HOLX agreed to purchase Mobidiag Oy for $795 million. The deal includes $714 million to be paid in cash for Mobidiag’s equity along with $81 million of debt. The transaction is awaiting regulatory approval and is expected to close in the fourth quarter of 2021.
During the second quarter, ended March 27, HOLX’s revenue surged 103.4% year-over-year to $1.54 billion, wherein the organic revenue soared 104.7%. Its worldwide molecular diagnostics revenue surged 390.6%, due to robust global demand for HOLX’s two SARS-CoV-2 assays running on the fully automated Panther® and Panther Fusion® systems. Its EPS for the quarter climbed to $2.38 from $0.36 posted in the same period last year.
Wall Street expects HOLX’s revenue for the quarter ending September 30, 2021 to be $1 billion, representing a 21.8% year-over-year decrease. Its EPS is expected to grow at the rate of 2.35% per annum over the next five years.
HOLX ended Friday’s trading session at $65.63, surging 23.9% over the past year. During the past six months, the stock has declined 12.6%.
Due to its bright prospects, HOLX has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
HOLX also has a Growth and Value ratings of A. In the 182-stock Medical – Devices & Equipment industry, it is ranked #22. Click here to see the additional POWR Ratings for HOLX (Stability, Sentiment, Momentum and Quality).
AGCO Corporation (AGCO)
AGCO designs, manufactures, and distributes agricultural machinery, including a range of agricultural equipment and related replacement parts, including tractors, combines, hay tools, sprayers, and forage equipment.
In 2019, AGCO has launched an investment program worth more than Euro 100 million to boost the manufacturing capabilities of the company’s subsidiary AGCO Power in Linnavuori, Finland, as well as AGCO’s global engine product portfolio.
For the first quarter ended March 31, AGCO’s revenue climbed 211% year-over-year to $2.4 billion. The APAC region contributed 83.1%, while South America contributed 56.3%. Its EPS for the quarter was $1.99 compared to $0.89 posted in the prior-year period.
A consensus revenue estimate for AGCO for the quarter ending June 30, 2021 is $2.7 billion, representing a 36.7% year-over-year rise. Its EPS is expected to grow at the rate of 20.6% per annum over the next five years.
AGCO ended Friday’s trading session at $153.80, surging 211% over the past year. During the past six months, the stock has soared 69.6%.
It’s no surprise that AGCO has an overall A rating, which translates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Growth and Value, along with a B grade for Sentiment. In the A-rated, 6-stock Agriculture industry, it is ranked #1.
Click here to see the additional POWR Ratings for AGCO (Momentum, Quality and Stability).
Bausch Health Companies Inc. (BHC)
BHC develops, , manufactures, and markets a range of branded, generic, and branded generic pharmaceuticals, over-the-counter products, and medical devices, including contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetics devices.
According to Bloomberg, BHC is considering a potential sale of its eye-care business and operates as an independent entity. In March 2021, BHC announced that it has entered into a definitive agreement to sell all its equity interests in Amoun Pharmaceutical Company to Abu Dhabi for nearly $740 million.
BHC’s sales for the first quarter ended March 31 rose 1% year-over-year to $2 billion. The revenue for the Bausch + Lomb segment slipped 2%, while revenue for the Ortho Dermatologics segment climbed 5%. Its loss per share widened to $1.71 from $0.43 posted in the same period last year.
Analysts expect BHC’s revenue for the quarter ending June 30, 2021 to be $2.1 billion, representing a 27.7% year-over-year increase. Its EPS is expected to grow at the rate of 6.1% per annum over the next five years.
BHC has climbed 76.9% over the past year to close the Friday trading session at $28.08. Over the past six months, the stock has gained 68.8%.
BHC’s POWR Ratings reflect this promising outlook. The stock has an A grade for Growth and Value. In the Medical – Pharmaceuticals industry, it is ranked #35 of 231 stocks.
In addition to the POWR Ratings grades I’ve just highlighted, you can see the BHC’s ratings for Sentiment, Quality, Momentum and Stability here.
United Therapeutics Corporation (UTHR)
UTHR develops and commercializes products to address the unmet medical needs of patients with chronic and life-threatening conditions worldwide. Its lead product is Remodulin, a drug used for the treatment of pulmonary arterial hypertension.
UTHR recently announced the submission of Tyvaso DPI™ for new drug application to the FDA. The submission includes both pulmonary arterial hypertension as well as pulmonary hypertension associated with interstitial lung disease indications.
During the first quarter of 2021, ended March 31,UTHR’s revenue climbed 6% year-over-year to $379.1 million, led by growth in its Unituxin drug. The growth in Unituxin revenues is due primarily to increased volume sales. Its EPS for the quarter declined to $0.61 versus $3.12 posted in the same period last year.
Analysts expect UTHR’s revenue for the quarter ending June 30, 2021 to be $377.1 million, representing a 4.2% increase year-over-year. Its EPS is expected to grow 27.8% to $3.10.
UTHR ended Friday’s trading session at $195.42, rallying 74.5% over the past year. During the past six months, the stock soared 43.8% higher.
UTHR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B which equates to Buy in our POWR Rating system. UTHR also has a Value and Quality grade of A. In the 492-stock Biotech industry, it is ranked #17.
To see additional POWR Ratings for Growth, Momentum, Stability and Sentiment for UTHR, Click here.
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HOLX shares were trading at $65.30 per share on Monday afternoon, down $0.33 (-0.50%). Year-to-date, HOLX has declined -10.34%, versus a 13.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More...
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