Concerns over high inflation, the Fed’s aggressive interest rate hikes to tame it, and the geopolitical tensions have kept the stock market under immense pressure this year. The U.S. economy contracted for two consecutive quarters, signaling a recession. The economic headwinds have driven significant market volatility, with the CBOE Volatility Index gaining 16.3% year-to-date.
While a slightly lower increase in the consumer price index (CPI) in July renewed investors’ confidence in the market lately, the minutes of the Federal Reserve’s recent policy meeting indicate that the central bank would continue with the interest rate hikes until inflation came down substantially. Therefore, the market is expected to remain under pressure.
Given this backdrop, investors could consider buying highly profitable stocks Nature’s Sunshine Products, Inc. (NATR) and Vertex Pharmaceuticals Incorporated (VRTX), which possess solid growth prospects.
Nature’s Sunshine Products, Inc. (NATR)
NATR is a natural health and wellness company primarily engaged in manufacturing and selling nutritional and personal care products. It offers its products under the Nature’s Sunshine Products and Synergy WorldWide brands.
In terms of trailing-12-month gross profit margin, NATR’s 72.29% is 122.5% higher than the 32.50% industry average. Likewise, its 9.12% trailing-12-month return on total capital is 47.5% higher than the industry average of 6.18%. Furthermore, the stock’s trailing-12-month asset turnover ratio of 1.92% is 138.22% higher than the industry average of 0.81%.
NATR’s net sales increased marginally year-over-year to $214.65 million for the six months ended June 30, 2022. Its current liabilities declined 9.8% to $69.11 million, compared to $76.67 million in the year-ago period. The company registered a non-GAAP net income of $1.51 million, while its adjusted EPS came in at $0.05 for the same period.
For fiscal 2023, NATR’s revenue is expected to come in at $451 million, representing a 7.5% year-over-year growth. Street expects the company’s EPS to increase 256% year-over-year to $0.89 in the next year. The shares of NATR have declined 7.7% over the past month to close the last trading session at $10.08.
NATR’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Value, Sentiment, and Quality and a B for Stability. It is ranked #1 of nine stocks in the B-rated Medical – Consumer Goods industry. To see the other ratings of NATR for Growth and Momentum, click here.
Vertex Pharmaceuticals Incorporated (VRTX)
VRTX is a biotechnology company that develops and commercializes therapies for treating cystic fibrosis. The company markets SYMDEKO/SYMKEVI, ORKAMBI, and KALYDECO to treat cystic fibrosis patients with specific mutations in their cystic fibrosis transmembrane conductance regulator gene; and TRIKAFTA for the treatment of patients with CF 6 years of age or older who have at least one F508del mutation.
On July 11, 2022, VRTX announced that it had entered into a definitive agreement to acquire ViaCyte. M.D., Chief Executive Officer and President of VRTX Reshma Kewalramani, said, “VX-880 has successfully demonstrated clinical proof of concept in T1D, and the acquisition of ViaCyte will accelerate our goal of transforming, if not curing, T1D by expanding our capabilities and bringing additional tools, technologies, and assets to our current stem cell-based programs.”
In terms of trailing-12-month EBITDA margin, VRTX’s 39.09% is significantly higher than the 3.21% industry average. Likewise, its 0.60% trailing-12-month asset turnover ratio is 74.3% higher than the industry average of 0.34%.
For the fiscal second quarter ended June 30, 2022, VRTX’s total revenues increased 18.3% year-over-year to $2.20 billion. Its non-GAAP operating income improved 1,571.8% from the year-ago value to $1.18 billion, while its non-GAAP net income rose 2,049% year-over-year to $930.50 million. Also, its non-GAAP EPS came in at $3.60, indicating a 2,017.6% improvement year-over-year.
Analysts expect VRTX’s EPS and revenue for the third quarter ending September 30, 2022, to increase 2.7% and 12.1% year-over-year to $3.66 and $2.22 billion, respectively. It has surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 58.9% to close the last trading session at $299.23.
VRTX’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B for Value and Sentiment. Within the Biotech industry, it is ranked first of 402 stocks. Click here to see the other ratings of VRTX for Growth, Momentum, and Stability.
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NATR shares were trading at $10.32 per share on Thursday afternoon, up $0.24 (+2.38%). Year-to-date, NATR has declined -44.22%, versus a -9.57% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...
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