The stock market is now in one of those phases in which the indices are swinging between minor gains and losses. However, the speed of the COVID-19 inoculation drive and the Federal Reserve’s commitment to economic growth indicate a long-term positive outlook. Rising Treasury yields and an improving labor market add to this optimism.
However, many stocks, particularly those that advanced due to the pandemic, have witnessed a sell-off since the beginning of the year and are now attractively priced given their significant growth potential in a recovering economy.
Qualcomm Incorporated (QCOM), Vertex Pharmaceuticals Incorporated (VRTX), and Alexion Pharmaceuticals, Inc. (ALXN) are examples. They suffered price declines last quarter, but they possess solid rebound prospects this quarter. So, we think it could be wise to bet on these stocks now.
Qualcomm Incorporated (QCOM)
QCOM is involved in designing, developing, manufacturing, and marketing digital communications products and services in China, South Korea, Taiwan, and the United States. Qualcomm CDMA Technologies, Qualcomm Technology Licensing, and Qualcomm Strategic Initiatives are the three segments through which the company operates.
Elliptic Labs, a leading artificial intelligence (AI) software company and the world’s leader in Virtual Smart Sensors, plans the expansion of its collaboration with QCOM to make Elliptic’s AI Virtual Smart Sensor Platform available to Always Connected PCs, which are Windows laptops powered by Qualcomm® Snapdragon™ compute platforms.
During the quarter ended December 27, 2020, QCOM’s revenue climbed 62% year-over-year to $8.3 billion, boosted by strong 5G demand in handsets and growth in its RF front-end, automotive, and Internet of Things (IoT) adjacencies. Its EPS for the quarter rose to $2.12 from $0.80 posted in the prior year period. The company’s CEO, Steve Mollenkopf, stated, “We remain well positioned as the 5G ramp continues and we extend our core technology roadmap to adjacent industries.”
Analysts expect QCOM’s revenue for the quarter ending March 31, 2021 to be $7.6 billion, representing a 46.3% year-over-year gain. Its EPS is likely to grow at the rate of 24.5% per annum over the next five years.
QCOM has declined 8.5% on a year-to-date basis to close yesterday’s trading session at $139.43. Over the past six months, the stock gained 13.3%.
QCOM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
QCOM has an A grade for Growth, and a B grade for Value and Quality. Among the 99 stocks in the B-rated Semiconductor & Wireless Chip industry, it is ranked #11.
In addition to the POWR Ratings grades we’ve just highlighted, you can see QCOM ratings for Stability, Sentiment, and Stability, here.
Vertex Pharmaceuticals Incorporated (VRTX)
VRTX is focused on discovering, developing, manufacturing, and commercializing small molecule drugs for patients with serious diseases in specialty markets. The company focuses on developing and commercializing therapies for the treatment of cystic fibrosis (CF) and advancing its research and early-stage development programs.
Last month, the Australian Therapeutic Goods Administration (TGA) approved the use of VRTX’s Trikafta (elexacaftor, tezacaftor, ivacaftor, and ivacaftor) for the treatment of cystic fibrosis (CF) for patients aged 12 years and above.
VRTX’s revenue for the second quarter ended December 31, 2020 increased 46% year-over-year to $1.63 billion. Its EPS for the quarter climbed to $2.25 from $1.70 posted in the same period last year.
A consensus revenue estimate for the quarter ending March 31, 2021 is $1.7 billion, representing a 9.6% year-over-year increase. Its EPS is expected to grow at the rate of 18.3% per annum over the next five years.
VRTX ended yesterday’s trading session at $212.72, declining 10% year-to-date. The stock also retreated 20% over the past six months.
Due to its bright prospects, VRTX has an overall B rating, which translates to a Buy in our POWR Rating system. VRTX has a Quality grade of A, and a Sentiment and Value Grade of B. In the F-rated Biotech industry, it is ranked #13 of 488 stocks.
Click here to see the additional POWR Ratings for VRTX (Growth, Stability, and Momentum).
Alexion Pharmaceuticals, Inc. (ALXN)
ALXN is a biopharmaceutical company that develops and commercializes life-transforming therapeutic products. ALXN’s revenue for the fourth quarter ended December 31, 2020 climbed 15% year-over-year to $1.6 billion due to growth in neurology and continued strength in the PNH and atypical HUS businesses. Its Metabolic sales grew 7% year-over-year due to an increase in volume. Its EPS for the quarter declined 40% year-over-year to $2.42.
Analysts expect ALXN’s revenue for the quarter ending March 31, 2021 to be $1.6 billion, indicating a 9.7% year-over-year increase. Meanwhile, its EPS is likely to increase at the rate of 8.8% per annum for the next five years.
Year-to-date, ALXN has declined 2.5% to end yesterday’s trading session at $152.35. Over the past six months, the stock has surged 21.5%.
ALXN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. ALXN has an A Grade for Value and Quality. In the Biotech industry, it is ranked #17.
In total, we rate ALXN on eight different levels. Beyond what we’ve stated above we have also given ALXN grades for Growth, Stability, Sentiment, and Momentum. Get all the ALXN ratings here.
QCOM shares were trading at $139.23 per share on Thursday afternoon, down $0.20 (-0.14%). Year-to-date, QCOM has declined -8.17%, versus a 9.53% 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...
More Resources for the Stocks in this Article
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|VRTX||Get Rating||Get Rating||Get Rating|
|ALXN||Get Rating||Get Rating||Get Rating|