Over the past few months, the stock markets have been witnessing a rotation away from expensive growth stocks into quality value stocks that have the potential to benefit from an economic recovery. This is activity is evident in the SPDR Portfolio S&P 500 Growth ETF’s (SPYG) 6.3% returns over the past three months versus the SPDR Portfolio S&P 500 Value ETF’s (SPYV) 11.6% gains.
However, the price decline of some quality growth stocks–some of which are positioned to perform well in the post-pandemic economy–has created a solid entry opportunity for investors.
Takeda pharmaceutical Company Limited (TAK)
Headquartered in Tokyo, TAK is engaged mainly in the pharmaceutical business. The company’s five core therapeutic areas are oncology, gastroenterology, neuroscience, rare diseases, and plasma-derived therapies. It is also engaged in the improvement of pipelines at research and development centers located primarily in Japan and the United States.
The company’s operating income for the nine months ended December 31, 2020 increased 120.7% year-over-year to ¥358.73 billion. TAK’s net income was ¥179.03 billion, representing a 319% year-over-year increase. Its EPS increased 318.2% year-over-year to ¥113.72.
TAK’s revenue has increased at a CAGR of 21.5% over the past three years. Its EBIT and EBITDA also increased at CAGRs of 14.6% and 28.8%, respectively, over that period.
Analysts expect TAK’s EPS and revenue to improve 507.7% and 417.8%, respectively, year-over-year in its fiscal year 2020 (ended March 31, 2021).
On April 14, Centogene N.V. (CNTG) extended its partnership with TAK to diagnose patients with certain genetic disorders. This is expected to increase the company’s market reach and afford it more expertise in the genetic research field. The stock is currently trading 14.7% below its 52-week high of $20.
TAK’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 assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Growth and Value, and a B grade for Stability. Click here to access TAK’s ratings for Quality, Sentiment, and Momentum as well.
TAK is ranked #14 of 491 stocks in the Biotech industry.
Bausch Health Companies Inc. (BHC)
Formerly known as Valeant Pharmaceuticals International, Canada’s BHC is one of the country’s largest publicly traded drug makers. The company operates mainly through four segments—Bausch+Lomb/international, Salix pharmaceuticals, ortho dermatology, and diversified products.
The company’s revenue from its Salix segment came in at $527 million for its fiscal 2020 fourth quarter (ended December 31, 2020), compared to $517 million in the prior-year period. This was driven primarily by increased sales of XIFAXAN and TRULANCE. BHC’s non-GAAP net income also increased 18.3% year-over-year to $478 million. Its EBIT has increased at a CAGR of 34% over the past three years.
Analysts expect BHC’s EPS and revenue to increase 126.1% and 28%, respectively, year-over-year for the quarter ending June 30, 2021.
BHC and Nicox announced on April 16, 2021 that VYZULTA has been approved by the Brazilian Health Regulatory Agency. This marks the product’s 10th regulatory approval, so BHC’s sales of the product should increase significantly and reach more people. The stock has gained 81.7% over the past year and closed Friday’s trading session at $29.65. It is currently trading 14.8% below its 52-week high of $34.80, which it hit on March 9, 2021.
It’s no surprise that BHC has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Value and Growth. Click here to see the additional POWR Ratings for BHC (Quality, Momentum, Sentiment, and Stability).
BHC is ranked #26 of 232 stocks in the Medical-Pharmaceuticals industry.
Quidel Corporation (QDEL)
Founded in 1979, QDEL is develops, manufactures and markets diagnostic testing solutions. Its products include Sofia, QuickVue, InflammaDry and AdenoPlus, among others. It also provides a portable testing platform—Triage MeterPro. The company sells its products directly to end users and distributors.
QDEL’s $809.20 of net sales for its fiscal year 2020 fourth quarter, ended December 31, 2020 represents a 431.7% year-over year rise. Its gross profit has increased 639.7% year-over-year to $701.50 million. The company’s total net income has increased 1435.1% year-over-year to $470.13 million. Also, its EPS came in at $11.14, which represents an 1426% year-over-year increase.
The company’s revenue and EBITDA have increased at CAGRs of 81.5% and 155.3%, respectively, over the past three months. Its EBIT also increased at a CAGR of 206.7% over the same period.
Analysts expect QDEL’s EPS to increase 286.1% year-over-year to $4.71 for the quarter ended March 31, 2021. Its $ 467.04 revenue estimate for the quarter ending June 30, 2021 represents a 146.1% year-over-year increase. QDEL also surpassed consensus EPS estimates in each of the trailing four quarters.
QDEL completed a distribution and fulfilment agreement with McKesson Corporation (MCK) on April 22to expedite consumer access to QDEL’s non-prescription QuickVue At-Home OTC COVID-19 Test. This is expected to increase the company’s consumer base and reach significant new markets with the introduction of its new over the counter COVID-19 antigen product. The stock has gained 109.3% over the past year and closed yesterday’s trading session at $116.01. The stock is currently trading 62.1% below its 52-week high of $306.72.
QDEL’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. It has an A grade for Value and Growth, and a B grade for Quality. In addition to these ratings, one can see QDEL’s ratings for Sentiment, Momentum, and Stability here .
QDEL is ranked #13 of 58 stocks in the Medical-Diagnostic/Research industry.
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TAK shares were trading at $16.97 per share on Monday afternoon, down $0.09 (-0.53%). Year-to-date, TAK has declined -6.76%, versus a 11.96% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand. More...
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