The S&P 500 index has suffered extreme volatility amid the resurgence of COVID-19 cases and the emergence of the omicron variant. On December 1, the United States identified its first known COVID-19 case caused by the omicron variant. This has raised investor fears about the economic recovery. But according to JPMorgan analysts, the rise in the S&P 500 will not be hampered because of the omicron variant despite the recent stock market pullback.

In addition, a positive analysis by a team of strategists at Goldman Sachs claims that “Omicron is slightly more transmissible but causes much less severe disease,” as reported from the initial case findings in South Africa. Most experts seem to be convinced by this analysis for now.

Therefore, we think it could be wise to bet on fundamentally sound S&P 500 stocks Vertex Pharmaceuticals Incorporated (VRTX), Agilent Technologies, Inc. (A), HP Inc. (HPQ), and McKesson Corporation (MCK). These stocks are currently trading below their 52-week highs but have Strong Buy or Buy rating in our proprietary POWR Ratings system.

Vertex Pharmaceuticals Incorporated (VRTX)

Boston-based biotechnology company VRTX develops and commercializes therapies to treat cystic fibrosis. It also pursues scientific innovation to create transformative medicines for people with serious diseases. 

On November 19, 2021, VRTX announced that the Spanish government had approved its terms for the national reimbursement of KAFTRIO in a combination regimen with ivacaftor for treating cystic fibrosis for eligible patients. Ludovic Fenaux, Senior Vice President, Vertex International, said, “The formalized agreement is an important milestone for people living with cystic fibrosis in Spain. We are pleased that the Ministry of Health recognized the value of KAFTRIO (ivacaftor/tezacaftor/elexacaftor) in a combination regimen with ivacaftor.”

VRTX’s net product revenues increased 29.2% year-over-year to $1.98 billion for its fiscal third quarter, ended September 30, 2021. Its non-GAAP operating income came in at $1.19 billion, up 39.1% year-over-year. While its non-GAAP net income increased 32.9% year-over-year to $926 million, its non-GAAP EPS came in at $3.56, up 34.8% year-over-year.

Analysts expect VRTX’s revenue to be $7.50 billion in its fiscal year 2021, representing a 20.9% year-over-year rise. The company’s EPS is expected to increase 23.4% year-over-year to $12.74 in the current year. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past month, the stock has gained 10.6% in price to close yesterday’s trading session at $205. It is currently trading 15.6% below its 52-week high of $242.99, which it hit on January 25, 2021.

VRTX’s strong fundamentals are reflected in its POWR Ratings. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system.

VRTX has an A grade for Value and Quality and a B grade for Growth and Sentiment. It is ranked #3 of 476 stocks in the Biotech industry. Click here to see the additional POWR Ratings for Momentum and Stability for VRTX.

Click here to checkout our Healthcare Sector Report for 2021

Agilent Technologies, Inc. (A)

A provides application-focused solutions to the life sciences, diagnostics, and applied chemical markets worldwide. The Santa Clara, Calif.-based company functions primarily through Life Sciences and Applied Markets, and the Diagnostics, Genomics, and the Agilent CrossLab segments.

On November 1, 2021, A announced new Agilent 6560C Ion Mobility LC/Q-TOF, enhancements to the VWorks automation software suite, and new AssayMAP large capacity cartridges. Sudharshana Seshadri, vice president and general manager of A’s Mass Spectrometry Division, said, “These introductions reinforce Agilent’s commitment to supporting and enhancing the speed of discovery and development of novel protein biotherapeutics to improve the quality of life.”

A’s net revenue increased 11.9% year-over-year to $1.66 billion in its fiscal fourth quarter, ended October 31, 2021. Its income from operations came in at $395 million, up 32.1% year-over-year. While its non-GAAP net income increased 20.7% year-over-year to $368 million, its non-GAAP EPS came in at $1.21, up 23.5% year-over-year.

Analysts expect A’s revenue and EPS to increase 7.1% and 11.5%, respectively, year-over-year to $5.99 billion and $4.28 in its fiscal year 2022. Over the past nine months, the stock has gained 19.1% in price to close yesterday’s trading session at $148.21. It is currently trading 17.5% below its 52-week high of $179.57, which it hit on September 3, 2021.

A’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system.

A has a B grade for Value, Stability, Sentiment, and Quality. Within the Medical-Diagnostics/Research industry, it is ranked #2 out of 55 stocks. Click here to see the additional POWR Rating for Growth and Momentum for A.

Note that A is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.

HP Inc. (HPQ)

HPQ provides personal computing and other access devices, imaging and printing products, and related technologies, solutions, and services in the USA and internationally. The Palo Alto, Calif., company operates through three segments: Personal Systems; Printing; and Corporate Investments. 

On November 23, 2021, Enrique Lores, HPQ President and CEO, said, “HP is at the heart of hybrid with an innovative portfolio of hardware, software, and subscriptions that position the company well for sustained growth in the fiscal year 2022 and beyond.”

HPQ’s GAAP net revenue increased 9.3% year-over-year to $16.68 billion in its fiscal fourth quarter, ended October 31, 2021. Its non-GAAP net earnings came in at $1.08 billion, up 28.9% from the previous period. And its non-GAAP EPS came in at $0.94, up 51.6% year-over-year.

For its fiscal year 2022, HPQ’s revenue and EPS are expected to grow 3.2% and 10%, respectively, year-over-year to $65.55 billion and $4.17. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 23.3% in price to close yesterday’s trading session at $36.46. It is currently trading 5% below its 52-week high of $38.38, which it hit on December 1, 2021.

HPQ has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Value and a B grade for Quality. HPQ is ranked #11 of 52 stocks in the Technology – Hardware industry. Click here to see the additional POWR Ratings for HPQ (Growth, Momentum, Stability, and Sentiment).

McKesson Corporation (MCK)

San Francisco-based MCK offers healthcare supply chain management, retail pharmacy, community oncology and specialty care, and healthcare information solutions globally. It has four segments: U.S. Pharmaceutical; International; Medical-Surgical Solutions; and Prescription Technology Solutions.

On November 1, 2021, Brian Tyler, CEO of MCK, said, “We remain committed to investing in our growth strategies of biopharma services and oncology ecosystems while simultaneously increasing shareholder returns.”

MCK’s revenues increased 9.5% year-over-year to $66.58 billion in its fiscal 2022 second quarter, ended September 30, 2021. Its total current assets came in at $45.58 billion for the period ended September 30, 2021, compared to $45.38 billion for March 31, 2021. Also, its total liabilities, redeemable noncontrolling interests, and equity (deficit) came in at $63.6 billion, compared to $65.02 billion for the same period.

For its fiscal year 2022, MCK’s revenue is expected to grow 8.7% year-over-year to $258.92 billion. Its EPS is estimated to increase at a rate of 29.6% to $22.3 in the current year. Over the past nine months, the stock has gained 24% in price to close yesterday’s trading session at $215.41. It is currently trading 6% below its 52-week high of $229.13, which it hit on November 24, 2021.

MCK has an overall A rating, which equates to a Strong Buy in our proprietary rating system.

In addition, it has a B grade for Growth, Value, Stability, and Sentiment. MCK is ranked #1 of 86 stocks in the Medical – Services industry. Click here to see the additional POWR Ratings for MCK (Momentum and Quality).

VRTX shares were trading at $205.34 per share on Thursday afternoon, up $0.34 (+0.17%). Year-to-date, VRTX has declined -13.12%, versus a 23.70% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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