U.S inflation is running red hot, with prices rising 8.6% from a year ago, marking the fastest increase since December 1981, while core inflation was up 6% year-over-year. The Fed will likely proceed with multiple rate hikes this year, and the tightening policy could continue into 2023, adding to the worries that the economy is nearing a recession. On the other hand, the World Bank has recently warned of a recession and slashed its global growth forecast for this year from 4.1% to 2.9%, amid the war in Ukraine, lockdowns in China, supply-chain disruptions, and risk of stagflation.
The market volatility is evident from the CBOE Volatility Index’s 90.1% year-to-date gains. However, the widespread sell-off has caused certain financially robust stocks to trade at a heavily discounted valuation.
Given this backdrop, we think investors should scoop up fundamentally strong stocks Anthem, Inc. (ANTM), Qiagen N.V. (QGEN), Bayer Aktiengesellschaft (BAYRY), Amdocs Limited (DOX), and McKesson Corporation (MCK), which are currently trading at discounts to their peers. They are rated Strong Buy in our proprietary POWR Ratings system and have an A or B grade for Value and Stability.
Anthem, Inc. (ANTM)
ANTM and its subsidiaries operate as a health benefits company in the United States. It operates through four segments- Commercial & Specialty Business; Government Business; IngenioRx; and Other.
On May 5, 2022, ANTM completed its acquisition of Integra Managed Care, a Managed Long-Term Care Plan in New York. Integra serves more than 40,000 Medicaid members and is thus expected to help ANTM extend its consumer reach.
For the first quarter ended March 31, 2022, ANTM’s total operating revenue came in at $37.89 billion, up 18% year-over-year. Its adjusted shareholders’ net income came in at $2.02 billion, up 16% year-over-year, while its adjusted EPS came in at $8.25, up 17.7% year-over-year.
In terms of forward EV/S, ANTM’s 0.88x is 74.9% lower than the industry average of 3.50x. Its forward P/S of 0.76x is 82.4% lower than the industry average of 4.32x.
ANTM’s revenue is expected to increase 12.3% year-over-year to $153.78 billion in 2022. Its EPS is estimated to increase 13.4% year-over-year to $32.46 in 2023. It surpassed EPS estimates in each of the trailing four quarters. The stock has gained 12% over the past six months to close Friday’s trading session at $482.83. It has a beta of 0.97.
ANTM’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to a Strong Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Growth, Value, Stability, and Quality. It is ranked first among 11 stocks in the A-rated Medical - Health Insurance industry. Click here to see the additional ratings for Momentum and Sentiment for ANTM.
Qiagen N.V. (QGEN)
Headquartered in Venlo, the Netherlands, QGEN offers a sample to insight solutions that transform biological materials into molecular insights worldwide. The company provides primary sample technology consumables and secondary sample technology consumables. It serves molecular diagnostics, academia, pharmaceutical, and applied testing customers.
On May 19, 2022, QGEN’s recently launched, environmentally friendly QIAwave nucleic-acid extraction kits received the prestigious ACT Environmental Impact Factor Label from My Green Lab- a non-profit organization (NGO), tutelary to advanced and sustainable scientific research. This honor marks a red-letter achievement for QGEN.
For the first quarter ended March 31, 2022, QGEN’s net sales came in at $628.39 million, up 10.8% year-over-year. Its adjusted net income came in at $184.40 million, up 19.9% year-over-year. Also, its adjusted EPS came in at $0.80, up 21.2% year-over-year.
QGEN’s trailing-twelve-month non-GAAP P/E of 16.09x is 16.6% lower than the industry average of 19.29x. Its trailing-twelve-month EV/EBIT of 15.59x is 22.2% lower than the industry average of 20.04x.
QGEN’s revenue is expected to come at $2.06 billion in 2023, representing a 3.5% year-over-year rise. The company’s EPS is also expected to increase 6.6% year-over-year to $2.10 in 2023. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. Over the past month, the stock has gained marginally to close Friday’s trading session at $44.88. It has a beta of 0.32.
It’s no surprise that QGEN has an overall A rating, equating to a Strong Buy in our proprietary rating system. In addition, it has a B grade for Value, Stability, Sentiment, and Quality.
QGEN is ranked #2 out of 53 stocks in the Medical - Diagnostics/Research industry. Click here for the additional POWR Ratings for Growth and Momentum for QGEN.
Bayer Aktiengesellschaft (BAYRY)
Headquartered in Leverkusen, Germany, BAYRY and its subsidiaries operate as a life science company worldwide. It works through Pharmaceuticals; Consumer Health; and Crop Science segments.
On May 10, 2022, Werner Baumann, Chairman of the Board of Management, said, “Our forecast going forward this year remains confident despite the great uncertainties, including the stability of supply chains and energy supplies, and we confirm the currency-adjusted outlook for the full year published in March.”
BAYRY’s net sales came in at €14.64 billion ($15.32 billion) for its first quarter ended March 31, 2022, up 18.7% year-over-year. Its EBIT came in at €4.21 billion ($4.41 billion), up 36.6% year-over-year. Moreover, its EPS came in at €3.35, up 57.3% year-over-year.
The stock’s forward EV/S of 2.02x is 42.4% lower than the industry average of 3.50x. Its forward P/S of 1.35x is 68.8% lower than the industry average of 4.32x.
Analysts expect BAYRY’s revenue to increase marginally year-over-year to $51.78 billion in 2023. The company’s EPS is estimated to grow 6.2% from the year-ago value to $2.06 in 2023. Over the past six months, the stock has gained 27.6% to close Friday’s trading session at $16.79. BAYRY’s 24-month beta is 0.83.
BAYRY’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to a Strong Buy in our POWR Ratings system.
It has an A grade for Growth and Value and a B grade for Stability. It is ranked #8 out of 169 stocks in the Medical - Pharmaceuticals industry. Click here to see the additional ratings for BAYRY (Momentum, Sentiment, and Quality).
Amdocs Limited (DOX)
DOX and its subsidiaries provide software and services worldwide. The company designs, develops, operates, implements, supports, and markets open and modular cloud portfolios.
On May 24, 2022, DOX agreed to acquire MYCOM OSI, a UK-based company providing SaaS-based cloud network and service assurance solutions to worldwide communications service providers. This acquisition aims to include end-to-end service and network orchestration in DOX’s network portfolio, which rests on intelligent network automation, 5G, and cloud.
For the second quarter ended March 31, 2022, DOX’s revenue increased 9.2% year-over-year to $1.15 billion. Its non-GAAP net income came in at $190.94 million, up 28.9% year-over-year, while its non-GAAP EPS came in at $1.54, up 36.3% year-over-year.
In terms of forward EV/S, DOX’s 2.21x is 21.5% lower than the industry average of 2.81x. The stock’s forward P/S of 2.19x is 22.8% lower than the industry average of 2.84x.
DOX’s revenue is expected to come in at $4.36 billion in 2022, representing a 15.7% year-over-year rise. In addition, the company’s EPS is expected to increase 18.7% year-over-year to $5.02 in 2022. Over the past six months, the stock has gained 13.5% to close Friday’s trading session at $81.81. Its beta is 0.71.
It’s no surprise that DOX has an overall A rating, equating to a Strong Buy in our proprietary rating system. In addition, it has a B grade for Stability, Sentiment, and Quality.
DOX is ranked first out of 56 stocks in the Software - Business industry. Click here for the additional POWR Ratings for DOX (Growth, Value, and Momentum).
McKesson Corporation (MCK)
MCK provides healthcare services in the United States and internationally. It operates through four segments- U.S. Pharmaceutical; International; Medical-Surgical Solutions; and Prescription Technology Solutions (RxTS).
On May 5, 2022, Brian Tyler, CEO, said, “Our transformation to a diversified healthcare services company is underway and our strategy is working. We are encouraged by the growth in our strategic pillars of oncology and biopharma services, and the strength in our core North American distribution businesses.”
MCK’s revenues increased 11.8% year-over-year to $66.10 billion for the fourth quarter ended March 31, 2022. Its adjusted earnings came in at $870 million, up 7.4% year-over-year. Also, its adjusted EPS came in at $5.83, up 15.4% year-over-year.
MCK’s forward EV/S of 0.19x is 94.7% lower than the industry average of 3.48x. Its forward P/S of 0.17x is 96.1% lower than the industry average of 4.32x.
Analysts expect MCK’s revenue to increase 2.9% year-over-year to $275.87 billion in 2024. Its EPS is expected to increase 13.6% per annum for the next five years. Also, it surpassed EPS estimates in three of the four trailing quarters. Over the past year, the stock has gained 60.3% to close Friday’s trading session at $313.34. Its beta is 0.66.
MCK has an overall A rating equating to Strong Buy in our POWR Ratings system. It has a B grade for Growth, Value, Stability, Sentiment, and Quality. It is ranked first out of 84 stocks in the Medical - Services industry. Click here to see the additional POWR Ratings for MCK (Momentum).
ANTM shares were trading at $470.33 per share on Monday morning, down $12.50 (-2.59%). Year-to-date, ANTM has gained 2.01%, versus a -20.15% 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.
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