U.S. Markets closed
  • S&P 500

    4,471.37
    +33.11 (+0.75%)
     
  • Dow 30

    35,294.76
    +382.20 (+1.09%)
     
  • Nasdaq

    14,897.34
    +73.91 (+0.50%)
     
  • Russell 2000

    2,265.65
    -8.52 (-0.37%)
     
  • Gold

    1,768.10
    -29.80 (-1.66%)
     
  • EUR/USD

    1.1606
    +0.0005 (+0.0464%)
     
  • 10-Yr Bond

    1.5760
    +0.0570 (+3.75%)
     
  • Vix

    16.30
    -0.56 (-3.32%)
     
  • GBP/USD

    1.3751
    +0.0074 (+0.5418%)
     
  • USD/JPY

    114.2000
    +0.5230 (+0.4601%)
     
  • BTC-USD

    61,644.51
    +2,664.48 (+4.52%)
     
  • CMC Crypto 200

    1,464.06
    +57.32 (+4.07%)
     
  • FTSE 100

    7,234.03
    +26.32 (+0.37%)
     
  • Nikkei 225

    29,068.63
    +517.70 (+1.81%)
     

2 Undervalued-Predictable Health Care Stocks

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

According to the Undervalued-Predictable Screener, one of our Premium value screens, two health care companies with predictable earnings and trading below intrinsic value are Anthem Inc. (NYSE:ANTM) and Amgen Inc. (NASDAQ:AMGN).


Dow receives boost following "Super Tuesday," especially in health care

On Wednesday, the day following the "Super Tuesday" voting primaries, the Dow Jones Industrial Average closed at 27,096.04, up 1,178.63 points from the previous close of 25,917.41.

83e9a890865993c3bc105bab28e4591d.png
83e9a890865993c3bc105bab28e4591d.png

The primary results sent health care stocks soaring, with UnitedHealth Group Inc. (NYSE:UNH) and Centene Corp. (NYSE:CNC) increasing over 9% and 14%. The SPDR Select Sector Fund - Health Care exchange-traded fund (XLV) increased 4.85%.

d8420d43a6513876112d27d03878093a.png
d8420d43a6513876112d27d03878093a.png

U.S. lawmakers announce funding bill to combat coronavirus

The U.S. Centers for Disease Control and Prevention reported 129 coronavirus cases within the country, including cases that are under investigation. Additionally, the casualties in the U.S. reached 11.

In response to the CDC announcement, U.S. lawmakers announced an $8.3 billion funding bill to "protect the American people from a potential [coronavirus] pandemic," according to Senate Appropriations Committee Chairman Richard Shelby. CNBC sources further said the bill includes over $3 billion dedicated to the research and development of vaccines and therapies; $2.2 billion dedicated to the aiding in prevention, preparedness and response efforts; approximately $1 billion dedicated to medical supplies and community health centers; and $1.25 billion dedicated to the aiding of coronavirus-mitigating efforts overseas.

President Trump added that his administration is willing to "take more money" than initially planned; allowing the bill to go through and "get the funding out the door with no delay."

Undervalued-predictable strategy continues outperforming in overvalued market

According to model portfolio statistics, the Undervalued-Predictable strategy has returned a combined 281.21% since inception, with a five-year annualized return of 6.95% outperforming the Standard & Poor's 500 index annualized return of 6.69% for the same period.

As its name suggests, the Undervalued-Predictable strategy lists the companies that not only trade below intrinsic value based on discounted cash flow models, but also have strong and consistent revenue and earnings growth based on the GuruFocus business predictability rank. For the undervalued-predictable strategy, GuruFocus defines a predictable company as a company that has a predictability rank of four stars or higher.

Anthem

Shares of Anthem closed at $296.42, up 15.62% from the previous close of $256.38. Despite this, the stock is still trading 20.74% below its intrinsic value of $374 based on the discounted free cash flow model.

ed04f1b25f7b6d7b441e1b7c23d4140f.png
ed04f1b25f7b6d7b441e1b7c23d4140f.png

The Indianapolis-based company provides employer, individual and government-sponsored health coverage plans. According to GuruFocus, signs of strong profitability include a four-star business predictability rank and net profit margins that outperform 60% of global competitors.

691a87f4992bc305b8862f4c703a658b.png
691a87f4992bc305b8862f4c703a658b.png

Gurus with large holdings in Anthem include Andreas Halvorsen (Trades, Portfolio), First Eagle Investment (Trades, Portfolio) and the Vanguard Health Care Fund (Trades, Portfolio).

d62240a6db2cbf54ba73fe9ed25613bd.png
d62240a6db2cbf54ba73fe9ed25613bd.png

Amgen

Shares of Amgen closed at $215.11, up 5.23% from the previous close of $204.42. Despite this, the stock is still trading 16.94% below its intrinsic value of $259 based on the discounted free cash flow model.

6ae03ec0ec90050dbcee0b4a01e50ff3.png
6ae03ec0ec90050dbcee0b4a01e50ff3.png

The Thousand Oaks, California-based company manufactures drugs for the treatment of renal disease and cancer. GuruFocus ranks Amgen's profitability 10 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank, a return on assets that outperforms over 88% of global competitors and an operating margin that has increased approximately 5.30% per year on average over the past five years and is outperforming over 96% of global drug manufacturers.

cb419bab23e6c3d849888a110bb5cb54.png
cb419bab23e6c3d849888a110bb5cb54.png

PRIMECAP Management (Trades, Portfolio) has the largest stake in Amgen with 18,297,015 shares.

bc0b7ce285b80e44c6496a246aa8490d.png
bc0b7ce285b80e44c6496a246aa8490d.png

Disclosure: No positions.

Read more here:

  • Warren Buffett's Market Indicator Falls From All-Time High

  • Top 5 Holdings of Bill Gates' Foundation Trust

  • 3 Stocks Warren Buffett and Leon Cooperman Agree On



Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

This article first appeared on GuruFocus.