The economic turmoil brought on by the coronavirus pandemic is showing barely any signs of easing. After a few months of some stability, a surge in the number of daily cases over the last ten days in the United States has derailed the ongoing easing of lockdown orders. This has triggered a fresh wave of panic among investors.
Per an article by The Atlantic, an all-time high of 62,000 new confirmed cases were recorded in the United States on Jul 8. However, as a flicker of hope, average daily deaths have declined 75% from the peak reached in April.
Meanwhile, despite upswings in some of the major benchmark indices leading to several temporary phases of market recovery over the past couple of months, the pessimism across major pandemic-battered U.S. industries is looming large.
Also, the World Bank’s June report, projecting a 5.2% contraction in the 2020 global GDP, intensifies this financial gloom.
The MedTech Picture
The U.S. MedTech industry, in particular, continues to grapple with pandemic-led economic crisis. That is primarily owing to global manufacturing and supply chain disruptions as well as deferral of elective medical/surgical procedures. Several MedTech firms, specifically those specializing in dental equipment supplies, cardiovascular, surgical implant and oncology procedures, reported heavy revenue losses in the first quarter of 2020.Apprehensions regarding a worsening second-quarter performance also loom large.
A notable example is of orthopedics major Zimmer Biomet Holdings ZBH, which has witnessed a 21.1% fall in its share price compared with its industry’s 9.3% fall over the past six months. Similarly, The Cooper Companies COO has seen a 13.2% loss of its share price compared with 3.6% decline of its industry in the same time period.
Ideal Strategy for MedTech Investors
Amid the pandemic-induced market turmoil, when volatility peaks, it is always wise to resort to a longer-term investing strategy and pick some growth-focused Medical device stocks which are fundamentally strong.
Once the pandemic ebbs, these stocks with a robust long-term growth potential with strong and sustainable financial performance can be the best bets.
Here are a few MedTech companies with a Growth Score of A or B. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.
With robust earnings growth rates and solid Return on Equity (ROE), these stocks are ideal for long-term bet.
3 Stocks to Bet On:
DaVita, Inc. DVA: This Zacks Rank #1 company’s dialysis services in the United States continue to see solid demand. In May 2020, DaVita launched the DaVita Venture Group (“DVG”), through which it plans to accelerate efforts to develop and deploy solutions aimed at improving the health care and quality of life for patients of kidney disease and related chronic conditions. It has a Growth Score of B.
The stock’s ROE stands at a very impressive 32.5% versus the industry’s 13.5%. For 2020, its earnings growth rate is projected at 13.5% against the industry’s projection of (0.5%). Over the past six months, the company’s shares have gained 3.7% against the industry’s 2.7% fall.
Patterson Companies, Inc. PDCO: This Zacks Rank #1 company’s growth is being driven by a diverse product portfolio, strong veterinary business prospects, accretive acquisitions and strategic partnerships. High single-digit growth in its global companion animal business drove the topline in the last-reported quarter. It has a Growth Score of B.
For fiscal 2022, earnings growth rate is anticipated at 24.4%, against the S&P 500 Index’s projected fall of 2.9%.Over the past three months, the stock has gained 49.1% compared with the industry’s 12.7% growth. It too has an impressive level of ROE of 11.2%.
West Pharmaceutical Services, Inc. WST: This Zacks Rank #2 company continues to gain on the introduction of new products in the elastomer space and the launch of AccelTRA line extension components, which have boosted the company's drug containment and delivery portfolio. It has a Growth Score of A
For the next five years, its projected EPS growth stands at a solid 9.2% compared with the industry’s anticipation of 8.4% growth. It has a ROE of 17.7%. Over the past six months, the stock has gained 54.6% against the industry’s 3% fall.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>
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DaVita Inc. (DVA) : Free Stock Analysis Report
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