3 Medical Device Stocks With Potential to Fight Recession Risk
The U.S. economy as well as other global economies had a gloomy first-half 2022 due to several challenges rising from resurgence in COVID-19 infections. Although there has been a surge in hiring by companies and spending by consumers so far this year, two major macro factors are pointing to an impending recession in the U.S. economy.
Macro Factors Indicating Recession
The S&P 500 has entered into bear territory, having declined 26% so far in 2022. A 20% correction in a year in any financial asset price is typically defined as a bear market for the asset. Meanwhile, the U.S. Bureau of Economic Analysis (“BEA”) announced that the U.S. gross domestic product (“GDP”) contracted 1.6% quarter over quarter during the first quarter of 2022. The Federal Reserve Bank of Atlanta is predicting another similar contraction in the U.S. economy during the second quarter as well. A contraction in the U.S. GDP for two consecutive quarters will indicate that the country has already entered a recession. The first or advance estimate for the second quarter U.S. GDP will be released by the BEA on Jul 28.
Recession-Proof Investments
The fear about an impending or actual recession may lead to heightened volatility in the stock market and more correction in stock prices. This can also be an opportune moment to buy stocks with strong growth potential at attractive prices. These stocks are likely to provide a cushion to the portfolio with their potential market-beating performance. One of the safest options to invest in during a recession is healthcare, which is majorly recession-proof, as there will always be demand for prescription drugs, medical devices for diagnosis and treatments, and healthcare services.
Moreover, stocks with strong fundamentals are likely to grow faster and create wealth at an accelerated pace during the recovery from the recession. Historically, the S&P 500 has gained approximately 600% from the lows touched during the recession in 2008-09 with many stocks giving much more returns.
Here we discuss three stocks, which have a VGM Score of A or B, reflecting robust growth potential for the upcoming period. Our research shows that stocks with a VGM 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.
The stocks include McKesson MCK, Patterson Companies PDCO and AMN Healthcare Services AMN. The stock price of these companies has risen so far this year despite the decline in the S&P 500 Index as well as a decrease in the broader Medical sector of 15.5%.
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McKesson
The company carries a Zacks Rank #2. McKesson has a VGM Score of A. The Zacks Consensus Estimate for earnings has moved 0.6% and 0.1% north for fiscal 2023 and 2024, respectively, in the past 60 days. Shares of MCK have rallied 32.6% so far this year.
A strong position in the Distribution market continues to favor the stock. The company played a crucial role in the COVID-19 response efforts in the United States and abroad via the distribution of COVID-19 vaccines, ancillary supply kits, and COVID-19 tests. Amid rising cases of COVID-19 infections and increasing priority for COVID vaccination McKesson’s prospects are set to get a boost.
McKesson Corporation Price
McKesson Corporation price | McKesson Corporation Quote
Patterson Companies
The company carries a Zacks Rank #2. Patterson Companies has a VGM Score of B. The Zacks Consensus Estimate for earnings has moved up 2.2% and 2.5% for fiscal 2023 and 2024, respectively, in the past 60 days. Shares of the company have rallied 4.7% year to date.
A prudent cost savings approach and solid sales execution continue to work in favor of Patterson Companies. The improvement in the Dental business and sustained momentum in the Animal Health business will likely aid PDCO going forward.
Patterson Companies, Inc. Price
Patterson Companies, Inc. price | Patterson Companies, Inc. Quote
AMN Healthcare Services
The company sports a Zacks Rank #1. AMN Healthcare has a VGM Score of B. The Zacks Consensus Estimate for earnings has moved 2.7% and 1.3% north for 2022 and 2023, respectively, in the past 60 days. Shares of the company have rallied 0.3% so far this year.
AMN Healthcare saw robust results across each of its core arms, and a surge in its top and bottom lines in first-quarter 2022.Strength in the healthcare Managed Services Program (MSP) and a broad array of services augur well for AMN.The recent Connetics USA buyout looks promising.
AMN Healthcare Services Inc Price
AMN Healthcare Services Inc price | AMN Healthcare Services Inc Quote
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