Back to top

Image: Bigstock

How to Invest After the Market Selloff

Read MoreHide Full Article

If you’re concerned about the way shares dropped off sharply yesterday, you should be.

This kind of volatility is what we’ve been talking about for a while now, so it should be something we are preparing for rather than something that surprises us.

It’s clear that there has been some profit taking, considering the long weekend coming up and the weather that generally has people visiting the great outdoors. And it has been really profitable for investors of late, what with valuations going through the roof. So it’s natural that they’d want to use some of that cash.

But it may not be the only reason. It is a fact that the economy is doing well and appears set to do better. Also, the pandemic isn’t spreading like it was earlier and a vaccine is around the corner. So a growing number of markets are going to open up.

This, of course, means that the tech sector won’t be playing as big a role as it has in the past few months. But given the prices these shares are trading at, there’s bound to be some negative reaction as money starts flowing into other areas.

This will increase the volatility that’s already expected as the nation goes to the polls, in addition to the government’s recently-adjusted attitude to inflation.

So if you’re looking for a good strategy for investing in stocks, I can tell you that the best strategies are the tried and tested ones. So here at Zacks, that means stocks with #1 (Strong Buy) or #2 (Buy) ranks; operating in attractive industries (the top 50% of Zacks–classified industries outperform the bottom 50% by a factor of more than 2 to 1); with good Growth or Value Scores and attractive numbers to match.

I’ve selected a few from the medical sector here that you may want to add to your portfolio-

Humana Inc. (HUM - Free Report)

Humana is one of the largest health care plan providers in the United States. It offers health insurance benefits under Health Maintenance Organization (HMO), Private Fee-For-Service (PFFS), and Preferred Provider Organization (PPO) plans. Its specialty products deal with dental, vision and other supplementary benefits. Its plans reach people through a network of healthcare providers.

At the end of 2019, it had around 17 million members under its medical benefit plans and approximately 5 million members in its specialty product category.

Zacks Rank #2

Value B

Growth A

Industry: Medical - HMOs (top 13%)

Revenue to grow 15.6% and 8.9%, respectively in this year and the next

EPS to grow 5.0% and 17.4%, respectively in this year and the next

Valuation: P/S is 0.80X, suggesting undervaluation

Select Medical Holdings Corp. (SEM - Free Report)

Select Medical owns critical illness recovery and rehabilitation hospitals. It also offers outpatient rehabilitation and occupational health services. As of Dec 31, 2019, it operated 101 critical illness recovery hospitals in 28 states, 29 rehabilitation hospitals in 12 states, and 1,740 outpatient rehabilitation clinics in 37 states and the District of Columbia.

Zacks Rank #1

Value A

Growth A

Industry: Medical - HMOs (top 13%)

Revenue to grow -2.4% and 6.6%, respectively in this year and the next

EPS to grow 8.9% and 24.8%, respectively in this year and the next

Valuation: P/S is 0.51X, suggesting undervaluation

Universal Health Services, Inc. (UHS - Free Report)

 Universal Health Services owns and operates (through its subsidiaries) acute care hospitals, behavioral health centers, surgical hospitals, ambulatory surgery centers and radiation oncology centers.

It offers general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, pediatric services, pharmacy services and/or behavioral health services.

Its 350 inpatient acute care hospitals and behavioral health facilities and 37 outpatient and other facilities are located in 37 states, Washington, D.C., the UK, Puerto Rico and the U.S. Virgin Islands.

Zacks Rank #1

Value A

Growth A

Industry: Medical - Hospital (top 26%)

Revenue to grow -1.4% and 6.0%, respectively in this year and the next

EPS to grow -5.8% and 11.0%, respectively in this year and the next

Valuation: P/S is 0.85X, suggesting undervaluation

Fresenius SE & Co (FSNUY - Free Report)

Fresenius  offers products and services for dialysis through hospitals and outpatient treatment. Its Fresenius Medical Care segment treats chronic kidney failure; Fresenius Helios is a hospital operator; Fresenius Kabi supplies essential drugs, clinical nutrition products, medical devices and services; and Fresenius Vamed plans, develops and manages healthcare facilities. Fresenius SE & Co is headquartered in Bad Homburg, Germany.

Zacks Rank #2

Value A

Growth A

Industry: Medical - Instruments (top 23%)

Revenue to grow 8.3% and 4.7%, respectively in this year and the next

EPS to grow -1.1% and 10.7%, respectively in this year and the next

Valuation: P/S is 0.65X, suggesting undervaluation


More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021. 

Click here for the 6 trades >>

Published in