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4 MedTech Growth Stocks With Strong ROE to Buy Amid Coronavirus
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The impact of the coronavirus pandemic has been quite profound on the second-quarter performance of most U.S. sectors. The disappointing performance led to the U.S. real GDP’s decline at an annual rate of 31.7%. Rescue packages and other monetary stimuluses announced during the quarter, however, failed to put a check on the plunge in GDP.
However, as the lockdown restrictions were gradually lifted around May and June, the economy is on a rebound. Still, market watchers are concerned about the economic situation as the number of coronavirus cases continues to rise amid bleak prospects of vaccines.
MedTech Scenario
The impact of the pandemic on the MedTech sector has so far remained sort of mixed. On one hand, the postponement of several non-elective procedures has severely impacted a series of MedTech majors. For instance, orthopedic major Zimmer Biomet Holdings, Inc. (ZBH - Free Report) reported disappointing second-quarter net sales due to deferral of non-emergency procedures. Notably, over the past year, this stock has risen 1.9% compared with the sector’s 7.2% rise.
However, this is in sharp contrast to stocks like ResMed Inc. (RMD - Free Report) , whose business was significantly boosted by the pandemic-led increase in critical care products. Over the past year, the company’s share price has surged 28.5% against the industry’s 3.3% fall.
Investing in ROE-Driven MedTech Growth Stocks: Best Option Now
The overall disappointing performance by a number of key MedTech stalwarts during the pandemic has sent investors into a frenzy, resulting in widespread panic selling over the past few months. This has made such fundamentally strong stocks with solid long-term growth potential dirt cheap. Interestingly, most of such stocks were actually expensive during the pre-pandemic period, given their otherwise robust long-term growth parameters.
To beat the pandemic blues and maximize capital gains, investors can now scoop up these fundamentally-strong MedTech growth stocks at bargain prices. These companies, although currently underperforming, have a strong potential for a rebound.
Given the current market situation, a company’s profit margin can be a very misleading parameter to base one’s investment choices. A better strategy can be to gauge the asset management efficiency of the company to create profit. To serve this purpose, investors can choose from stocks with a strong return on equity (ROE). During difficult times, companies which have proven their mettle in efficient asset management are expected to maximize returns during normal times.
4 Stocks to Buy
Given that most stocks are now available at never-seen-before prices, investors can choose those with good growth potential.
To narrow down the list, we have selected stocks with a Growth Style 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.
These stocks have a strong ROE, which is an indicator of sustainable growth. On declining share prices over the past few months, these stocks are available at extremely reasonable prices now.
Listed below are four companies that investors can consider.
Tivity Health, Inc. , a key provider of fitness, nutrition and social connection solutions, can be the first choice for investors. This Zacks Rank #1 company with a Growth Score of A entered into two partnerships over the past few months and posted solid second-quarter results. This buoys optimism on the stock.
Its ROE stands at an impressive rate of 36.3% against the industry’s negative returns. Further, its historical earnings per share (EPS) growth currently stands at 54.5%, which is at a higher level than the industry’s 23.8%. Over the past year, the stock has lost 12.3% against the industry’s 18.8% rise.
NextGen Healthcare, Inc. , a key provider of software and services, is a Zacks Rank #2 company with a Growth Score of A. NextGen exited the first quarter of fiscal 2021 on a strong note, with earnings and revenues beating estimates. Through the fiscal first quarter, the company continued gaining from the Topaz acquisition. The NextGen Virtual Visits and NextGen Enterprise also gained significant momentum during the fiscal first quarter. The launch of the NextGen Patient Experience Platform instills optimism on the stock.
Its ROE of 10.6% is impressive against the industry’s negative returns. Further, its sales-to-asset ratio currently stands at 0.80, which is at a higher level than the industry’s 0.53. Over the past year, the stock has lost 13% against the industry’s 30.8% rise.
Renowned innovative airway clearance technology provider Electromed, Inc. (ELMD - Free Report) recently announced its fourth-quarter fiscal 2020 and full-year results. Although quarterly revenues declined due to the pandemic, the full-year results were quite impressive. The company currently carries a Zacks Rank of #2 and has a Growth Score of A.
Its ROE stands at an impressive rate of 14.5% against the industry’s negative returns. Further, its historical EPS growth currently stands at 17.4%, which is at a higher level than the industry’s 9.3%. Over the past three months, the stock has lost 25.2% against the industry’s 10.3% rise.
Fresenius Medical Care AG & Co. KGaA (FMS - Free Report) , a key integrated provider of products and services for dialysis patients, is another alternative for investors. In July, this Zacks Ranked #2 company with a Growth Score of A, reported solid second-quarter results. A wide range of dialysis products and services raises optimism over the stock. Management expects to undertake meaningful investments in 2020 to capitalize on opportunities and optimize cost base. Per the postulates of the ‘Growth Strategy 2020’, the company aims to boost revenues to $28 billion by 2020.
Its ROE stands at an impressive rate of 10.5% against the industry’s negative returns. Further, its current cash flow growth rate is 47.6% compared with the industry’s 5.7%. Over the past three months, the stock has lost 3.1% against the industry’s 10.3% rise.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
4 MedTech Growth Stocks With Strong ROE to Buy Amid Coronavirus
The impact of the coronavirus pandemic has been quite profound on the second-quarter performance of most U.S. sectors. The disappointing performance led to the U.S. real GDP’s decline at an annual rate of 31.7%. Rescue packages and other monetary stimuluses announced during the quarter, however, failed to put a check on the plunge in GDP.
However, as the lockdown restrictions were gradually lifted around May and June, the economy is on a rebound. Still, market watchers are concerned about the economic situation as the number of coronavirus cases continues to rise amid bleak prospects of vaccines.
MedTech Scenario
The impact of the pandemic on the MedTech sector has so far remained sort of mixed. On one hand, the postponement of several non-elective procedures has severely impacted a series of MedTech majors. For instance, orthopedic major Zimmer Biomet Holdings, Inc. (ZBH - Free Report) reported disappointing second-quarter net sales due to deferral of non-emergency procedures. Notably, over the past year, this stock has risen 1.9% compared with the sector’s 7.2% rise.
However, this is in sharp contrast to stocks like ResMed Inc. (RMD - Free Report) , whose business was significantly boosted by the pandemic-led increase in critical care products. Over the past year, the company’s share price has surged 28.5% against the industry’s 3.3% fall.
Investing in ROE-Driven MedTech Growth Stocks: Best Option Now
The overall disappointing performance by a number of key MedTech stalwarts during the pandemic has sent investors into a frenzy, resulting in widespread panic selling over the past few months. This has made such fundamentally strong stocks with solid long-term growth potential dirt cheap. Interestingly, most of such stocks were actually expensive during the pre-pandemic period, given their otherwise robust long-term growth parameters.
To beat the pandemic blues and maximize capital gains, investors can now scoop up these fundamentally-strong MedTech growth stocks at bargain prices. These companies, although currently underperforming, have a strong potential for a rebound.
Given the current market situation, a company’s profit margin can be a very misleading parameter to base one’s investment choices. A better strategy can be to gauge the asset management efficiency of the company to create profit. To serve this purpose, investors can choose from stocks with a strong return on equity (ROE). During difficult times, companies which have proven their mettle in efficient asset management are expected to maximize returns during normal times.
4 Stocks to Buy
Given that most stocks are now available at never-seen-before prices, investors can choose those with good growth potential.
To narrow down the list, we have selected stocks with a Growth Style 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.
These stocks have a strong ROE, which is an indicator of sustainable growth. On declining share prices over the past few months, these stocks are available at extremely reasonable prices now.
Listed below are four companies that investors can consider.
Tivity Health, Inc. , a key provider of fitness, nutrition and social connection solutions, can be the first choice for investors. This Zacks Rank #1 company with a Growth Score of A entered into two partnerships over the past few months and posted solid second-quarter results. This buoys optimism on the stock.
Its ROE stands at an impressive rate of 36.3% against the industry’s negative returns. Further, its historical earnings per share (EPS) growth currently stands at 54.5%, which is at a higher level than the industry’s 23.8%. Over the past year, the stock has lost 12.3% against the industry’s 18.8% rise.
NextGen Healthcare, Inc. , a key provider of software and services, is a Zacks Rank #2 company with a Growth Score of A. NextGen exited the first quarter of fiscal 2021 on a strong note, with earnings and revenues beating estimates. Through the fiscal first quarter, the company continued gaining from the Topaz acquisition. The NextGen Virtual Visits and NextGen Enterprise also gained significant momentum during the fiscal first quarter. The launch of the NextGen Patient Experience Platform instills optimism on the stock.
Its ROE of 10.6% is impressive against the industry’s negative returns. Further, its sales-to-asset ratio currently stands at 0.80, which is at a higher level than the industry’s 0.53. Over the past year, the stock has lost 13% against the industry’s 30.8% rise.
Renowned innovative airway clearance technology provider Electromed, Inc. (ELMD - Free Report) recently announced its fourth-quarter fiscal 2020 and full-year results. Although quarterly revenues declined due to the pandemic, the full-year results were quite impressive. The company currently carries a Zacks Rank of #2 and has a Growth Score of A.
Its ROE stands at an impressive rate of 14.5% against the industry’s negative returns. Further, its historical EPS growth currently stands at 17.4%, which is at a higher level than the industry’s 9.3%. Over the past three months, the stock has lost 25.2% against the industry’s 10.3% rise.
Fresenius Medical Care AG & Co. KGaA (FMS - Free Report) , a key integrated provider of products and services for dialysis patients, is another alternative for investors. In July, this Zacks Ranked #2 company with a Growth Score of A, reported solid second-quarter results. A wide range of dialysis products and services raises optimism over the stock. Management expects to undertake meaningful investments in 2020 to capitalize on opportunities and optimize cost base. Per the postulates of the ‘Growth Strategy 2020’, the company aims to boost revenues to $28 billion by 2020.
Its ROE stands at an impressive rate of 10.5% against the industry’s negative returns. Further, its current cash flow growth rate is 47.6% compared with the industry’s 5.7%. Over the past three months, the stock has lost 3.1% against the industry’s 10.3% rise.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>