The coronavirus pandemic has cast a pall over markets. Various rescue packages and fiscal stimuli have failed to be much of a support to the U.S. economy.
The latest coronavirus stimulus plan of $2.2 trillion was passed by the House on Oct 1 and currently awaits the Senate’s response. The stimulus plan proposes to inject $75 billion into COVID-19 testing and contact tracing efforts along with authorizing more money for a second round of Paycheck Protection Program loans for the hardest-hit businesses and industries. However, like the earlier stimulus packages, this plan does not explicitly offer any assistance to sectors like MedTech.
MedTech the Safe Haven
Amid the dismal show by majority of the U.S. sectors and despite the stimulus-led conservativeness of the government related to the MedTech sector, market watchers consider this sector a safe investment bet now.
Although MedTech companies have been hurt by the pandemic-led supply disruption and procedural delays, certain companies from this space have actually performed impressively and sustained the market meltdown due to the nature of business which aligns well with COVID-19-related healthcare needs.
Here we are talking about companies engaged in the manufacturing and supply of critical care products like ventilators and masks. These companies have put up stellar performances on the pandemic-led surge in demand. A prominent example is ResMed Inc. (
RMD Quick Quote RMD - Free Report) , which is a renowned manufacturer of ventilators. It has outperformed the S&P 500 over the past year, rallying 29.2% versus the latter’s 16.2%. Investing in such companies seems prudent given the current market volatility. Invest in the Best MedTech Options Now
The MedTech sector, although not totally unscathed by the pandemic-led market mayhem, has performed way better than the overall U.S economy. The companies, whose performances were boosted by the pandemic, boast strong fundamentals and have appealing long-term prospects. This has made them the best investment option amid the market mayhem.
3 Stocks to Buy
Here we have handpicked three stocks from the MedTech space which have held their ground during the pandemic-led market meltdown. To narrow down the list, we have selected stocks 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.
We have listed stocks which have strong growth potential and have become extremely attractive picks now.
The first company that investors can consider is
Thermo Fisher Scientific, Inc. ( TMO Quick Quote TMO - Free Report) . The company is a scientific instrument maker and a world leader in serving science. The Zacks Rank #1 company, with a Growth Score of B, delivered an outstanding quarterly performance in the second quarter of 2020, leveraging on its capacity to extend support amid the pandemic. We are encouraged by the exceptionally strong year-over-year revenue growth at the company’s Life Sciences Solutions segment. In terms of end market, pharma and biotech registered growth on robust performance in bioproduction and pharma services businesses. COVID-19-related sales also boosted the company’s quarterly results.
Its return on equity (ROE) stands at an impressive rate of 18.2% against the industry’s negative return. Further, its projected earnings per share (EPS) growth rate currently stands at 27.8% versus the industry’s 1.5%. The company projects 15.5% earnings growth for the next five years. During Apr 1 to Sep 30, the stock has gained 60.4% compared with the S&P’s 35.6% rise.
Our next pick is
LHC Group, Inc. ( LHCG Quick Quote LHCG - Free Report) , a company that serves as a post-acute care partner for hospitals, physicians and families in the United States. The Zacks Rank #1 company has a Growth Score of A and continues to gain from hospice admissions, which rose year over year in the second quarter. Its better-than-expected earnings results in the reported quarter buoy optimism. The recent finalization of a joint venture (JV) partnership with Orlando Health is encouraging. LHC Group is focused on acquisitions and JVs for inorganic expansion. Its pipeline of potential M&A growth opportunities also remain robust and well balanced between Home Health and Hospice.
Its ROE of 9.1% compares favorably with the industry’s negative return. Further, its projected EPS growth currently stands at 7% versus the industry’s anticipation of loss per share. The company projects 13.1% earnings growth for the next five years. During Apr 1 to Sep 30, the stock has gained 65.6% compared with the S&P’s 35.6% rise.
Our final choice is global oncology company
NovoCure Limited ( NVCR Quick Quote NVCR - Free Report) . Although the oncology business has suffered due to procedural deferrals, this company wrapped up the second quarter with better-than-expected results. The year-over-year top and bottom-line growth of this Zacks Rank #2 company has been impressive. The company is currently working to extend survival in some of the most aggressive forms of cancer by developing and commercializing its innovative therapy, Tumor Treating Fields. For investors’ note, Tumor Treating Fields is the company’s proprietary platform technology.
The company has a Growth Score of A and a ROE of 5.1% against the industry’s negative returns. Further, its projected EPS growth currently stands at an impressive rate of 359.5% against the industry’s anticipation of loss per share. The company projects 94.4% earnings growth for the next year. During Apr 1 to Sep 30, the stock has gained 72.5% compared with the S&P’s 35.6% rise.
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