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Bet on 4 Low-Beta MedTech Stocks to Ride the Choppy Market
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The rollout of vaccines on a massive scale along with several stimulus packages makes many investors optimistic about an economic rebound in the United States. Healthcare stocks across various domains are witnessing a significant upward trend of late, on anticipations that the economy will get to full-fledged reopening and normalization on mass vaccination. A number of MedTech stocks have confirmed strong rebounds in their base businesses recently, which had been otherwise been disrupted through the pandemic due to significantly sluggish demand for non-COVID MedTech procedures.
However, even though markets have started to respond positively, the one-and-a-half-year long pandemic hiccups have slowed down the industry-wide progress to such an extent that achieving pre-COVID levels of development seems far-fetched. Added to this, the rising concerns about the possibility of a third wave in other populous parts of the world have been spooking investors.
Issues Haunting the MedTech Sector
President Biden’s Jul 4 vaccination target has been missed. And although he addressed the nation to be free from the pandemic on Jul 5, he could not defy the odds of newly mutated and more lethal Delta variant of COVID-19 “becoming the globally dominant variant of the disease.” The Guardian on Jul 3 reported that, according to Anthony Fauci, an American physician-scientist and immunologist, the United States will soon see surges in cases of the highly-infectious Delta variant of COVID-19 in areas where vaccination rates are low.
Added to that, the news regarding inflation speeding up faster than it has in more than a decade post COVID-19 market recovery has kept investors on edge. Per a report of CNBC, inflation, according to the Federated Hermes chief market strategist, could be stickier than the Federal Reserve anticipates and might spook Wall Street and put investors in the crosshairs of a turbulent summer.
Moreover, the market has become volatile on rising anticipation that the Federal Reserve will raise interest rates as early as next year to quell inflation worries. The policymaking Federal Open Market Committee indicated that rate hikes could come as soon as 2023 after signaling no increases in March until beyond 2023 (according to an article by Business Standard).
Bet on Stocks With Low Volatility
With uncertainty still looming large, it would be a prudent to tap the MedTech space, which showed considerable buoyancy last year despite the pandemic-induced disruption. While no one can predict the short-term direction of the market, retail investors can convert this period of uncertainty into opportunity by investing in fundamentally strong and resilient stocks.
We suggest investors to consider stocks with low beta (less than 1) which tend to be less volatile. Investing in low-beta stocks with strong growth fundamentals will not only deliver consistent returns but also provide a shield against choppy market conditions.
To narrow down the list, we have selected four stocks with a Growth Score of A or B and beta of less than 1. Our research also 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.
Henry Schein, Inc. (HSIC - Free Report) : The company is well positioned to gain from its extensive global foothold and diverse channel mix. Through the pandemic, the Henry Schein One dental software business has been progressing well. The company boosted its dental business with the acquisition of a majority ownership in eAssist Dental Solutions and Jarvis Analytics in June and May, respectively. A raised 2021 earnings outlook is also promising, indicative of the company’s bullish trend.
The stock sports a Zacks Rank #1. It has a Growth Score of B and beta of 0.89. It has an expected long-term earnings growth rate of 11.20%.
BellRing Brands, Inc. (BRBR - Free Report) : The company’s RTD (Ready to drink) protein shakes, under the brand Premier Protein, have gained great loyalty among consumers despite some recent supply constraints. At present, the company’s channels are growing with e-commerce, food and mass leading the way. For fiscal year 2021, BellRing management has raised its guidance for net sales to $1.17-$1.20 billion from $1.07-$1.12 billion and adjusted EBITDA to $214-$220 million from $207-$217 million.
The stock carries a Zacks Rank #2. It has a Growth Score of A and beta of 0.86. It has an expected long-term earnings growth rate of 21.60%.
Harrow Health, Inc. (HROW - Free Report) : The company registered solid first-quarter 2021 results. Notably, the company’s key financial metrics reached record levels, on both year over year and sequential basis. Management projected that all the pent-up demand for ophthalmic procedures (delayed due to the pandemic) is expected to get on track will boost revenues for the company. The acquisition of an exclusive worldwide license from Spaeth/Richman Contrast Sensitivity Center (SPARCS) by Visionology -- a subsidiary of Harrow Health -- is encouraging as well.
The stock carries a Zacks Rank #2. It has a Growth Score of B and beta of 0.90. For 2021, the company’s earnings growth rate is projected at 680%.
West Pharmaceuticals Services, Inc. (WST - Free Report) : The company’s Proprietary Products business continues to exhibit sustained strength and is an important contributor to West Pharmaceutical’s top line. The stable liquidity position is again a plus. The company has raised its guidance for full-year 2021 net sales to the range of $2.63-$2.65 billion from the prior $2.50-$2.53 billion. Adjusted earnings per share for 2021 are anticipated in the band of $6.95 to $7.10 (up from the previous range of $6-$6.15 per share).
West Pharmaceutical Services, Inc. Price and Consensus
The stock carries a Zacks Rank #2. It has a Growth Score of B and beta of 0.99. It has an expected long-term earnings growth rate of 25.8%.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Image: Bigstock
Bet on 4 Low-Beta MedTech Stocks to Ride the Choppy Market
The rollout of vaccines on a massive scale along with several stimulus packages makes many investors optimistic about an economic rebound in the United States. Healthcare stocks across various domains are witnessing a significant upward trend of late, on anticipations that the economy will get to full-fledged reopening and normalization on mass vaccination. A number of MedTech stocks have confirmed strong rebounds in their base businesses recently, which had been otherwise been disrupted through the pandemic due to significantly sluggish demand for non-COVID MedTech procedures.
However, even though markets have started to respond positively, the one-and-a-half-year long pandemic hiccups have slowed down the industry-wide progress to such an extent that achieving pre-COVID levels of development seems far-fetched. Added to this, the rising concerns about the possibility of a third wave in other populous parts of the world have been spooking investors.
Issues Haunting the MedTech Sector
President Biden’s Jul 4 vaccination target has been missed. And although he addressed the nation to be free from the pandemic on Jul 5, he could not defy the odds of newly mutated and more lethal Delta variant of COVID-19 “becoming the globally dominant variant of the disease.” The Guardian on Jul 3 reported that, according to Anthony Fauci, an American physician-scientist and immunologist, the United States will soon see surges in cases of the highly-infectious Delta variant of COVID-19 in areas where vaccination rates are low.
Added to that, the news regarding inflation speeding up faster than it has in more than a decade post COVID-19 market recovery has kept investors on edge. Per a report of CNBC, inflation, according to the Federated Hermes chief market strategist, could be stickier than the Federal Reserve anticipates and might spook Wall Street and put investors in the crosshairs of a turbulent summer.
Moreover, the market has become volatile on rising anticipation that the Federal Reserve will raise interest rates as early as next year to quell inflation worries. The policymaking Federal Open Market Committee indicated that rate hikes could come as soon as 2023 after signaling no increases in March until beyond 2023 (according to an article by Business Standard).
Bet on Stocks With Low Volatility
With uncertainty still looming large, it would be a prudent to tap the MedTech space, which showed considerable buoyancy last year despite the pandemic-induced disruption. While no one can predict the short-term direction of the market, retail investors can convert this period of uncertainty into opportunity by investing in fundamentally strong and resilient stocks.
We suggest investors to consider stocks with low beta (less than 1) which tend to be less volatile. Investing in low-beta stocks with strong growth fundamentals will not only deliver consistent returns but also provide a shield against choppy market conditions.
To narrow down the list, we have selected four stocks with a Growth Score of A or B and beta of less than 1. Our research also 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.
Henry Schein, Inc. (HSIC - Free Report) : The company is well positioned to gain from its extensive global foothold and diverse channel mix. Through the pandemic, the Henry Schein One dental software business has been progressing well. The company boosted its dental business with the acquisition of a majority ownership in eAssist Dental Solutions and Jarvis Analytics in June and May, respectively. A raised 2021 earnings outlook is also promising, indicative of the company’s bullish trend.
Henry Schein, Inc. Price and Consensus
Henry Schein, Inc. price-consensus-chart | Henry Schein, Inc. Quote
The stock sports a Zacks Rank #1. It has a Growth Score of B and beta of 0.89. It has an expected long-term earnings growth rate of 11.20%.
BellRing Brands, Inc. (BRBR - Free Report) : The company’s RTD (Ready to drink) protein shakes, under the brand Premier Protein, have gained great loyalty among consumers despite some recent supply constraints. At present, the company’s channels are growing with e-commerce, food and mass leading the way. For fiscal year 2021, BellRing management has raised its guidance for net sales to $1.17-$1.20 billion from $1.07-$1.12 billion and adjusted EBITDA to $214-$220 million from $207-$217 million.
BellRing Brands, Inc. Price and Consensus
BellRing Brands, Inc. price-consensus-chart | BellRing Brands, Inc. Quote
The stock carries a Zacks Rank #2. It has a Growth Score of A and beta of 0.86. It has an expected long-term earnings growth rate of 21.60%.
Harrow Health, Inc. (HROW - Free Report) : The company registered solid first-quarter 2021 results. Notably, the company’s key financial metrics reached record levels, on both year over year and sequential basis. Management projected that all the pent-up demand for ophthalmic procedures (delayed due to the pandemic) is expected to get on track will boost revenues for the company. The acquisition of an exclusive worldwide license from Spaeth/Richman Contrast Sensitivity Center (SPARCS) by Visionology -- a subsidiary of Harrow Health -- is encouraging as well.
Harrow Health, Inc. Price and Consensus
Harrow Health, Inc. price-consensus-chart | Harrow Health, Inc. Quote
The stock carries a Zacks Rank #2. It has a Growth Score of B and beta of 0.90. For 2021, the company’s earnings growth rate is projected at 680%.
West Pharmaceuticals Services, Inc. (WST - Free Report) : The company’s Proprietary Products business continues to exhibit sustained strength and is an important contributor to West Pharmaceutical’s top line. The stable liquidity position is again a plus. The company has raised its guidance for full-year 2021 net sales to the range of $2.63-$2.65 billion from the prior $2.50-$2.53 billion. Adjusted earnings per share for 2021 are anticipated in the band of $6.95 to $7.10 (up from the previous range of $6-$6.15 per share).
West Pharmaceutical Services, Inc. Price and Consensus
West Pharmaceutical Services, Inc. price-consensus-chart | West Pharmaceutical Services, Inc. Quote
The stock carries a Zacks Rank #2. It has a Growth Score of B and beta of 0.99. It has an expected long-term earnings growth rate of 25.8%.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>