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3 Medical Device Stocks With Potential to Fight Recession Risk
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The U.S. economy as well as other global economies had a gloomy 2022 due to several challenges, While the first half was marred by resurgence in COVID-19 infections, labor-shortage, rising interest rates and costs impacted the second half. Although there was a surge in hiring by companies and spending by consumers in 2022, two major macro factors point to an impending recession in the U.S. economy.
Macro Factors Indicating Recession
Although the S&P 500 has gained 4% so far in 2023, markets seem to be overwhelmed after a long run in the past two years. The high inflation rate in 2022 led to a rise in cost of raw materials, thereby leading to higher cost of finished goods during the second half of the year. This is likely to continue in the first half of 2023. This rise in price of goods should impact demand going forward this year. Moreover, Fed’s raising of interest rates to tame inflation is likely to impact demand for debt and may reduce both business and consumer spending. Inflation remained above Fed’s target rate in February, which implies further rate hikes this year.
Meanwhile, several finance and technology companies have started mass layoffs, thereby leading to rising unemployment. The layoffs should continue in upcoming months, with multiple companies announcing layoffs. The trend is likely to spread to other sectors going forward, likely leading to reduced consumer spending.
A key technical indicator of an impending recession, inverted yield curve, appeared on the charts in October 2022, indicating a recession potentially within a year.
Recession-Proof Investments
The fear about an impending recession or an 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, given their potential to deliver a market-beating performance. One of the safest options to invest in during a recession is healthcare, which is majorly recession-proof. This is because there will always be demand for prescription drugs, medical devices for diagnosis and treatments, and healthcare services.
Image Source: Zacks Investment Research
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 RadNet (RDNT - Free Report) , The Pennant Group (PNTG - Free Report) and Viemed Healthcare (VMD - Free Report) . The stock price of these companies has outperformed the S&P 500 Index as well as the broader Medical sector so far this year.
RadNet
The company carries a Zacks Rank #2 and has a VGM Score of A. The Zacks Consensus Estimate for earnings has moved 6.3% and 48.4% north for 2023 and 2024, respectively, in the past 30 days. Shares of RDNT have rallied 27.2% so far this year.
During the fourth quarter of 2022, RadNet posted 15.2% growth in revenues year over year. Adjusted earnings per share (EPS) improved 10% from the year-ago period. The company derives majority of its revenues from high-quality, cost-effective, fixed-site outpatient diagnostic imaging services. Robust demand for diagnostic imaging is likely to drive sales for the company in 2023. Moreover, the company started offering novel AI-enhanced mammography services to women in November last year for enhanced breast cancer diagnostic. This should bring additional revenues amid the AI-hype.
The company carries a Zacks Rank of 2 and has a VGM Score of B. The Zacks Consensus Estimate for earnings has remained stable at 71 cents for 2023 but the same has moved up 5.1% for 2024 in the past 30 days. Shares of the company have rallied 30.3% year to date.
The company provides medical services in the home health and hospice segment. The rising adoption of home-health services is likely to boost The Pennant Group’s revenues going forward. The company reported revenues of $473.2 million during the fourth quarter of 2022, up 7.6% year over year. Adjusted income improved 152.4% from the year-ago period. The company estimates its full-year revenues in 2023 to be between $503.5 million and $518.4 million, implying growth of 6.4%-9.5% over 2022. Adjusted EPS is likely to grow 24.6% from 2022 at the mid-point of the company’s guided range for 2023.
The company has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for earnings has moved 11.1% and 34.1% north for 2022 and 2023, respectively, in the past 30 days. Shares of the company have rallied 28.5% so far this year.
Viemed’s fourth-quarter 2022 revenues grew 30% year over year. The company expects revenues to grow by 1.3%-4% in 2023. Viemed is a provider of in-home medical equipment and post-acute respiratory healthcare services in the United States.
Image: Bigstock
3 Medical Device Stocks With Potential to Fight Recession Risk
The U.S. economy as well as other global economies had a gloomy 2022 due to several challenges, While the first half was marred by resurgence in COVID-19 infections, labor-shortage, rising interest rates and costs impacted the second half. Although there was a surge in hiring by companies and spending by consumers in 2022, two major macro factors point to an impending recession in the U.S. economy.
Macro Factors Indicating Recession
Although the S&P 500 has gained 4% so far in 2023, markets seem to be overwhelmed after a long run in the past two years. The high inflation rate in 2022 led to a rise in cost of raw materials, thereby leading to higher cost of finished goods during the second half of the year. This is likely to continue in the first half of 2023. This rise in price of goods should impact demand going forward this year. Moreover, Fed’s raising of interest rates to tame inflation is likely to impact demand for debt and may reduce both business and consumer spending. Inflation remained above Fed’s target rate in February, which implies further rate hikes this year.
Meanwhile, several finance and technology companies have started mass layoffs, thereby leading to rising unemployment. The layoffs should continue in upcoming months, with multiple companies announcing layoffs. The trend is likely to spread to other sectors going forward, likely leading to reduced consumer spending.
A key technical indicator of an impending recession, inverted yield curve, appeared on the charts in October 2022, indicating a recession potentially within a year.
Recession-Proof Investments
The fear about an impending recession or an 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, given their potential to deliver a market-beating performance. One of the safest options to invest in during a recession is healthcare, which is majorly recession-proof. This is because there will always be demand for prescription drugs, medical devices for diagnosis and treatments, and healthcare services.
Image Source: Zacks Investment Research
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 RadNet (RDNT - Free Report) , The Pennant Group (PNTG - Free Report) and Viemed Healthcare (VMD - Free Report) . The stock price of these companies has outperformed the S&P 500 Index as well as the broader Medical sector so far this year.
RadNet
The company carries a Zacks Rank #2 and has a VGM Score of A. The Zacks Consensus Estimate for earnings has moved 6.3% and 48.4% north for 2023 and 2024, respectively, in the past 30 days. Shares of RDNT have rallied 27.2% so far this year.
During the fourth quarter of 2022, RadNet posted 15.2% growth in revenues year over year. Adjusted earnings per share (EPS) improved 10% from the year-ago period. The company derives majority of its revenues from high-quality, cost-effective, fixed-site outpatient diagnostic imaging services. Robust demand for diagnostic imaging is likely to drive sales for the company in 2023. Moreover, the company started offering novel AI-enhanced mammography services to women in November last year for enhanced breast cancer diagnostic. This should bring additional revenues amid the AI-hype.
RadNet, Inc. Price
RadNet, Inc. price | RadNet, Inc. Quote
The Pennant Group
The company carries a Zacks Rank of 2 and has a VGM Score of B. The Zacks Consensus Estimate for earnings has remained stable at 71 cents for 2023 but the same has moved up 5.1% for 2024 in the past 30 days. Shares of the company have rallied 30.3% year to date.
The company provides medical services in the home health and hospice segment. The rising adoption of home-health services is likely to boost The Pennant Group’s revenues going forward. The company reported revenues of $473.2 million during the fourth quarter of 2022, up 7.6% year over year. Adjusted income improved 152.4% from the year-ago period. The company estimates its full-year revenues in 2023 to be between $503.5 million and $518.4 million, implying growth of 6.4%-9.5% over 2022. Adjusted EPS is likely to grow 24.6% from 2022 at the mid-point of the company’s guided range for 2023.
The Pennant Group, Inc. Price
The Pennant Group, Inc. price | The Pennant Group, Inc. Quote
Viemed Healthcare
The company has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for earnings has moved 11.1% and 34.1% north for 2022 and 2023, respectively, in the past 30 days. Shares of the company have rallied 28.5% so far this year.
Viemed’s fourth-quarter 2022 revenues grew 30% year over year. The company expects revenues to grow by 1.3%-4% in 2023. Viemed is a provider of in-home medical equipment and post-acute respiratory healthcare services in the United States.
Viemed Healthcare, Inc. Price
Viemed Healthcare, Inc. price | Viemed Healthcare, Inc. Quote