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New Covid-19 Cases Increase, 5 Defensive Stocks to Buy

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On Feb 11, China’s National Health Commission’s stated that the number of new, confirmed cases declined to 2,478 from 3,062. However, the very next day, 242 new deaths were reported, nearly double the previous day's toll. The number of confirmed new cases in Wuhan alone touched 14,840 as of Feb 12.

Officials adopted a new methodology for counting the number of infected people, which reflected the steep increase in death toll.

CDC Fears Covid-19 Could Spread in the U.S.

In the United States, 14 cases of Covid-19 have been reported so far. More than 600 people have been quarantined, after being flown out of China, a week before. On Feb 12, the Centers for Disease Control and Prevention (CDC) had warned that the virus can “likely” spread in America.

Dr. Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases said the health officials “should be prepared for this new virus to take a foothold in the U.S." In fact, CDC is constantly communicating with and monitoring medical supplies manufacturers to make sure that there are enough masks and gloves in case of an outbreak.

Why Play Defensive?

With the rise in Covid-19 cases in Wuhan and China, airlines have canceled flights and schools have extended holidays for an indefinite period. Even though factories are reopening, the turnout is minimal as fears of virus spread remain a major concern.

The outbreak has disrupted trade and multi-national companies’ outlook. Companies have been forced to find alternatives and shift manufacturing to the United States and Mexico.

Hence, amid the current uncertainties and fear driven by the spread of Covid-19, investing in defensive stocks like healthcare can be beneficial. Defensive stocks provide stable returns regardless of market conditions. Demand for these products or services is constant irrespective of market gyrations as these cater to basic human necessities.

However, these stocks do not give high returns when the economy is expanding, compared to technology and cyclical sectors.

Our Picks

We are presenting five defensive stocks. What’s more, each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ResMed Inc. (RMD - Free Report) develops, manufactures, distributes, and markets medical devices and cloud-based software solutions that can help to diagnose, treat, and manage respiratory disorders. The company focuses on breathing, chronic obstructive pulmonary disease, neuromuscular disease, and other chronic diseases.

The company’s expected earnings growth rate for the current year is 17.9% against the Zacks Medical - Products industry’s projected earnings decline of 0.4%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 4.9% upward over the past 60 days.

The Ensign Group, Inc. (ENSG - Free Report) provides health-care services in the post-acute care continuum and other ancillary businesses. The company’s expected earnings growth rate for the current quarter is 9.1% against the Zacks Medical - Nursing Homes industry’s projected earnings decline of more than 100%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 8.8% upward over the past 60 days.

DaVita Inc. (DVA - Free Report) provides outpatient, hospital inpatient, and home-based hemodialysis services. The company’s expected earnings growth rate for the current year is nearly 8% compared with the Zacks Medical - Outpatient and Home Healthcare industry’s projected earnings growth of 5.5%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 4.9% upward over the past 60 days.

KalVista Pharmaceuticals, Inc. (KALV - Free Report) is a clinical stage pharmaceutical company, which discovers, develops, and commercializes small molecule protease inhibitors. The company’s expected earnings growth rate for the current year is 18.1% compared with the Zacks Medical - Drugs industry’s projected earnings growth of 11.3%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 10.9% upward over the past 60 days.

MEI Pharma, Inc. (MEIP - Free Report) is a late-stage pharmaceutical company, focused on the development of various therapies for the treatment of cancer. The company’s expected earnings growth rate for the current quarter is 11.8% against the Zacks Medical - Drugs industry’s projected earnings decline of more than 100%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 5.4% upward over the past 60 days.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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