Back to top

Image: Bigstock

Here's Why You Should Invest in DaVita (DVA) Stock Right Now

Read MoreHide Full Article

DaVita Inc. (DVA - Free Report) continues to benefit from solid and steadily expanding international presence, DaVita Kidney Care and prudent acquisition of dialysis centers.

In a year’s time, shares of DaVita have rallied 37.9% against the industry's decline 17.6%. Meanwhile, the S&P 500 Index has fallen 12.9%.

With a market capitalization of $9.26 billion, DaVita is a leading provider of dialysis services in the United States to patients suffering from chronic kidney failure. The company’s earnings are anticipated to grow 20.4% over the next five years. It has a trailing four-quarter positive earnings surprise of 10.8%, on average.

The stock also has a VGM Score of A. 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), are better picks than most.

Let’s delve deeper into the factors that substantiate DaVita’s Zacks Rank #1 at present.

Factors Driving DaVita

DaVita is steadily expanding in the international markets. In the past few years, the company has strengthened its position in the emerging and developing markets of Brazil, China, Colombia, Germany, India, Malaysia, Netherlands, Poland, Portugal and Saudi Arabia through strategic alliances and acquisitions of dialysis centers.

These are anticipated to help DaVita deliver more efficient patient care. Currently, the company is looking to expand in major European and Asian countries via acquisitions and partnerships.

DaVita Kidney Care, the major revenue-generating segment of DaVita, specializes in a broad array of dialysis services, thereby significantly contributing to the top line. Notably, fourth-quarter U.S. dialysis and related lab services revenues amounted to $2.77 billion, up 1.8% on a year-over-year basis.

Acquiring dialysis centers and businesses that own and operate dialysis centers and other ancillary services is DaVita’s preferred business strategy. These initiatives have contributed significantly to the company’s top line.

During fourth-quarter 2019, DaVita opened a total of 31 new dialysis centers in the country. Outside the United States, the company launched three new dialysis centers and acquired seven dialysis centers.

Which Way Are Estimates Headed?

For 2020, the Zacks Consensus Estimate for revenues is pegged at $11.61 billion, indicating an improvement of 1.9% from the prior-year period. The same for earnings stands at $6.06per share, suggesting growth of 12.2% from the year-ago reported figure.

Other Stocks to Consider

Some other top-ranked stocks from the broader medical space include Accuray Incorporated (ARAY - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and The Cooper Companies, Inc. (COO - Free Report) , each currently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Accuray has an expected earnings growth rate of 200% for third-quarter fiscal 2020.

West Pharmaceutical has an estimated earnings growth rate of 3.4% for first-quarter 2020.

Cooper Companies has a projected long-term earnings growth rate of 10.8%.

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 >>