There have been rising concerns regarding the disconnect between the stock market and the economy. According to many analysts, the market’s rally over the past 10 months could prove to be another stock market bubble that could lead to another correction in the near term…
On the other hand, a nationwide coronavirus vaccination drive and the gradual resumption of industrial and economic activities is raising hopes for a solid economic recovery this year. As such, investors have begun rotating away from expensive growth stocks into potential turnaround candidates.
The recent outperformance of value stocks is evident in the SPDR S&P 500 Value ETF’s (SPYV) 13.7% return over the past three months versus the SPDR S&P 500 Growth ETF’s (SPYG) 8.1% gain and the SPDR S&P 500 Trust ETF’s (SPY) 5.4% return. Analysts believe this trend can continue with a vaccine-driven economic recovery this year.
CVS Health Corporation (CVS – Get Rating) and Allstate Corporation (ALL – Get Rating) are currently trading at discounts to their peers and, we think, possess solid revenue and earnings growth potential. So, it could be wise to pick these undervalued stocks right now.
CVS Health Corporation (CVS – Get Rating)
CVS operates retail specialty pharmacy stores, and provides health services and plans in the United States. As part of its mission to create an integrated healthcare business, CVS has forged a new, bold business model that unites its retail franchise and long-standing pharmacy benefits management (PBM) unit, Caremark, with giant health insurer, Aetna. The company functions through the following segments – Pharmacy Services, Retail/LTC and Health Care Benefits.
In terms of forward P/E, CVS is currently trading at 10.26x, which is 65% below the industry average of 29.29x. In terms of trailing-12-month P/S, CVS’ 0.38x is significantly lower than the industry average of 8.01x.
CVS recently introduced the Symphony medical alert system to help caregivers monitor the safety and well-being of seniors at home. CVS also recently…
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