Investors’ rotation away from pricey growth stocks to undervalued turnaround candidates has been the trend so far this year. Investors expect a coronavirus-vaccine-driven economic recovery to help fundamentally strong value stocks to return to their fair values. This is evidenced by the SPDR Portfolio S&P 500 Value ETF’s (SPYV) 5.2% gains so far this year versus the SPDR Portfolio S&P 500 Growth ETF (SPYG) 3.2% loss…
Even though many growth stocks from the technology space are expected to continue their rally due to the continuation of the pandemic-driven trends even in a post-pandemic world, their momentum is expected to slow. Conversely, a solid growth in revenues and earnings on the back of an economic recovery and increased consumer spending should drive value stocks to fair prices. After all, betting on good bargains usually leads to higher returns in the long run.
Shares of Gilead Sciences, Inc. (GILD – Get Rating), Honda Motor Company, Ltd. (HMC – Get Rating), and Regeneron Pharmaceuticals, Inc. (REGN – Get Rating) are trading at discounts to their peers. Moreover, we think these stocks are sufficiently sound fundamentally to ride high on an economic recovery.
Gilead Sciences, Inc. (GILD – Get Rating)
GILD is involved in developing, manufacturing, and marketing biopharmaceutical products in untapped areas. The company has a focus on HIV/AIDS, cardiovascular conditions, and respiratory diseases. GILD’s stock has gained 8.5% year-to-date to close yesterday’s trading session at $63.23.
GILD recently acquired MYR GmbH for 1.45 billion euros. The acquisition allows GILD to add Hepcludex, a treatment for chronic hepatitis delta virus (HDV) to its portfolio. GILD also recently partnered with Gritstone to develop a treatment for HIV infection.
For the quarter ended December 31, 2020, GILD’s total sales grew 26% compared to the same period last year. The company’s diluted EPS grew 99% during the same period.
In terms of non-GAAP forward price/earnings, GILD is currently trading at 8.82x, 62.7% lower than the industry average 23.65x. In terms of forward price/sales, GILD is trading at 3.2x, 59.66% lower than the industry average of 7.93x
GILD is expected to see revenue growth of 20.5% for the quarter ended March 31, 2021 and 0.4% in 2021. Its EPS is estimated to grow 20.8% for the quarter ended March 31, 2021 and at a rate of 2.8% per annum over the next five years.
GILD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
It has an A grade for Value, and B for Growth, Sentiment, and Quality. In the Biotech industry, it is ranked #2 of 488 stocks.
In total, we rate GILD on eight different levels. Beyond what we stated above we have also given GILD grades for Stability and Momentum. Get all the GILD ratings here.
Honda Motor Company, Ltd. (HMC – Get Rating)
HMC develops and markets motorbikes and automobiles. The company has global operations. HMC has returned 10.1% over the past year, and the stock closed yesterday’s trading session at $28.6.
HMC recently began selling its new automobile model, called…
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