In its December meeting, the Federal Reserve’s decision to raise interest rates and reduce its overall asset holdings sooner than it originally planned to combat high inflation caused the stock market to sell-off last week. This has caused many quality stocks to suffer price dips.
However, considering the prospect of a solid economic recovery, growth stocks should perform well this year. Investors’ interest in growth stocks is evidenced by the iShares Russell Top 200 Growth ETF’s (IWY) 11.3% returns over the past nine months versus the SPDR S&P 500 Trust ETF’s (SPY) 9.4% gains during the period.
We think the recent dip provides an excellent opportunity for investors to buy Anthem, Inc. (ANTM), Zoetis Inc. (ZTS), Moderna, Inc. (MRNA), and Forrester Research, Inc. (FORR). These names possess solid growth attributes. Based on their solid fundamentals and broad market reach, we expect these stocks to deliver substantial upside in the near term.
Anthem, Inc. (ANTM)
ANTM is a health benefits company that offers a broad spectrum of network-based managed care plans and services to large and small groups, individuals, Medicaid, and Medicare markets. The Indianapolis, Ind.-based company offers an array of specialty and other insurance products and services, such as pharmacy and radiology benefits management, dental, vision, life and disability insurance benefits, and analytics-driven personal health care.
On Nov. 10, 2021, ANTM agreed to acquire Integra Managed Care, a Managed Long-Term Care Plan designed for adults living with long-term disabilities. Currently serving more than 40,000 Medicaid members, Integra’s acquisition aligns with ANTM’s goal of growing its Medicaid business and will be added to ANTM’s Government Business Division upon the closure of its acquisition by the end of the 2022 second quarter.
ANTM’s total revenues for its fiscal 2021 third quarter, ended Sept. 30, 2021, increased 15% year-over-year to $35.82 billion. The company’s pre-tax income came in at $2 billion, up 413.1% from the prior-year period. ANTM’s adjusted net income was $1.67 billion, up 56.5% from its year-ago period. And its adjusted EPS increased 61.7% year-over-year to $6.79. The company had $5.49 billion in cash and cash equivalents as of September 30, 2021.
ANTM’s revenue and total assets have grown at CAGRs of 13.6% and 9.6%, respectively, over the past three years. The $26.02 consensus EPS estimate for its fiscal year 2021 ended Dec. 31, 2021, represents a 15.7% rise from the prior-year period. It surpassed the consensus EPS estimates in each of the trailing four quarters. Analysts expect ANTM’s revenue to rise 14% year-over-year to $137.68 billion. And its
EPS is expected to grow at a 13.4% rate per annum over the next five years.
Over the past nine months, the stock has gained 19.3% in price to close the last trading session at $448.09, down 4.7% from its 52-week high of $470.02.
It is no surprise that ANTM has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has an A grade for Growth and Sentiment and a B grade for Value, Stability, and Quality. Click here to see the additional ratings for ANTM’s Momentum.
ANTM is ranked #1 of 11 stocks in the B-rated Medical - Health Insurance industry.
Zoetis Inc. (ZTS)
ZTS in Florham Park, N.J., discovers, manufactures, and markets veterinary vaccines, medicines, and diagnostic products that are complemented by genetic tests and a range of services worldwide. Through its sales representatives and technical and veterinary operations specialists, the company markets its products to veterinarians, livestock producers, retail outlets, and third-party veterinary distributors.
On Jan.13, 2022, the U.S. Food and Drug Administration (FDA) approved ZTS’ Solensia to control the pain of osteoarthritis (OA) in cats and help improve their mobility and overall well-being. As a once-monthly injection administered at a veterinary clinic, Solensia, along with active substance frunevetmab, a monoclonal antibody (mAb), has been studied and demonstrated to control OA pain. ZTS expects high demand in the coming months.
ZTS’ revenue for the third quarter, ended September 30, 2021, increased 11.4% year-over-year to $1.99 billion. The company’s non-GAAP gross profit was $1.41 billion, representing a 13.2% year-over-year improvement. Its non-GAAP pre-tax income came in at $717 million, up 9.5% from the prior-year period. While its non-GAAP net income increased 13.9% year-over-year to $597 million, its non-GAAP EPS increased 13.6% to $1.25. As of Sept. 30, 2021, the company had $3.27 billion in cash and cash equivalents.
ZTS’ revenue and total assets have increased at CAGRs of 10% and 9.4%, respectively, over the past three years. Analysts expect the company’s EPS to increase 20.8% year-over-year to $4.65 in its fiscal year 2021, ended December 31, 2021. It surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive. The $7.74 billion consensus revenue estimate for the same fiscal year represents a 15.9% rise from the prior-year period. ZTS’ EPS is expected to grow at a 13.6% rate per annum over the next five years.
Over the past nine months, the stock has gained 20.9% in price to close the last trading session at $202.70, down 18.6% from its 52-week high of $249.27.
ZTS’ POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
The stock has an A grade for Quality and a B grade for Growth, Sentiment, and Stability. Click here to see the additional ratings for ZTS’ Value and Momentum.
Among the 190 stocks in the Medical - Pharmaceuticals industry, ZTS is ranked #6.
Moderna, Inc. (MRNA)
MRNA in Cambridge, Mass., is a biotechnology company that develops therapeutics and vaccines based on messenger RNA to treat infectious diseases, immuno-oncology, rare diseases, cardiovascular diseases, and auto-immune diseases. As of March 9, 2021, the company had 13 programs in clinical trials and a total of 24 development programs in six modalities.
On Dec. 27, 2021, MRNA announced a revised supply agreement with the government of South Korea for 20 million doses of MRNA’s COVID-19 vaccine or an updated booster vaccine candidate, if authorized. MRNA expects to deliver 15 million doses in the third quarter of 2022. The supply agreement should enable MRNA to gain a wider market reach in the coming months.
For its fiscal 2021 third quarter, ended Sept. 30, 2021, MRNA’s total revenue increased 3065% year-over-year to $4.97 billion. The company’s operating income came in at $3.56 billion, compared to a $235 million loss in the prior-year period. Its net income was $3.33 billion for the quarter, versus a $233 net loss in the year-ago period. Its EPS was $7.70, versus a $0.59 loss per share in the prior-year period. And as of September 30, 2021, the company had $5.55 billion in cash and cash equivalents.
MRNA’s revenue and total assets have grown at CAGRs of 295.3% and 141.3%, respectively, over the past three years. Analysts expect the company’s EPS to be $26.21 for its fiscal year 2021, ended Dec. 31, 2021, representing a 1437.2% rise from the prior-year period. The $17.62 billion consensus revenue estimate for the same fiscal year indicates a 2093.3% year-over-year improvement. MRNA’s EPS is expected to grow at a 16.8% rate per annum over the next five years.
Over the past nine months, the stock has gained 9.3% in price to close its last trading session at $186.61, down 62.4% from its 52-week high of $497.49.
MRNA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Growth and Value. Click here to see the additional ratings for MRNA (Stability, Sentiment, and Momentum).
MRNA is ranked #20 of 465 stocks in the Biotech industry.
Forrester Research, Inc. (FORR)
FORR is an independent research and advisory services company internationally. The Cambridge, Mass.-based company helps leaders across technology, marketing, customer experience, product, and sales functions accelerate growth.
On Nov. 8, 2021, FORR added FeedbackNow Predict, a new predictive capability, to its FeedbackNow solution to enable businesses to proactively anticipate real-time customer experience (CX) issues and mitigate potential incidents before they occur. According to FRRO, more than 60% of CX professionals say their businesses lack closed-loop processes for CX feedback. By offering an enhanced solution, FORR is looking forward to helping organizations build customer goodwill and long-term brand loyalty.
FORR’s adjusted revenues for its fiscal 2021 third quarter, ended Sept. 30, 2021, increased 8.7% year-over-year to $118.14 million. The company’s adjusted income from operations came in at $12.70 million, up 54.5% from the prior-year period. While its adjusted net income increased 71.1% year-over-year to $7.90 million, its adjusted EPS grew 70.8% to $0.41. The company had $129.33 million in cash and cash equivalents as of Sept. 30, 2021.
FORR’s revenue and total assets have grown at CAGRs of 11.3% and 25.9%, respectively, over the past three years. The $2.07 consensus EPS estimate for its fiscal year 2021, ended Dec. 31, 2021, represents a 29.4% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. For the same fiscal year, analysts expect FORR’s revenue to improve 10% from the prior-year period to $494.39 million. And the company’s EPS is expected to grow at a 10% rate per annum over the next five years.
Over the past six months, the stock has gained 17.1% in price to close the last trading session at $54.79, down 10% from its 52-week high of $60.90.
FORR’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
FORR has an A grade for Growth, Sentiment, and Quality and a B grade for Stability. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for FORR’s Value and Momentum here.
FORR is ranked #1 of 121 stocks in the Financial Services (Enterprise) industry.
Click here to checkout our Healthcare Sector Report
ANTM shares were trading at $454.12 per share on Wednesday morning, up $6.03 (+1.35%). Year-to-date, ANTM has declined -2.03%, versus a -4.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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