Concerns over surging inflation, the Federal Reserve’s interest rate increases, and deepening supply chain constraints due to the Russia-Ukraine war and extended COVID-19 lockdowns in China have led to extensive stock market sell offs of late. The benchmark S&P 500 index is down 12.3% year-to-date, and investor fears of a recession in the near term could put further pressure on the stock market.
However, this market downturn has pushed the price of many quality stocks below their intrinsic values. More value stocks are available in the market now compared to earlier this year, and investors’ interest in value stocks is evident in the Vanguard Value ETF’s (VTV) 1.3% returns over the past nine months versus the SPDR S&P 500 Trust ETF’s (SPY) 5.6% loss.
Agilent Technologies, Inc. (A), United Therapeutics Corporation (UTHR), Nissan Motor Co., Ltd. (NSANY), Bausch Health Companies Inc. (BHC), and Encore Wire Corporation (WIRE) look undervalued at their current price levels considering their growth potential. Therefore, we think these stocks could be solid bets now.
Agilent Technologies, Inc. (A)
A in Santa Clara, Calif., provides core bio-analytical and electronic measurement solutions to the life diagnostics and applied chemical markets. The company offers electronic and bio-analytical measurement, semiconductor, and board testing. It markets its products through direct sales, distributors, resellers, manufacturer's representatives, and electronic commerce.
On April 5, 2022, A expanded CE-IVD in the European Union for its PD-L1 IHC 28-8 pharmDx to identify esophageal squamous cell carcinoma patients for treatment with biopharmaceutical company Bristol Myers Squibb’s (BMY) PD-1-targeted immunotherapeutic OPDIVO, in combination with fluoropyrimidine and platinum-based chemotherapy or OPDIVO in combination with YERVOY. As esophageal cancer is the seventh most common cancer, these combined treatments should help the companies reach wide market reach in the coming months.
On April 4, 2022, A announced that it became a member of the Advanced Mammalian Biomanufacturing Innovation Center (AMBIC), the first I/UCRC dedicated to mammalian cell culture upstream development. As the increasing prominence of biopharmaceuticals and precision cell and gene biotherapeutics has prompted the need for next-generation analytical tools and comprehensive solutions, A’s participation in AMBIC should allow it to bring life-saving drugs and diagnostics to patients more efficiently and effectively.
For its fiscal year 2022 first quarter, ended Jan.31, 2022, A’s net revenue increased 8.1% year-over-year to $1.67 billion. The company’s non-GAAP income from operations came in at $441 million, representing an 11.4% rise from the prior-year period. A’s non-GAAP net income increased 12.2% year-over-year to $368 million. Its non-GAAP EPS came in at $1.21, representing a 14.2% year-over-year improvement. As of Jan. 31, 2022, the company had $1.11 billion in cash and cash equivalents.
Analysts expect A’s EPS to grow 20.4% year-over-year to $4.61 for its fiscal 2022, ending Oct. 31, 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $6.38 billion consensus revenue estimate for the same fiscal year represents a 14.5% rise from the prior-year period. The company’s EPS is expected to grow at a 14.2% rate per annum over the next five years.
The stock’s 1.64x non-GAAP forward PEG is 13.4% lower than the 1.89x industry average. Over the past week, the stock has gained 1.1% in price and closed yesterday’s trading session at $122.40, down 31.8% from its 52-week high of $179.57.
A's POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has a B grade for Quality, Growth, Stability, and Value. Click here to see the additional ratings for A’s Momentum and Sentiment.
A is ranked #3 of 50 stocks in the Medical - Diagnostics/Research industry.
Click here to checkout our Healthcare Sector Report for 2022
United Therapeutics Corporation (UTHR)
UTHR is a biotechnology company that engages in the development and commercialization of products to address the unmet medical needs of patients with chronic and life-threatening diseases internationally. The Silver Spring, Md., company is also engaged in early-stage research and development of several organ transplantation-related technologies, including regenerative medicine, xenotransplantation, and ex-vivo lung perfusion.
On Jan. 21, 2022, the world's first recipient of UTHR’s UHeart, an investigational genetically-modified xenotransplanted organ, reached a two-week milestone, and the patient showed continued postoperative cardiovascular improvement with normal organ function. Also, the first peer-reviewed publication of UTHR’s UKidney, a similarly gene-edited investigational xenograft in a human preclinical model at Birmingham Marnix E. Heersink School of Medicine (UAB), was published in the American Journal of Transplantation. This should help UTHR gain wide recognition across the industry in the coming months.
On Oct. 27, 2021, 3D Systems (DDD) expanded its joint development program with UTHR to combine DDD’s 3D printing expertise with UTHR’s regenerative medicine and organ manufacturing expertise to develop bioprinting of lung scaffolds. This will help the companies influence cell behavior and reproduction for application across multiple human organs. This approach avoids the need for immunosuppression and thus could help the huge unmet medical need for organ transplantation.
UTHR’s total revenues for its fiscal 2022 first quarter, ended March 31, 2022, increased 21.8% year-over-year to $461.90 million. The company’s operating income came in at $228 million, versus $64.80 million in the prior-year period. Its net income came in at $239.90 million for the quarter, representing a 747.7% year-over-year improvement. Its EPS increased 724.6% year-over-year to $5.03, and the company had $3.83 billion in cash, cash equivalents, and marketable securities as of March 31, 2022.
Analysts expect the company’s EPS to hit $15.72 for its fiscal year 2022, ending Dec. 31, 2022, representing a 56.3% rise from the prior-year period. The $1.93 billion consensus revenue estimate for the same fiscal year indicates a 9.8% year-over-year improvement. Analysts expect UTHR’s EPS to improve at a 1.9% rate per annum over the next five years.
The stock’s 2.84x forward EV/Sales is 21.7% lower than the 3.62x industry average. In terms of forward Price/Cash Flow, UTHR is currently trading at 14.49x, which is 14.2% lower than the 16.88x industry average. Over the past week, the stock has gained 0.2% and ended yesterday’s trading session at $179.68, down 17.7% from its 52-week high of $218.38.
UTHR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has an A grade for Value and a B grade for Growth and Quality. Click here to see the additional ratings for UTHR (Sentiment, Stability, and Momentum).
UTHR is ranked #9 of 395 stocks in the Biotech industry.
Nissan Motor Co., Ltd. (NSANY)
Headquartered in Yokohama, Japan, NSANY manufactures and sells automobiles and parts and provides sales financial services worldwide. The company participates in the promotion of motorsports, including race and motorsports event planning, vehicle remodeling, sale of car parts and accessories for motorsports, and demonstration test and commercialization study for second-life use of lithium-ion batteries for automotive use.
On April 25, 2022, NSANY announced a new driver-assistance technology (currently in development) that utilizes highly accurate, real-time information about the vehicle’s surrounding environment to enhance collision avoidance. Developed in collaboration with other innovative companies, this technology fuses information from next-generation high-performance LIDAR, radar, and cameras, which helps vehicles instantly analyze a situation and automatically perform required collision-avoidance operations. NSANY should witness heightened demand for this technology after its launch.
On April 8, 2022, NSANY unveiled its prototype production facility for laminated all-solid-state battery cells, which it aims to market in 2028. Under the Nissan Ambition 2030 vision, NSANY aims to launch an EV with all-solid-state batteries developed in-house by fiscal 2028 and believes the batteries could be reduced to $75 per kWh in fiscal 2028 and $65 per kWh after that, placing EVs at the same cost level as gasoline-fueled vehicles.
NSANY’s gross profit for its fiscal 2021 third quarter ended March 31, 2022, increased 5.1% year-over-year to ¥344.34 billion ($2.65 billion). The company’s operating income came in at ¥52.16 billion ($400.98 million), indicating a 92.3% rise from the year-ago period. Its net income came in at ¥37.32 trillion ($286.90 billion) for the quarter, compared to a ¥32.41 billion ($249.18 million) loss in the prior-year period. The company had ¥1.79 trillion ($13.75 billion) in cash and cash equivalents as of March 31, 2022.
Analysts expect the company’s revenue to hit $67.75 billion for its fiscal year 2022 ended March 31, 2022, representing a 200.8% rise from the prior-year period. NSANY’s 0.88x forward EV/Sales is 20.8% lower than the 1.12x industry average. In terms of forward Price/Cash Flow, NSANY is currently trading at 2.06x, which is 79.6% lower than the 10.09x industry average. The stock has declined 1.1% in price over the past week and closed yesterday’s trading session at $7.99, down 32.3% from its 52-week high of $218.38.
NSANY’s POWR Ratings reflect its solid prospects. It has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has an A grade for Value and a B grade for Growth. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for NSANY’s Momentum, Quality, Sentiment, and Stability, here.
NSANY is ranked #12 of 69 stocks in the Auto & Vehicle Manufacturers industry.
Click here to check out our Automotive Industry Report for 2022
Bausch Health Companies Inc. (BHC)
Based in Laval, Canada. BHC develops, manufactures, and markets a range of pharmaceutical, medical device, and over-the-counter (OTC) products, primarily in the therapeutic areas of eye health, gastroenterology, and dermatology. The company operates through Bausch + Lomb; Salix; International Rx; Ortho Dermatologics; and Diversified Products segments.
On March 28, 2022, BHC’s global eye health business Bausch + Lomb Corporation and Clearside Biomedical, Inc. (CLSD), a biopharmaceutical company that develops drug therapies to treat blinding diseases of the eye, announced the U.S. commercial launch of XIPERE, the first and only therapy approved by the U.S. Food and Drug Administration (FDA) for suprachoroidal use for the treatment of macular edema associated with uveitis. This should help XIPERE gain wider market reach in the U.S. and generate huge profits.
On February 22, 2022, BHC and its oral health care business, OraPharma, announced the U.S. launch of the OraFit custom clear aligner system that corrects malocclusion. The availability of plastic material OraFit allows dental professionals to offer a new custom aligner option that can easily align patients’ teeth into position with improved comfort due to the gentle, consistent pressure OraFit applies. This should witness surging demand in the coming months.
BHC’s operating income for its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, came in at $367 million, compared to a $5 million loss in the prior-year period. As of December 31, 2022, the company had $582 million in cash and cash equivalents.
Analysts expect the company’s EPS to reach $2.08 in its fiscal year 2022, ending Dec. 31, 2022, representing a 6.5% rise from the prior-year period. The $11.06 billion consensus revenue estimate for the same fiscal year indicates a 3.1% rise from the prior-year period. BHC’s EPS is expected to grow at an 8.7% rate per annum over the next five years.
The stock’s 3.41x forward EV/Sales is 9.8% lower than the 3.78x industry average. In terms of forward Price/Cash Flow, BHC is currently trading at 4.12x, which is 75.9% lower than the 17.05x industry average. Over the past week, the stock has declined 5.5% in price and ended yesterday’s trading session at $18.66, down 42.7% from its 52-week high of $32.54.
BHC’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has an A grade for Value and a B grade for Growth. Click here to see the additional ratings for BHC (Momentum, Stability, Sentiment, and Quality).
BHC is ranked #28 of 169 stocks in the Medical - Pharmaceuticals industry.
Click here to checkout our Healthcare Sector Report for 2022
Encore Wire Corporation (WIRE)
WIRE manufactures and sells electrical building wires and cables for interior electrical wiring in commercial and industrial buildings, homes, apartments, manufactured housing, and data centers. The McKinney, Tex.-based company serves healthcare, data center, airport expansion, military bases, oil and gas, transit, wastewater treatment, school construction, and power generation markets. It sells its products primarily through independent manufacturers and representatives and direct in-house marketing.
For its fiscal 2022 first quarter, ended March 31, 2022, WIRE’s net sales increased 62.8% year-over-year to $723.07 million. The company’s gross profit came in at $243.75 million, representing a 188.4% rise from the year-ago period. Its operating income was $207.54 million, up 289% from the prior-year period. While its net income increased 292.2% year-over-year to $161.53 million, its EPS grew 300% to $7.96. It had $466.09 million in cash and equivalents as of March 31, 2022.
Analysts expect the stock’s EPS to improve 9.4% year-over-year to $2.84 billion for its fiscal year 2022, ended Dec. 31, 2022. The company surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive. WIRE’s EPS is expected to grow at a 10% rate per annum over the next five years.
The stock’s 0.65x forward EV/Sales is 59.7% lower than the 1.62x industry average. In terms of forward Price/Cash Flow, WIRE is currently trading at 6.06x, which is 55.7% lower than the 13.69x industry average. Over the past week, the stock has gained 11.4% and closed yesterday’s trading session at $123.45, down 18.6% from its 52-week high of $151.64.
WIRE’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 Growth and a B grade for Value, Quality, and Sentiment. Click here to see the additional ratings for WIRE (Stability and Momentum).
The stock is ranked #5 of 48 stocks in the Technology - Electronics industry.
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A shares were unchanged in after-hours trading Wednesday. Year-to-date, A has declined -20.66%, versus a -9.38% 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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