While many economists have warned of a looming recession for months, the Silicon Valley Bank (SVB) collapse, followed by Credit Suisse's rescue, and the ensuing turmoil in world markets have dramatically shaped investor sentiment in the past month.
Therefore, let’s take a look at some of the “safe-haven” stocks, Sanofi (SNY), USANA Health Sciences, Inc. (USNA), and FONAR Corporation (FONR), which could help with stable returns during such market turmoil.
Last week the Conference Board said its Leading Economic Index for the U.S. fell by 1.2% in March, slipping to its lowest level since November 2020. The data indicates that economic weakness could soon intensify and spread throughout the U.S. economy.
Additionally, billionaire investor Leon Cooperman warned of a coming recession as the Federal Reserve grapples with balancing inflation control and financial stability concerns. He stated that the United States is going through a "textbook" financial crisis, and investors should expect sluggish returns as the S&P 500 won't hit a new high for a long time.
Alongside this warning signal, the International Monetary Fund (IMF) warned that a hard landing is “within the realm of possibilities” for the U.S. economy. Moreover, U.S. Gross Domestic Product (GDP) rose at a 1.1% annualized pace in the first quarter, lower than economists’ expected growth of 2%.
Nonetheless, given the non-cyclical nature and the rising demand for medical services, quality stocks SNY, USNA, and FONR look well-equipped to brave most market challenges. Hence, these stocks could be ideal buys for now.
Sanofi (SNY)
SNY is engaged in the research, development, manufacture, and marketing of therapeutic solutions globally. The company operates through the three broad segments of Pharmaceuticals; Vaccines; and Consumer Healthcare. It is headquartered in Paris, France.
On March 13, the company announced an agreement to acquire Provention Bio, Inc., which would add TZIELD, an innovative first-in-class therapy for the delay of Stage 3 type 1 diabetes (T1D), to its core asset portfolio in General Medicines.
This acquisition is a strategic fit for SNY at the intersection of the company’s growth in immune-mediated diseases and disease-modifying therapies in areas of high unmet need, and its expertise in diabetes.
SNY’s trailing-12-month EBITDA margin of 30.98% is significantly higher than the 1.92% industry average. Also, its trailing-12-month gross profit margin of 69.83% is 25.5% higher than the industry average of 55.65%.
In the fiscal first quarter that ended March 31, 2023, SNY’s net sales increased 5.7% year-over-year to €10.22 billion ($11.27 billion). Its gross profit grew 8.5% year-over-year to €7.78 billion ($8.58 billion), while its business operating income rose 8.7% from the year-ago value to €3.33 billion ($3.67 billion).
The company’s net business income and EPS increased 11.3% from its prior-year quarter to €2.70 billion ($2.98 billion) and €2.16 per share, respectively.
The consensus EPS estimate of $0.99 for the second quarter ending June 2023 represents a 12.6% improvement year-over-year. The consensus revenue estimate of $11.15 billion for the ongoing quarter indicates an 8.2% increase from the prior-year period. The company has an excellent earnings surprise history, as it surpassed the consensus EPS estimates in each of its trailing four quarters.
The stock has gained 34.3% over the past six months to close the last trading session at $56.22.
SNY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
SNY has a B grade for Value, Stability, Sentiment, and Quality. It is ranked #11 out of 164 stocks in the Medical – Pharmaceuticals industry.
In addition to the POWR Ratings we have stated above, one can see SNY ratings for Growth and Momentum here.
USANA Health Sciences, Inc. (USNA)
USNA develops and manufactures high-quality nutritional supplements, functional foods, and personal care products. The company offers USANA nutritional products that comprise essentials/CellSentials, such as vitamin and mineral supplements that provide a foundation of total body nutrition for various age groups.
On March 29, USNA was recognized as a top brand for calcium supplements in Hong Kong by market research giant Euromonitor International. This reflects the company’s strong performance in offering quality nutritional products.
In terms of trailing-12-month USNA’s gross profit margin of 80.39% is 154.9% higher than the 31.54% industry average. Likewise, its trailing-12-month levered FCF margin of 9.78% is 268.4% higher than the industry average of 2.65%.
USNA’s net earnings for the fiscal first quarter that ended April 1, 2023, amounted to $18.38 million and $0.95 per share. Its total current assets increased 3% year-over-year to $395.88 million compared to $384.38 million as of December 31, 2022. In addition, the company generated $13 million of operating cash flow during the quarter.
Street expects USNA’s EPS and revenue to increase 14.7% and 4% year-over-year to $3.50 and $980.60 million, respectively, for the fiscal year 2024. The stock has gained 27.6% year-to-date to close the last trading session at $67.90.
USNA’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
Among the seven stocks in the A-rated Medical – Consumer Goods industry, it is ranked #2. USNA is also rated an A in Value and Quality and a B in Stability and Sentiment. To see additional POWR Ratings for Growth and Momentum for USNA, click here.
FONAR Corporation (FONR)
FONR engages in the research, development, production, and marketing of Magnetic Resonance Imaging (MRI) scanners for the detection and diagnosis of human diseases. It operates through the Medical Equipment; and Physician Management; and Diagnostic Services segments.
In terms of trailing-12-month FONR’s EBITDA margin of 23.05% is significantly higher than the 1.92% industry average. Likewise, its trailing-12-month ROCE and ROTC of 5.61% and 6.10% compare to the negative industry averages of 40.93% and 22.10%, respectively.
FONR’s net revenues came in at $24.26 million for the quarter that ended on December 31, 2022, while its income from operations amounted to $4.23 million. Its net income and EPS amounted to $2.81 million and $0.32 per share during the same period.
Its total cash and cash equivalents came in at $49.51 million for the period that ended December 31, 2022, compared to $48.72 million as of June 30, 2022.
Over the past nine months, the stock has gained 4.6% to close the last trading session at $15.27.
FONR’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It has an A grade for Stability and a B for Value, Sentiment, and Quality. Out of 141 stocks in the Medical - Devices & Equipment industry, it is ranked #4.
Click here to see the other ratings of FONR for Growth and Momentum.
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SNY shares were trading at $56.14 per share on Thursday afternoon, down $0.08 (-0.14%). Year-to-date, SNY has gained 15.92%, versus a 7.47% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
Why These 3 Quality Stocks Are a Safe Haven for Investors During Market Turmoil StockNews.com
