Health Care Stocks You'll Wish You Bought Sooner

The latest inflation data has further aggravated recession worries. With inflation still hovering near its multi-decade high, the odds of the Fed proceeding with its fourth consecutive 75-bps interest rate hike are pretty high. The consequent increase in recession fears has dampened the market sentiment significantly.

However, healthcare companies enjoy demand and margins resistant to inflation and recession. The inelastic demand for healthcare products helps these companies generate stable revenues regardless of inflationary pressures and consumers’ spending cuts amid a recession.

Moreover, the demand for healthcare products and services could rise further due to the increased need to serve aging Baby Boomers and the increasing frequency and severity of chronic conditions.

According to a report published by Health Affairs, national health spending is expected to reach $6.8 trillion by 2030.

Hence, given ongoing macroeconomic turbulence and uncertain outlook, one could make the most of the strong uptrend in healthcare stocks Eli Lilly and Company (LLY), Merck & Co., Inc. (MRK), and Biogen Inc. (BIIB) by investing in them.

Eli Lilly and Company (LLY)

LLY discovers, develops, and markets human pharmaceuticals worldwide. With a market capitalization of $314.88 billion, the company provides diabetes, oncology, neuroscience, and other products.

Over the last three years, LLY has grown its revenue at a 10.3% CAGR, while the company’s EBITDA has grown at a 13.3% CAGR.

For the second quarter of the fiscal year 2022 ended June 30, 2022, LLY’s worldwide revenue stood at $6.49 billion. Excluding revenue from Alimta, the sale of the company's rights to Cialis in China in Q2 2021, and COVID-19 antibodies, the company’s revenue grew 6% year-over-year. LLY’s operating income and net income came in at $1.21 billion and $952.50 million, respectively. Its non-GAAP EPS came in at $1.25.

The consensus revenue estimate of $30.30 billion for fiscal 2023, ending September 2023, represents a 5.2% improvement year-over-year. Also, Street expects LLY’s EPS to grow 16.3% year-over-year to $9.28 during the same period.

LLY’s stock is trading at a premium, indicating high expectations regarding the company’s performance in the upcoming quarters. Regarding forward P/E, LLY is trading at 41.69x, 122.7% higher than the industry average of 18.7x. Also, it is trading at a forward Price/Sales multiple of 10.98 compares to the industry average of 4.25. Continue reading "Health Care Stocks You'll Wish You Bought Sooner"

2 Overly Traded Stocks to Avoid This Fall

Stubborn inflation, rising interest rates, and consequent market volatility have kept many investors on edge. Inflation shows no signs of slowing, despite the Fed’s aggressive monetary policy tightening.

The consumer price index increased 0.4% sequentially in September, beating the Dow Jones estimate. The headline inflation was up 8.2% on a 12-month basis, hovering near the highest levels in decades.

The surging inflation and hot employment data for September strengthen the case for the Fed announcing a fourth 75-basis-point interest rate hike in next month’s meeting. Given these circumstances, the Conference Board sees a 96% chance of a recession in the United States over the coming 12 months, which might begin before the end of 2022. Moreover, the board projects 2022 real GDP to grow 1.5% year-over-year and 2023 growth to zero percent.

Since the economic headwinds are expected to keep the stock market under pressure, overly traded stock Pfizer Inc. (PFE) and Snap Inc. (SNAP) could be best avoided now, with their intermediate and long-term trends being down.

Pfizer Inc. (PFE)

Popular drugmaker PFE discovers, develops, manufactures, and distributes biopharmaceutical products worldwide. The pandemic made PFE one of the world’s most watched stocks, thanks to its COVID-19 drugs and vaccines. The stock has a market capitalization of $240.55 billion.

Although the company has recently announced some promising deals, acquisitions, and FDA approvals, the stock has declined 27.4% year-to-date, underperforming the S&P 500’s 23% decline. The stock has been underperforming the broader market, with investors pricing in the expected sales decline that the company might experience due to an anticipated slowdown in Covid vaccinations in the near term.

For the fiscal second quarter that ended June 30, 2022, PFE’s revenues increased 46.8% year-over-year to $27.74 billion. However, the company’s revenues largely leaned on sales of its Covid-19 vaccine Comirnaty and its antiviral treatment Paxlovid. The Covid-19 vaccine brought in $8.80 billion in revenue in the second quarter, while sales of Paxlovid totaled $8.10 billion.

Adjusted net income attributable to PFE common shareholders rose 93.5% from the year-ago value to $11.66 billion, while adjusted EPS grew 92.5% year-over-year to $2.04.

Wall Street analysts expect PFE’s revenues to decline in the about-to-be-reported quarter, which ended September 2022. The consensus revenue estimate of $21.33 billion for the fiscal third quarter indicates an 11.5% year-over-year decline. Continue reading "2 Overly Traded Stocks to Avoid This Fall"

MCO Blueprint vs. Coronavirus Crash

It's not every day that you see 2,000 point swings for the Dow Jones Industrial Average or multiple trading halts in one session. We are living in unprecedented times.

It's also not commonplace to see a trading strategy tested during a market crash, but that's exactly what happened when Trader Travis was recording the last video of a 3-part bonus series for MarketClub Options members.

While the MarketClub Options bonus training videos are normally reserved for members, we thought an early release of our April video was too important not to share.

In this video, you'll see how the Blueprint helped protect Travis' portfolio as the markets began to free-fall.

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So, did your strategy protect you like the MarketClub Options Blueprint did for Travis? Did your plan get you out in time and help you cut losses?

If you don't have a step-by-step blueprint to guide you safely through these crazy times, you need to check out MarketClub Options right now.

To find parts 1 and 2 of Travis' bonus series and the entire MarketClub Options Blueprint, visit us here - MarketClub Options.

Stay safe. Protect your portfolio. Stick with your plan.

Best,
The MarketClub Team


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[1] Marte, J. (2019, August 19). 3 out of 4 economists predict a U.S. recession by 2021, survey finds. Retrieved from https://www.washingtonpost.com/business/2019/08/19/out-economists-predict-us-recession-by-survey-finds/.

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