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There’s one massive stock that is very telling of the economy. They encompass housing, finance, consumer goods, real estate, you name it. The stock is in a sector that typically is the first to lead into a new bull market. Meaning, if this stock turns up (i.e. bullish), we’ve likely hit the bottom. I share […]
If this stock goes bullish, we’ve hit bottom Read More »
Persistently high inflation and the Federal Reserve’s way of addressing it through consecutive aggressive interest rate hikes have led to recession fears and sell-offs in the equity market. The S&P 500 is down 22.5% year-to-date and 5.2% over the past month. Despite the economic headwinds, renowned drug maker Johnson & Johnson (JNJ) managed to beat
The No. 1 Stock to Buy on a Panic Sell-Off Read More »
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.
The stock is currently trading above its 50-Day and 200-Day moving averages of $315.46 and $293.68, respectively, indicating a bullish trend. It has gained 10.7% over the past month to close the last trading session at $332.76.
MarketClub’s Trade Triangles show that LLY has been trending UP for all the three-time horizons. The long-term trend for LLY has been UP since March 17, 2022, while its intermediate-term and short-term trends have been UP since September 28 and October 14, 2022, respectively.
The Trade Triangles are our proprietary indicators, comprised of weighted factors that include (but are not necessarily limited to) price change, percentage change, moving averages, and new highs/lows. The Trade Triangles point in the direction of short-term, intermediate, and long-term trends, looking for periods of alignment and, therefore, intense swings in price.
In terms of the Chart Analysis Score, another MarketClub proprietary tool, LLY scored +100 on a scale from -100 (strong downtrend) to +100 (strong uptrend), indicating that the uptrend is likely to continue. However, traders should protect gains.The Chart Analysis Score measures trend strength and direction based on five different timing thresholds. This tool considers intraday price action; new daily, weekly, and monthly highs and lows; and moving averages.
Click here to see the latest Score and Signals for LLY.
Merck & Co., Inc. (MRK)
With a market capitalization of $233.52 billion, MRK is a global healthcare company offering prescription medicines, vaccines, biological therapies, and animal health products. The company operates through Pharmaceuticals and Animal Health segments.
MRK’s revenue, EBITDA, and EPS increased at CAGRs of 8.8%, 10.1%, and 22.3% over the last three years, respectively.
In the fiscal 2022 second quarter ended June 30, 2022, MRK’s sales increased 28% year-over-year to $14.59 billion. The company’s non-GAAP net income grew 204.2% from the year-ago quarter to $4.74 billion. During the same period, its non-GAAP EPS amounted to $1.87, up 206.6% year-over-year.
Analysts expect MRK’s revenue for the current fiscal year (ending December 31, 2022) to come in at $58.54 billion, indicating an increase of 20.2% year-over-year. The company’s EPS is expected to increase 22.3% year-over-year to $7.36. Furthermore, MRK has topped the consensus EPS estimates in each of the trailing four quarters.
The stock is currently trading at a discount to its peers. In terms of forward P/E, MRK is presently trading at 12.53x, 31.3% lower than the industry average of 18.19x. Also, its forward Price/Sales multiple of 3.99 compares with the industry average of 4.22.
MRK is currently trading above its 50-Day and 200-Day moving averages of $88.48 and $85.82, respectively, indicating a bullish trend. It has gained 9.3% over the past month to close the last trading session at $94.12.
According to the Trade Triangles, MRK has been trending UP for all three time periods. The long-term trend for MRK has been UP since October 1, 2021, while its intermediate-term and short-term trends have been UP since October 10 and October 14, 2022, respectively.
In terms of the Chart Analysis Score, MRK scored +90, indicating that the stock is in a strong uptrend that is likely to continue. While MRK shows intraday weakness, it remains in the confines of a bullish trend. Traders should use caution and utilize a stop order.
Click here to see the latest Score and Signals for MRK.
Biogen Inc. (BIIB)
BIIB develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases. With a market capitalization of $38.40 billion, BIIB has a leading portfolio of medicines to treat multiple sclerosis, introduced the first approved treatment for spinal muscular atrophy, and developed the first and only approved treatment to address a defining pathology of Alzheimer’s disease.
During the fiscal 2022 second quarter ended June 30, 2022, BIIB’s total revenue came in at $2.59 billion, registering a slight year-over-year decline due in part to generic and biosimilar competition for TECFIDERA and RITUXAN. Total cost and expenses declined 39.8% year-over-year to $1.32 billion.
As a result, BIIB’s net income increased 135.9% from the year-ago value to $1.06 billion, while its EPS grew 142.1% from the prior-year quarter to $7.24.
Analysts expect BIIB’s EPS for the fourth quarter of the current fiscal year (ending December 31, 2022) to increase by 3.2% year-over-year to $3.50. The company has surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock is currently trading at a discount to its peers. In terms of forward P/E, BIIB is currently trading at 16.3x, 12.8% lower than the industry average of 18.72x. Also, its forward Price/Sales multiple of 3.91 compares favorably with the industry average of 4.33.
The stock is trading above its 50-day and 200-day moving averages of $222.59 and $214.35, respectively, indicating a bullish trend. It has gained 30.9% over the past month to close the last trading session at $269.55.
BIIB has been trending UP for all three time periods, according to Trade Triangles. The long-term trend for BIIB has been UP since August 8, 2022, while its intermediate-term and short-term trends have been UP since September 12 and October 13, 2022, respectively.
In terms of the Chart Analysis Score, BIIB scored +90, indicating that it is in a strong uptrend that is likely to continue. While BIIB shows intraday weakness, it remains in the confines of a bullish trend. Traders should use caution and utilize a stop order.
Click here to see the latest Score and Signals for BIIB.
What’s Next for these Health Care Stocks?
Remember, the markets move fast and things may quickly change for these stocks. Our MarketClub members have access to entry and exit signals so they’ll know when these trends start to reverse.
Join MarketClub now to see the latest signals and scores, get alerts, and read member-exclusive analysis for over 350K stocks, futures, ETFs, forex pairs and mutual funds.
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Health Care Stocks You’ll Wish You Bought Sooner Read More »
Apple (AAPL) has been a haven in this turbulent market, but recent reports say it may not increase production of its new iPhone range because weaker-than-expected demand has caused a minor drop in its stock price.
Apple’s share price has fallen about 4% since those reports. The dip is an indication of the smartphone’s continued importance to the company, despite its efforts to diversify.
Speaking of diversification, are there products or services in Apple’s pipeline that could one day become as important to the company as the iPhone?
Here are two possibilities to consider…
Apple Going into Space?
Satellite/smartphone deals are all the rage in the telecoms industry, with deals aiming to connect satellites directly to either phones or cell towers.
Amazon has partnered with Verizon, OneWeb with AT&T, and Nokia with AST SpaceMobile. T-Mobile has signed a deal to connect smartphones to SpaceX satellites. SpaceX boss Elon Musk also says he has had conversations with Apple.
A move to satellites for Apple would align nicely with its current strategy. The company has started to use more of its own designed chips to increase autonomy over hardware manufacturing. And now, Apple may hope that satellites will give it more control over connectivity to its phones…which would put it in direct competition with wireless carriers like AT&T and Verizon.
Lending credence to the satellite prediction, Apple has already sealed a deal for satellite messaging services with the satellite communications company Globalstar (GSAT).
Apple has said its new iPhone 14 series will include an “Emergency SOS” feature that will allow users to send emergency messages via satellite when out of terrestrial network coverage. This feature will come online in November and initially will be available only in the U. S. and Canada; it will be free for at least its first two years.
The tie-up has pushed Globalstar’s share price up about 55% this year. It was a life-saving deal for the loss-making company, whose stock is only around $1.73 a share, and had revenues of only $124 million in 2021. Apple has warrants to acquire up to 2.64% of Globalstar’s stock at $1.01; in return for its investment, Apple will control 85% of Globalstar’s network capacity.
A buyout of Globalstar seems almost inevitable. The potential gains for Apple could be noteworthy. Keep in mind that Globalstar comes with an existing satellite network plus approval for satellite-based mobile services. That would be another big advantage against iPhone competition.
If Apple’s satellite services also include internet connections in the future, Apple could add another large source of recurring revenue. Internet access in many isolated locations in the world is very valuable.
And even if we focus on just the U.S., an Apple satellite network would be big for the company. If 1% of iPhone users paid $100 a month for internet access via satellite, this service would add close to $1.5 billion to the Apple’s annual revenue, adding to Apple’s bundle of profitable services.
The Next iPhone?
On the hardware side, Apple’s next breakthrough product could be a virtual reality (VR) headset, which could be unveiled as early as this autumn. The company has been moving toward producing this product for a while now, making about a dozen purchases in the fields of virtual and augmented reality over the past six years.
Little is known about this new Apple product, but a “pass-through” video system from Vrana, a start-up company Apple bought in 2017 for $30 million, might be a key feature. Vrana seemingly solved the problem of not being able to see real-world objects while being inside a virtual world. The company repurposed the cameras in its Totem prototype, which had been designed to sense a user’s position, to allow users to also view their surroundings. The whole idea here is that users would be able to see the physical world around them overlaid with digital images.
The VR market remains tiny in comparison to the smartphone market at the moment, and it is currently dominated by Meta Platforms (META). Sales of Meta’s Quest 2 headset reached an estimated 10 million units last year, giving Meta 78% of the VR market, according to research firm IDC.
But based on Apple’s history, it would not surprise me if Apple’s headset quickly does to the Quest headsets what the iPhone did to Blackberry and Nokia.
While few analysts expect AR or VR to go mainstream overnight, researchers at Citi expect that 1 billion people—roughly the number of iPhone users today—will be wearing headsets by 2030. The researchers believe this will translate to a market worth up to $2 trillion in revenue by the end of the decade.
Many things have to be fixed before this happens, however—including improvements in battery power, user interface, and physical comfort for VR and AR headsets. But Apple has done it before—recall that when Apple created the iPhone, its biggest breakthrough was to replace a physical keyboard with a multitouch screen.
Perhaps someday, Apple’s headset will rival and maybe even replace its iconic iPhone.
With these two potential blockbuster products/services coming in the relatively near future, Apple’s stock remains a buy. Just keep slowly accumulating Apple stock during the current bear market. You will be rewarded when Apple’s next big thing comes to fruition.
Keep your current portfolio as-is… and this easy trade will let you tap into bonus income from your stocks. MarketWatch says it’s a “… low-risk way to boost your retirement income….” And live next week, you’ll see how this stable trade can 4X your income in just 4 days. Click here for the details.
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A big deal in the grocery store space was announced last week with the potential acquisition of Albertsons (ACI) by Kroger (KR). The merger would create a grocery chain with roughly 12% control of the US market. It’s difficult to say if the deal will make it through antitrust scrutiny. Interestingly, short-term block options trades
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With the stock market tumbling, investors are on the hunt for safer investments that pay attractive returns. The fact that you can earn 9.62% from a U.S. Savings Bond is getting a lot of buzz.
Today, let’s review the features, pros, and cons of investing in these Series I Savings Bonds.
The U.S. government sells two types of saving bonds. We may remember the Series EE Bonds from our youth when we received them as gifts. EE Bonds pay a fixed rate, currently set at 0.10%.
Series I Bonds pay a fixed rate plus the inflation rate. The fixed-rate sits at 0.0%; however, the inflation rate portion is currently set at 9.62%.
Series I Bond rates are set twice a year on May 1 and November 1. The rate you initially earn will be in effect for the six-month window when you purchase your I Bonds. To lock in the current 9.62% rate, you must buy I Bonds no later than October 28.
Series I Bonds compound semi-annually. This means if you buy an I Bond now, it will earn 9.62% for six months, and then the rate will reset to the rate in effect on the semi-annual anniversary date. Simply put, the Series I Savings Bond rate resets every six months.
Here are the features of Series I Savings:
You can buy up to $10,000 of electronic I Bonds per year per person. You buy bonds through the Treasury Direct website.You can buy electronic bonds for any amount of $25.00 or greater.You can invest up to $5,000 of your federal tax return into paper I Bonds.Paper bonds come in denominations of $50, $100, $200, $500, and $1,000.I Bonds earn interest for up to 30 years.You can redeem a bond after one year, but if you redeem during the first five years, you will be charged a three-month interest penalty.I Bond interest is exempt from state income tax.For federal income taxes, you can declare the interest each year and pay taxes or let the interest grow tax-deferred until you redeem the bonds.
Overall, in this era of high inflation, Series I Bonds are a pretty good place to sock away some money.
But, there are some potential pitfalls to consider:
The $10,000 annual investment cap limits how much money you can put into I Bonds. You can’t sock away your entire nest egg and earn a government guaranteed 9.62%.Interest compounds to the value of the bond. You cannot elect to have the interest paid out. Your earnings will be tied up until you redeem the bonds.The semi-annual rate reset means you may earn a much lower interest rate in the future. The next reset on November 1 should be very attractive, but the rate could be much lower a few years later.
If you can live with the restrictions, Series I Savings Bonds offer an attractive, U.S. government-guaranteed return with the current 9.62% yield (if purchased before October 28), and can provide some stability to your investment portfolio. You can buy savings bonds through an account on the TreasuryDirect.gov website.
This is the easiest way to reach your income goals faster. For example, instead of collecting $1,000 per year in dividends, you could potentially increase your yearly income to $4,000 or more. And LIVE on October 20th, I’m revealing exactly how this simple strategy works. Get your ticket here.
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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.
Its EPS is expected to come in at $1.43, indicating a 7% increase from the prior-year quarter. However, revenue and EPS are expected to decrease 22.3% and 20.2% year-over-year for the next year, respectively.
The stock is currently trading at a discount to its peers. In terms of its forward P/E, PFE is trading at 7.57x, 65.6% lower than the industry average of 21.98x. Its forward Price/Sales multiple of 2.41 is 42.2% lower than the industry average of 4.16.
PFE is trading below its 50-day and 200-day moving averages of $46.08 and $50.17, respectively, indicating a bearish sentiment. It closed the last trading session at $42.86.
According to MarketClub’s Trade Triangles, the long-term trend for PFE has been DOWN since August 29, 2022, and its intermediate-term trend has been DOWN since Jul 21, 2022.
The Trade Triangles are our proprietary indicators, comprised of weighted factors that include (but are not necessarily limited to) price change, percentage change, moving averages, and new highs/lows. The Trade Triangles point in the direction of short-term, intermediate, and long-term trends, looking for periods of alignment and, therefore, intense swings in price.
In terms of the Chart Analysis Score, another MarketClub proprietary tool, PFE scored -55 on a scale from -100 (strong downtrend) to +100 (strong uptrend), indicating that the stock is moving in a sideways pattern and is unable to gain momentum in either direction. So, until a more robust trend is identified, it could be wise to avoid the stock.
The Chart Analysis Score measures trend strength and direction based on five different timing thresholds. This tool considers intraday price action, new daily, weekly, and monthly highs and lows, and moving averages.
Click here to see the latest Score and Signals for PFE.
Snap Inc. (SNAP)
SNAP is a camera and social media company operating worldwide. The company’s popular offering is Snapchat, a camera application with various functionalities, such as Camera, Communication, Snap Map, Stories, and Spotlight, enabling people to communicate visually through short videos and images.
The stock has declined 87% over the past year and 78.8% year-to-date to close the last session at $9.99. Bearish sentiments around the stock can be attributed to the challenging economic conditions, slowing demand for its online ad platform, Apple Inc.’s (AAPL) privacy-related changes, and growing competition from emerging social media companies.
SNAP’s daily active users grew 18% year-over-year to 347 million in the fiscal second quarter that ended June 2022. However, its average revenue per user declined by 4% to $3.20.
The company’s revenue increased 13.1% year-over-year to $1.11 billion. However, its net loss increased 178.3% year-over-year to $422.07 million, while its non-GAAP loss per share came in at $0.02, compared to an EPS of $0.10 in the prior-year period.
While analysts expect its revenue to increase 5.3% year-over-year to $1.12 billion in the about-to-be-reported quarter, ended September 2022, its EPS is expected to remain negative. The Street expects its EPS to decline 85.4% year-over-year in the fiscal year ending December 2022.
The stock looks overvalued at its current price level. Its forward non-GAAP P/E of 137x is 931% higher than the industry average of 13.29x. Regarding its forward Price/Sales, SNAP is currently trading at 3.52x, 215% higher than the industry average of 1.12x.
SNAP is currently trading below its 50-day moving average of $11.03 and 200-day moving average of $23.01.
SNAP’s long-term trend has been DOWN since October 22, 2021, while the intermediate-term trend has been DOWN since September 26, 2022, according to the Trade Triangles.
In terms of the Chart Analysis Score, SNAP scored -55. This score indicates that SNAP is moving in a sideways pattern and is unable to gain momentum in either direction. Until a more substantial trend is identified, the stock could be avoided.
Click here to see the latest Score and Signals for SNAP.
What’s Next for Pfizer Inc. (PFE) and Snap Inc. (SNAP)?
Join MarketClub now to see the latest signals and scores, get alerts, and read member-exclusive analysis for PFE and SNAP plus over 350K stocks, futures, ETFs, forex pairs and mutual funds.
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Best,The MarketClub Team[email protected]
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The COVID-19 pandemic brought the healthcare sector into the spotlight. In recent years, the demand for health insurance has increased worldwide due to the importance of protection against serious diseases. The persistently high inflation could mean rising healthcare expenditures. Although many Americans have comprehensive health insurance coverage through their employers, many still remain uninsured or
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The stock market is witnessing wild swings as red-hot inflation, the Fed’s rate hikes, ongoing geo-political instability, and other macroeconomic headwinds have battered the economy. JP Morgan CEO Jamie Dimon expects the economy to hit a recession next year. He also estimates the Fed’s benchmark interest rates to go higher than the 4%-4.5% level as
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Netflix (NFLX) is today’s morning trade for beginner, intermediate, and advanced options traders. Tim Biggam demonstrates an example trade using NFLX. The trade type is a call calendar and the direction is neutral to bullish. Tune in to find out more about the stock market today. Watch the video on the TD Ameritrade Network.
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