The three main stock market indices experienced a large gathering during the ordinary session on Tuesday. Investor optimism surrounding a better-than-expected manufacturing reading and strong corporate sentiment as COVID-19 cases continue to decline may have sparked the rebound after a downtrend in September. While the market may continue to be volatile in October amid concerns over the potential reduction of its bond buying program by the Fed in the near term, analysts expect the last quarter of the year is favorable to actions.
Sam Stovall, CFRA Chief Investment Strategist estimates that while October had already seen higher volatility compared to the averages of the other 11 months, this year the fourth quarter is expected to post an “above average return”. Additionally, the next earnings season could be a positive catalyst for the stock market, with expected earnings growth and surprises boosting investor sentiment.
In this environment, the fundamentally strong stocks Smith & Nephew plc (SNN), DaVita Inc. (DVA) and Orthofix Medical Inc. (OFIX), which have declined over the past month, are well positioned to regain momentum soon. So these stocks could be solid bets now.
Smith & Nephew plc (SNN)
Based in Watford, UK, SNN is a medical technology company that develops, manufactures, markets and sells medical devices and services. The company’s global franchise areas include orthopedics, sports medicine and ENT, and advanced wound management. It also operates Arthroscopic Enabling Technologies (AET), Trauma & Extremities and other surgical businesses.
Last month, SNN launched two important new technologies in its total knee replacement (TKA) portfolio: the JOURNEY II Medial Dished (R) for TKG and the SYNC performance instruments. These new additions will allow orthopedics to achieve the desired knee kinematics in total knee replacement procedures with sacrifice and crusader retention.
SNN’s revenue increased 27.7% year-on-year to $ 2.6 billion in the second quarter ended July 3, 2021. The company’s gross profit increased 31.6% from last year’s value to reach $ 1.84 billion. Its trading profit increased 166.9% from the previous year quarter to $ 459 million. Also, the company Operating profit was $ 239 million, compared to an operating loss of $ 5 million in the second quarter of 2020.
Analysts expect SNN’s EPS to grow at the rate of 4.6% per year over the next five years. The company’s consensus revenue of $ 5.37 billion for the fiscal year ending December 2021 represents a 17.7% year-over-year increase. But the stock has lost 10.4% in the past month.
SNN’s strong fundamentals are reflected in its POWR odds. The stock has an overall A rating, which equates to a strong buy in our proprietary rating system. POWR ratings evaluate stocks based on 118 different factors, each with its own weight.
In addition, the stock has a B rating for value, quality and growth. We also rated SNN for stability, sentiment, and momentum. Click here to access all SNN reviews.
SNN is ranked n ° 11 out of 176 shares in the Medical – Apparatus and equipment industry.
DaVita Inc. (DVA)
Incorporated in 1994, DVA is a provider of kidney dialysis services that operates through US dialysis services and related laboratory services; and Other ancillary services and strategic initiatives. The company’s other businesses include DaVita Integrated Kidney Care, DaVita Venture Group, DaVita Clinical Research and DaVita Physician Solutions.
Last month, DVA appointed Dr. Gregory Moore as its new independent director. Dr. Moore, with his experience, is expected to help the company accelerate the digital transformation of kidney care. In addition, he will develop new solutions that should help the company create a caring environment for patients in the future.
In the second quarter ended June 30, 2021, DVA’s total revenue increased 1.3% year-over-year to $ 2.92 billion. The company’s net profit increased 37.7% from last year’s value to $ 351.03 million. Its EPS was up 63% from the previous year quarter to $ 2.64. In addition, the company’s cash and cash equivalents increased by 221.2%, from $ 324.96 million as at December 31, 2020 to $ 1.04 billion as at June 30, 2021.
DVA revenue is expected to grow 3.4% year-on-year to $ 12.01 billion in fiscal 2022. The Company Has an Impressive History of Surprising Profits; it has beaten consensus EPS estimates in three of the past four quarters. Its EPS is expected to increase by 26.7% in the current year. While the stock has lost 13% in the past month, it has gained 32.7% in the past year.
DVA’s POWR ratings reflect this promising outlook. The stock has an overall A rating, which equates to a strong buy in our proprietary rating system. In addition, the stock has a B rating for growth, value and quality.
In addition to the POWR ratings that I just outlined, we can see the DVA ratings for stability, momentum and feeling. here. The stock is ranked # 1 out of 84 stocks in the Medical services industry.
Orthofix Medical Inc. (OFIX)
OFIX is a global medical device company focused on solutions for the spine and orthopedics. It has two strategic business units: Orthofix Spine and Orthofix Orthopedics. The company operates in four segments: BioStim; Organic Products ; Attachment of the ends; and fixation of the spine. Its segments offer Spinal-Stim, Trinity Evolution, VersaShield, eight-plate guided growth system and Contours VPS Volar Plating System III.
Last month, OFIX announced that more than 60,000 M6-C artificial cervical discs have been implanted worldwide. This generation disc includes a viscoelastic artificial core and a fibrous ring, as well as various unique features. The M6-C drive has established a leading position in the industry and is expected to set the company apart in the market.
OFIX net sales increased 66% year-on-year to $ 121.39 million. The company’s gross profit increased 88% from last year’s value to $ 93.96 million. Its operating profit was $ 4.27 million for the quarter, compared to an operating loss of $ 21 million in the previous year quarter. In addition, the company’s net income was $ 2.42 million, compared to a net loss of $ 18.42 million in the second quarter of 2020.
For fiscal 2021, analysts expect OFIX revenue to be $ 467.93 million, up 15.1% year-over-year. The company has an impressive history of profit surprises; it has beaten consensus EPS estimates in each of the past four quarters. In addition, its EPS is expected to increase by 184.6% in the current year. The OFIX share price has jumped 15.4% over the past year. But it has fallen 12.4% over the past month.
It’s no surprise that OFIX has an overall A rating, which equates to a strong buy in our POWR rating system. Also, the stock has an A rating for value and a B for quality.
Click here to view additional POWR ratings for OFIX (Momentum, Sentiment, Stability & Growth). OFIX is ranked n ° 12 in the Medical – Devices and equipment sector.
SNN shares were left unchanged on Wednesday after trading hours. Year-to-date, SNN is down -17.49%, compared to a 17.46% increase in the benchmark S&P 500 over the same period.
About the Author: Priyanka Mandal
Priyanka is an avid investment analyst and financial journalist. After earning a master’s degree in economics, her interest in financial markets motivated her to embark on her career in investment research. Following…