tdan05072020

Finding Stocks with Solid Fundamentals

Andy Wang returned to The Watch List with Nicole Petallides to discuss financial markets and stocks.

Resilient Stock Market Moves Higher 

With a decoupling of fundamentals and market prices, we need to be cognizant of speculation versus investing. One way to control risk in this liquidity driven environment is to focus on sectors like consumer staples, healthcare, and technology that have better earnings visibility this year and in 2021.

Food at Home Trend Continues 

The grocery store has become the most essential of stores in the current COVID-19 environment. Grocers are considered essential business in every state. As one of the largest grocers in the United States, Kroger (KR) is well positioned to benefit from continued increased spending on food at home. We believe that consensus estimates reflect the change in consumer behavior of less eating at restaurants and more eating at home to last through Q2 but could continue for longer.

Customers are going to the grocery store less frequently but increasing weekly spend. This favors one-stop shopping at stores like Kroger that sell groceries, gas, and pharmacy products. The stock trades at 13x next year's EPS forecast of $2.47. Investors should keep an eye on costs as food retailers, including Kroger, have cited increasing costs to keep shelves stocked and employees and customers safe.

Recession Proof Pharmaceuticals 

Today, Bristol Myers Squibb Co (BMY) reported adjusted income of $1.72 per share on $10.8 billion in sales for its first quarter, beating by earnings estimates. Company management reaffirmed EPS guidance of $6.00-$6.20 and expects $40 billion to $42 billion in sales. Drugs Opdivo, Eliquis, and Revlimid all came in ahead of consensus.

The company benefited from consumers stocking up on medicines in the quarter due to the pandemic, increasing its sales by around $500 million. The stock currently trades at 9x next year's EPS forecast of $7.32.

Investors should note that 2020 and 2021 guidance assumes the peak impact of the COVID-19 pandemic on BMY's business occurs in 2Q20, a return to a more stable business environment in 3Q20, and minimal impact from 4Q20 onwards.

Watch the full video

andy wang financial televisionsubscribe to our podcastWhat sectors do you think are benefitting from the current environment and economy?

Share This Story, Choose Your Platform!

About the Author: Andrew Wang

Andrew Wang

IMPORTANT DISCLOSURE INFORMATION 

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Runnymede Capital Management, Inc.-"Runnymede"), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Runnymede.  Please remember that if you are a Runnymede client, it remains your responsibility to advise Runnymede, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Runnymede is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Runnymede's current written disclosure Brochure discussing our advisory services and fees is available for review upon request. Please Note: Runnymede does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Runnymede's web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Search Website

Annuity Review Database

Follow Our Podcast


Google Podcasts
Apple Podcasts
spotify

Recent Posts