3 Value Stocks That Could Help Grow Your Portfolio in August (and Beyond)
August 09, 2021 at 07:13 AM EDT
Although the market remains highly volatile on concerns over the resurgence of COVID-19 cases, the major stock market indexes are trading near their all-time highs owing to impressive corporate earnings. Favorable market sentiment has led to sky-high valuations for several stocks and finding value stocks has become difficult. However, we think the shares of fundamentally sound stocks Bristol-Myers (BMY), PetroChina (PTR), and Gilead (GILD) still look undervalued at their current price levels considering these companies’ immense growth potential. So, read on for a closer evaluation of these names.
Value stocks were in focus earlier this year as investors rotated away from expensive growth stocks. However, despite concerns surrounding the resurgence of COVID-19 cases and uncertainty regarding the timing of the Federal Reserve’s tapering moves, the benchmark stock market indexes lately received a significant boost from strong corporate earnings results and news of a substantial decline in the unemployment rate. This has made most stocks expensive.
While investing in value stocks is one of the best strategies now, finding quality value stocks in the high-trading market isn't easy. According to a CNBC survey, nearly 70% of the respondents said that value stocks would do better than their growth counterparts in the coming months.
Despite performing well over the past few months, shares of Bristol-Myers Squibb Company (BMY), PetroChina Company Limited (PTR), and Gilead Sciences, Inc. (GILD) still look undervalued at their current price levels, considering these companies’ growth prospects. In addition, our proprietary POWR Ratings system has rated these stocks A for Value along with an overall Strong Buy or Buy rating.
Bristol-Myers Squibb Company (BMY)
Biopharmaceutical company BMY in New York City offers products in hematology, oncology, cardiovascular, and immunology therapeutic classes. Its popular products include Revlimid, Opdivo, Eliquis, and Orencia, and it sells its products to wholesalers, distributors, pharmacies, retailers, hospitals, clinics, and government agencies. In addition, it has collaboration agreements with several companies, including Pfizer, Inc. (PFE).
On July 30, 2021, BMY announced that the European Commission had approved Opdivo for the adjuvant treatment of adult patients with esophageal or gastroesophageal junction cancer who have residual pathologic disease following prior neoadjuvant chemoradiotherapy. The approval is expected to drive increased sales of Opdivo.
BMY’s total revenues increased 16% year-over-year to $11.70 billion in the second quarter, which ended June 30, 2021. Its non-GAAP gross profit grew 14.5% year-over-year to $9.34 billion. The company’s non-GAAP EPS increased 18% from its year-ago value to $1.93.
In terms of forward non-GAAP P/E ratio, BMY’s 9.09x is 61.3% lower than the 23.47x industry average. In terms of forward P/S, the stock’s 3.27x is 58.5% lower than the 7.87x industry average.
For the quarter ending September 30, 2021, analysts expect BMY’s EPS and revenue to increase 20.9% and 12.2%, respectively, year-over-year to $1.97 and $11.59 billion. In addition, it has surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past six months, the stock has gained 11.8% to close Friday’s trading session at $68.12.
BMY’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to a Strong Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has an A grade for Value, and a B grade for Growth, Stability, and Quality. Within the Medical – Pharmaceuticals industry, BMY is ranked #10 of 219 stocks. To see the additional POWR Ratings for BMY (Sentiment and Momentum), click here.
Note that BMY is one of the few stocks handpicked by our Chief Value Strategist, David Cohne, currently in the POWR Value portfolio. Learn more here.
PetroChina Company Limited (PTR)
Headquartered in Beijing, China, PTR offers a range of petroleum-related products, services, and activities internationally. The company has 22,555 km of natural gas pipelines, 7,190 km of crude oil pipelines, and 1,406 km of refined product pipelines. It is a subsidiary of China National Petroleum Corporation.
The company’s operating income increased 16.3% year-over-year to ¥551.92 billion ($85.43 billion) for the fiscal first quarter ended March 31, 2021. Its operating profit came in at ¥44.15 billion ($6.83 billion) compared to a ¥9.25 billion ($1.43 billion) operating loss in the prior-year period. Its net income came in at ¥31.64 billion ($4.90 billion) compared to a ¥13.35 billion ($2.07 billion) net loss in the year-ago period. Its EPS came in at ¥0.15 ($0.02) compared to a ¥0.09 ($0.01) loss per share in the prior year period.
In terms of forward non-GAAP PEG ratio, PTR’s 0.13x is 82.4% lower than the 0.74x industry average. In terms of forward P/S, the stock’s 0.21x is 82.6% lower than the 1.18x industry average.
Analysts expect PTR’s EPS and revenue to increase 245.5% and 34.5% year-over-year to $5.01 and $377.09 billion, respectively, in its fiscal year 2021. The stock has gained 39.1% over the past nine months to close Friday’s trading session at $41.50.
PTR’s POWR Ratings reflect solid prospects. The company has an overall B rating, which translates to Buy in our proprietary ratings system. In addition, it has an A grade for Growth and Value, and a B grade for Stability.
Gilead Sciences, Inc. (GILD)
GILD is a research-based biopharmaceutical company that discovers, develops, and commercializes medicines in the areas of unmet medical need internationally. The Foster City, Calif., company provides Biktarvy, Genvoya, Descovy, and Odefsey products to treat human immunodeficiency virus (HIV) infection; and Valery, an injection for intravenous use for the treatment of coronavirus disease.
On August 5, Kite, a GILD company, and Appia Bio, Inc. announced a collaboration and license agreement to research and develop HSC-derived cell therapies directed toward hematological malignancies. Mert Aktar, Vice President of Corporate Development and Strategy at Kite, said, “Through our collaboration with Appia Bio, we’re excited to harness unique biological properties of invariant natural killer T cells to research and develop allogeneic cell therapies for cancer.”
GILD’s revenue increased 21% year-over-year to $6.22 billion for the second quarter ended June 30, 2021. Its net income came in at $1.52 billion compared to a 3.34 billion net loss in the prior-year period. The company’s non-GAAP EPS came in at $1.87, up 68% year-over-year.
In terms of forward non-GAAP P/E ratio, GILD’s 9.62x is 59% lower than the 23.47x industry average. In terms of forward P/CF, the stock’s 7.88x is 57.8% lower than the 18.68x industry average.
GILD has gained 18.1% year-to-date to close Friday’s trading session at $68.78.
GILD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. In addition, it has an A grade for Value, and a B grade for Growth and Quality.
BMY shares were trading at $67.64 per share on Monday morning, down $0.48 (-0.70%). Year-to-date, BMY has gained 10.71%, versus a 18.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.3 Value Stocks That Could Help Grow Your Portfolio in August (and Beyond) appeared first on StockNews.com