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Chip maker Qualcomm has seen its stock drop nearly 10% so far.
Qilai Shen / Bloomberg
He
S&P 500
closed on a record on Thursday, above 4000 for the first time. But not all stocks have shared these gains so far this year.
While most S&P 500 stocks are positive for the year, about one in five has declined during the first quarter of 2021. Some have fallen for key reasons, while others seem to be on the rise. from the growth stock market to stock names.
Once the headwind has eased, the names that have been left behind are likely to recover, as their profit estimates remain strong. In some cases, analysts have adjusted their expectations further this year. This presents a good opportunity to get shares of fundamentally solid companies at discount prices.
Among the nearly 100 S&P 500 companies whose shares are in negative territory to date, approximately half are expected to post earnings per share in 2021 that are at least 20% higher than the 2019 tax gains. , about 30 are expected to see strength remain until 2022, meaning their 2022 gains are expected to grow by at least another 10% from 2021 levels.
To find shares whose potential profit is not reflected in the share prices, De Barron took those 30 names and removed all the shares that were traded with more than 30 times the earnings estimates of 2021. This left us with nine names.
Even better, analysts have raised their earnings estimates for 2021 and 2022 for all stocks since late last year, meaning Wall Street is making them more bullish. These discounted names are mainly growth stocks in the health, technology, telecommunications and consumer sectors.
Note: The 2021 and 2022 EPS are consensual estimates.
Source: FactSet
Chip maker
Qualcomm
(ticker: QCOM), for example, has seen its stock fall nearly 10% so far. Investors don’t seem impressed by the company’s first-quarter earnings, which were 62% higher than a year ago, but still didn’t take analysts ’expectations into account. In the longer term, the company – known for the chips that power smartphone processors – could benefit from the global transition to 5G networks and infrastructure spending proposed by the Biden administration.
Vertex Pharmaceuticals
Stocks (VTRX) are another example where a recent setback due to negative events may have gone too far. In mid-October, the biotech company canceled the development of a drug it promised once the test results disappointed. Its stock has fallen 23% since then and has fallen 10% so far. Despite the failure of that drug, De Barron wrote in March that Vertex remains a potent source in the treatment of cystic fibrosis and is developing a promising pipeline beyond.
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