Scoop Up These 2 'Strong Buy' Healthcare Stocks Trading More Than 25% Below Their 52-Week Highs The growing demand for healthcare services amid the COVID-19 pandemic has led to substantial capital inflows to the industry. Moreover, disruptive pro...
By Subhasree Kar •
This story originally appeared on StockNews
The growing demand for healthcare services amid the COVID-19 pandemic has led to substantial capital inflows to the industry. Moreover, disruptive progress in genomics and smart healthcare is expected to be the next big thing. Given the industry's solid growth prospects, we think fundamentally sound healthcare stocks Global Cord (CO) and IRIDEX (IRIX), which are currently trading at more than 25% below their 52-week price highs, could deliver significant returns. Let's take a closer look at these names.
Healthcare spending has increased significantly in recent years, and currently accounts for more than 17% of U.S. GDP. The United States spends almost twice as much on healthcare as other nations. Healthcare companies' crucial role in helping the world fight against coronavirus has led to significant capital inflows in the industry from governments and private organizations worldwide.
The industry's revenue increased 26.9% year-over-year and 6.7% sequentially in the second quarter of 2021. Moreover, the burgeoning genomics and healthcare technology segments are expected to revolutionize the industry in the near term.
So far, the industry has demonstrated immense growth potential, with significant progress in smart healthcare and innovative breakthroughs. Given the industry's vitality and its growth prospects, we think that fundamentally sound healthcare stocks Global Cord Blood Corporation (CO) and IRIDEX Corporation (IRIX), which are currently trading more than 25% below their 52-week price highs, could be good bets now. These stocks are rated "Strong Buy' in our proprietary POWR Ratings system.
Click here to checkout our Healthcare Sector Report for 2021
Global Cord Blood Corporation (CO)
Based in Hong Kong, CO provides umbilical cord blood storage and ancillary products. The company offers cord blood testing, processing, and storage services, and tests, processes, and stores donated cord blood, as well as providing matching services.
CO's revenues increased 12.2% year-over-year to RMB315.17 million ($48.81 million) in its fiscal first quarter ended June 30. Its gross profit grew 12.6% from its year-ago value to RMB267.33 million ($41.41 million), while its operating income improved 17.3% year-over-year to RMB156.56 million ($24.25 million). Its net income attributable to the company's shareholders increased 3% year-over-year to RMB136.42 million ($21.13 million).
Shares of CO have gained 35.7% in price over the past year and 24% year-to-date to close yesterday's trading session at $4.57. The stock is currently trading 27.6% below its 52-week high of $6.31.
It is no surprise that CO has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock also has an A grade for Quality, and a B grade for Value and Stability. Among the 57 stocks in the Medical - Diagnostics/Research industry, CO is ranked #3.
To see additional CO ratings for Sentiment, Growth, and Momentum, click here.
IRIDEX Corporation (IRIX)
IRIX in Mountain View, Calif., is an ophthalmic medical technology company that provides therapeutic-based laser systems, delivery devices, and consumable instrumentation to treat sight-threatening eye diseases in ophthalmology.
For its second fiscal quarter, ended July 3, IRIX's revenue came in at $13.43 million, its highest level since 2007, reflecting a 116% increase from the same period last year. Its gross profit stood at a 14-year quarterly high of $6.11 million, up 153.9% year-over-year. Its net income grew 150.1% from its year-ago value to $1.39 million. The company's EPS increased 145% year-over-year to $0.09.
A $51.49 million consensus revenue estimate for the current year indicates a 41.7% increase year-over-year. The Street expects the company's EPS to rise 41.3% in the current year, versus the last year. Moreover, IRIX has an impressive earnings surprise history also; it beat the consensus EPS estimates in three out of the trailing four quarters.
IRIX gained 278.5% in price over the past year to close yesterday's trading session at $7.22. The stock has gained 172.9% year-to-date. It is trading 25.6% below its 52-week high of $9.71.
IRIX has an overall A rating, which translates to Strong Buy in our proprietary POWR Ratings system. IRIX has an A grade for Sentiment, and a B for Value and Quality. It is ranked #12 out of the 183 stocks in the Medical - Devices & Equipment industry.
Click here to view additional IRIX ratings for Growth, Momentum, and Stability.
Click here to checkout our Healthcare Sector Report for 2021
CO shares were trading at $4.61 per share on Friday morning, up $0.04 (+0.88%). Year-to-date, CO has gained 24.26%, versus a 19.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree's keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master's degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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