3 Defensive Stocks to Buy Amid Volatility Even as the market has remained volatile over the past few months due to rising inflation and a resurgence of COVID-19 cases, some companies have remained relatively stable based on...
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Even as the market has remained volatile over the past few months due to rising inflation and a resurgence of COVID-19 cases, some companies have remained relatively stable based on their fundamental strength. Thermo Fisher (TMO), Vertex Pharmaceuticals (VRTX), and Turkcell Iletisim (TKC) are examples of this. So, we think they are well-positioned to dodge market volatility and as such should be a good addition to one's portfolio now. Read on.
Last week, the Senate's approval of a compromise bill helped avoid a U.S. debt default. Also, according to a Factset report, more S&P 500 companies have issued positive EPS guidance for the third quarter. However, the market remains volatile because ongoing supply chain disruptions and rising oil prices are adding fuel to an inflationary environment.
Furthermore, the spread of the COVID-19 cases continues to concern investors regarding the pace of the global economic recovery. According to a Bankrate survey, most top experts believe that a stock market correction is likely within the next year.
Amid current volatility, Thermo Fisher Scientific Inc. (TMO), Vertex Pharmaceuticals Incorporated (VRTX), and Turkcell Iletisim Hizmetleri A.S. (TKC) could be good additions to one's portfolio. Their less-than-one beta and solid growth attributes could help them dodge the volatility.
Thermo Fisher Scientific Inc. (TMO)
TMO offers life sciences solutions, analytical instruments, specialty diagnostics, and laboratory products and services worldwide. The Waltham, Mass.-based company operates in four segments: Life Sciences Solutions; Analytical Instruments; Specialty Diagnostics; and Laboratory Products and Services.
On October 1, 2021, TMO announced that it had assumed operational responsibility for a new biologics manufacturing site in Lengnau, Switzerland, as part of its strategic partnership with CSL Limited (CSLLY). Michel Lagarde, TMO's executive vice president, said, "Through our partnership with CSL, this site further strengthens our unique customer value proposition to leverage our scale and depth of capabilities for pharma and biotech customers."
TMO's total revenue surged 34% year-over-year to $9.27 billion in its fiscal second quarter, ended July 3, 2021. The company's adjusted operating income grew 44% year-over-year to $2.69 billion, while its adjusted net income came in at $2.22 billion, representing a 43% year-over-year rise. Also, its adjusted EPS was $5.60, up 44% year-over-year. TMO's revenue and EPS have grown at CAGRs of 18.3% and 53.9%, respectively, over the past three years.
TMO's EPS is expected to be $22.17 in its fiscal year 2021, representing a 13.4% year-over-year increase. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Also, the company's revenue is expected to increase 12.2% year-over-year to $40.43 billion in fiscal 2022. It has a 0.73 beta.
It is no surprise that TMO has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has a B grade for Sentiment. Click here to see TMO's ratings for Growth, Value, Momentum, Quality, and Stability as well. TMO is ranked #14 of 57 stocks in the Medical - Diagnostics/Research industry.
Click here to checkout our Healthcare Sector Report for 2021
Vertex Pharmaceuticals Incorporated (VRTX)
VRTX in Boston, Mass., develops and commercializes therapies for treating cystic fibrosis. The company markets SYMDEKO/SYMKEVI, ORKAMBI, and KALYDECO, to treat patients with cystic fibrosis who have specific mutations in their cystic fibrosis transmembrane conductance regulator gene.
On August 24, 2021, VRTX and Arbor Biotechnologies formed a new collaboration to enhance efforts in developing ex vivo engineered cell therapies. Bastiano Sanna, Ph.D., Executive Vice President and Chief of Cell and Genetic Therapies at VRTX, said, "This new collaboration further expands our toolkit in cell and genetic therapies and, specifically, our work to discover and develop cell therapies for the treatment of multiple serious diseases."
VRTX's product revenues surged 18% year-over-year to $1.79 billion in its fiscal second quarter, ended June 30, 2021. The company's non-GAAP operating income grew 18% year-over-year to $1.03 billion, while its non-GAAP net income came in at $811 million, representing an 18% year-over-year rise. Also, its non-GAAP EPS was $3.11, up 19% year-over-year. VRTX's revenue and EPS have grown at CAGRs of 36.6% and 67.5%, respectively, over the past three years.
For the quarter ending December 31, 2021, Analysts expect VRTX's EPS and revenue to increase 25.1% and 17.7% year-over-year to $3.14 and $1.92 billion, respectively. In addition, it surpassed the Street's EPS estimates in three of the trailing four quarters. It has a 0.66 beta.
VRTX's POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to a Buy in our proprietary rating system. The stock has a B grade for Value, Sentiment, and Quality.
Within the Biotech industry, VRTX is ranked #24 of 506 stocks. Click here to see the additional POWR Ratings for VRTX (Stability, Momentum, and Growth).
Click here to checkout our Healthcare Sector Report for 2021
Turkcell Iletisim Hizmetleri A.S. (TKC)
Headquartered in Istanbul, Turkey, TKC provides digital services internationally, and operates through Turkcell Turkey and Turkcell International segments. The company offers voice, data, and video communication solutions to its individual and corporate customers, and broadband services.
On August 12, TKC's CEO, Murat Erkan, said, "Considering our financial performance and our expectations for the second half of the year, we revise our 2021 guidance upwards. Accordingly, we increase our revenue growth guidance to around 18% and our EBITDA guidance to around TRY14.3 billion. Due to increased fiber investments and currency fluctuations, we target an operational capex over sales ratio of 21-22%."
TKC's revenues surged 23.5% year-over-year to TRY8.55 billion ($952.13 million) in its fiscal second quarter, ended June 30, 2021. The company's EBITDA grew 22.7% year-over-year to TRY3.47 billion ($386.06 million), while its net income came in at TRY1.11 billion ($123.97 million), representing a 30.6% year-over-year rise. Also, its EPS was TRY0.51, up 30.8% year-over-year. TKC's revenue and EPS have grown at CAGRs of 18.6% and 39.9%, respectively, over the past three years.
Analysts expect TKC's EPS to be $0.66 for its fiscal year, ending December 31, 2021, representing an 18.3% year-over-year increase. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Also, the company's revenue is expected to increase 14.7% year-over-year to $4.43 billion for its fiscal year ending December 31, 2021. It has a 0.85 beta.
TKC's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
In addition, it has an A grade for Value, and a B grade for Stability and Quality. Click here to access TKC's ratings for Growth, Sentiment, and Momentum as well. TKC is ranked #12 of 48 stocks in the A-rated Telecom - Foreign industry.
TMO shares were trading at $582.48 per share on Friday morning, up $5.13 (+0.89%). Year-to-date, TMO has gained 25.26%, versus a 20.29% 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.
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