9 precipitated stocks that look promising

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The

S&P 500

closed with a record Thursday, above 4000 for the first time. But not every stock has shared in that profit so far this year.

While the majority of S&P 500 shares are positive for the year, about one in five has fallen in the first quarter of 2021. value names.

However, once headwinds ease, the laggard names are likely to catch up as their earnings expectations remain strong. In some cases, analysts have raised their expectations this year. This is a good opportunity to acquire shares of fundamentally sound companies at low prices.

Of the nearly 100 S&P 500 companies whose shares are in negative territory to date, about half are expected to have earnings per share in 2021 at least 20% higher than earnings in fiscal 2019. Van they are expected to maintain that strength through 2022, meaning their revenues are expected to grow by an additional 10% by 2022 from the 2021 level.

To find stocks whose earnings potential may not be reflected in stock prices, Barron’s took those 30 names and removed all stocks trading more than 30 times earnings expectations for 2021. That resulted in nine names.

In fact, analysts have been raising their earnings estimates for 2021 and 2022 for all stocks since late last year, meaning Wall Street is making them more optimistic. These discounted names are typically growth stocks in the healthcare, technology, telecommunications and consumer sectors.

Note: The EPS for 2021 and 2022 are consensus estimates.

Source: FactSet

Chip maker

Qualcomm

(ticker: QCOM), for example, the stock has seen its stock fall nearly 10% so far. Investors seem unimpressed by the company’s first quarter sales, which were 62% higher than a year ago, but have still not met analyst expectations. In the longer term, the company – known for the chips that power smartphone processors – could benefit from the global transition to 5G networks and the proposed infrastructure spending from the Biden administration.

Vertex Pharmaceuticals

(VTRX) stocks are another example where a recent downturn due to negative events may have gone too far. In mid-October, the biotech company canceled development of a once-promising drug after the trial’s results were disappointing. The stock has since fallen 23% and is down 10% so far. Despite the flop of that one drug, Barron’s wrote in March that Vertex remains a powerhouse in the treatment of cystic fibrosis and is further developing a promising pipeline.

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