HOLX - Scoop Up These 2 Buy-Rated Stocks Down More Than 25% From Their Recent Highs

As a function of the accelerating economic recovery, concerns over rising inflation and Treasury yields are causing a price retreat by some stocks that have strong fundamentals.

Although inflation concerns might put pressure on the overall stock market in the near term, the odds of these stocks recovering are high compared to those that don’t possess strong financials and are overvalued.

Hologic, Inc. (HOLX) and TDK Corporation (TTDKY) are currently trading way below their recent highs due to the broader market dynamics, but we think they could be destined for solid gains in the near future based on their strong financials and growth prospects.

Hologic, Inc. (HOLX)

HOLX develops, manufactures, and supplies diagnostics products, medical imaging systems, and surgical products for women's health through early detection and treatment. It operates internationally through four segments: Diagnostics, Breast Health, GYN Surgical, and Skeletal Health. The company provides Aptima SARS-CoV-2 and Panther Fusion SARS-CoV-2 assays for detection of SARS-CoV-2.

On April 8, HOLX announced that it had signed an agreement to acquire Mobidiag Oy, a privately held, commercial-stage Finnish-French developer of innovative molecular diagnostic tests and instrumentation, for approximately $795 million. The transaction will accelerate the company’s global growth.

HOLX’s  revenue increased 103.4% year-over-year to $1.54 billion for the second quarter, ended March 27. Its operating income grew 409.5% year-over-year to $796.8 million, while its net income increased 553.4% year-over-year to $619.4 million. The company’s EPS increased 561.1% year-over-year to $2.38.

For its fiscal year 2021, analysts expect HOLX’s EPS and revenue to increase 91.5% and 38.6%, respectively, year-over-year to $7.62 and $5.24 billion. It surpassed the Street’s EPS estimates in three of the trailing four quarters. The stock has gained 20.6% over the past year to close yesterday’s trading session at $62.64. It is currently trading 26.3% below its $85.00, 52-week high, which it hit on February 16, 2021.

HOLX’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

The stock has an A grade for Growth and Value, and a B grade for Quality. Within the Medical - Devices & Equipment industry, HOLX is ranked #21 of 184 stocks. To see HOLX’s ratings for Momentum, Sentiment and Stability, click here.

Click here to checkout our Healthcare Sector Report for 2021

TDK Corporation (TTDKY)

Headquartered in Tokyo, Japan, TTDKY together with its subsidiaries, manufactures and sells electronic components internationally. The company operates through Passive Components, Sensor Application Products, Magnetic Application Products, Film Application Products, and Other segments. It also provides inductive devices, ferrite cores, magnetic heads, and transformers.

At a board of directors meeting held on April 28, TTDKY  approved the establishment of a joint venture with Contemporary Amperex Technology Co., Limited. Because the demand for rechargeable batteries is growing, the alliance will help the company capture new markets. The company’s revenue increased 8.5% year-over-year to $13.32 billion for the fiscal year ended March 31. Its operating income grew 14% year-over-year to $1 billion, while its net income increased 38.6% year-over-year to $713.56 million.

Analysts expect its EPS to increase 46.1% year-over-year to $8.49 in  2022. Its revenue is expected to increase 376.5% year-over-year to $14.45 billion for its fiscal year 2022. The stock has rallied 40.1% over the past year to close yesterday’s trading session at $122.49. It is currently trading 30.3% below its $175.64, 52-week high, which it hit on January 21, 2021.

TTDKY’s strong fundamentals are reflected in its POWR Ratings. The company has an overall B rating, which equates to Buy in our proprietary ratings system. The stock has an A grade for Value, and a B grade for Stability.

We have also graded TTDKY for Growth, Sentiment, Quality and Momentum. Click here to access all TTDKY’s ratings. TTDKY is ranked #14 of 48 stocks in the B-rated Technology - Hardware industry.

HOLX shares were trading at $62.48 per share on Tuesday afternoon, down $0.16 (-0.26%). Year-to-date, HOLX has declined -14.21%, versus a 10.93% 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.

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