We recently published a list of 8 stocks under $20 to invest in right now. In this article, we’ll take a look at how Viatris Inc. (NASDAQ:VTRS) stands compared to other sub-$20 stocks to invest in right now.
Is it possible to do a soft landing?
There has been a lot of discussion lately about economics and markets. Although the economy was performing well, with the US Federal Reserve cutting interest rates and analysts expecting the market to maintain its bullish outlook, recent geopolitical developments have caused investors to There are doubts again.
We recently featured an article on 10 Stocks Under $10 with High Potential and talked about how the market is expected to move if the geopolitical situation escalates. Tom Lee, managing partner and head of research at Fundstrat Global Advisors, said he would buy on the edge if the market rose that high, and said he is not sure how the market will fare after such tensions. He also presented a bullish theory on whether stocks tend to perform well. Here is an excerpt from the article:
Tom Lee, Managing Partner and Head of Research at Fundstrat Global Advisors, appeared on CNBC to discuss how the stock market is faring in the current geopolitically tense environment. Mr. Lee has long been bullish on small-cap stocks, but he remains cautious about the initial bump in the small-cap market’s rise. He remained bullish, forecasting a year-end target of 6,000 for the S&P 500, although he acknowledged that future events, such as geopolitical tensions in the Middle East, could increase volatility in the near term.
He stressed that current market conditions are difficult, with headline risks stemming from a possible port strike that could impact the economy. Lee suggested that any significant decline would be a good buying opportunity, as he believes the long-term outlook remains positive despite the temporary setback.
Talk about how the market fared during past wars. Lee pointed out that historically, market reactions to geopolitical conflicts have often been more positive than expected. He cited past conflicts where buying during early recessions has proven beneficial, with the exception of the recent Russia-Ukraine war, which went awry due to simultaneous Federal Reserve tightening. ”
Larry Adam, chief investment officer at Raymond James, said the current market is very much a soft landing given the progress the market has made. Adam recently appeared in an interview on CNBC and talked about how lower interest rates could benefit small-cap stocks, especially the Russell 2000. He believes the bull market will continue while the economy gradually moves towards a soft landing.
story continues
For small-cap stocks, about 56% of funding comes from the short end of the curve. The short end of the curve refers to short-term interest rates on the yield curve, typically representing yields on bonds with shorter maturities, such as two-year or five-year U.S. Treasuries. Larger companies, on the other hand, receive only 26% of funding from these ends of the curve. Therefore, Adam believes that the Fed will continue to lower interest rates, which will help small-cap stocks meet their funding needs.
He also noted that the Fed is expected to cut rates twice this year and four more next year. Another reason he likes small-cap stocks is because the economy is headed for a soft landing. Adam emphasized that we have already seen that small-cap stocks outperformed large-cap stocks as a result of rate cuts. Historically, when the economy takes a soft landing, small-cap stocks usually fare better than the rest of the market.
Additionally, Adam likes technology, healthcare, and industrials in both small-cap and large-cap categories, while mentioning his favorite sectors. In rationalizing the interest in these sectors, he said that the returns in these sectors are one of the salient positive factors. Technology is the only large-cap stock that has seen an upward revision. Additionally, the cash flow generated by these sectors is used to buy back stock, pay dividends, and increase future growth.
our methodology
We used the Finviz stock screener and Insider Monkey’s institutional database to curate a list of 8 stocks under $20 that you can invest in right now. We used a screener to narrow down the list to stocks trading below the $20 price (recorded on October 4th). Once we created a list of stocks under $20, we ranked them based on the number of hedge fund holders as of Q2 2024. The list is ranked in ascending order based on the number of hedge funds.
Why do we care what hedge funds do? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
Viatris Inc. (VTRS): Strategic shift in healthcare investing
A medical worker wearing a white coat and holding a microscope reflects on a patient’s diagnosis.
Viatris Co., Ltd. (NASDAQ:VTRS)
Stock price: $11.43
Number of hedge fund holders: 45 people
Viatris Inc. (NASDAQ:VTRS) is an international healthcare company formed through the merger of Mylan, a former division of Pfizer, and Upjohn. The company specializes in manufacturing and selling generic and branded pharmaceutical products. It is known for popular drugs such as Viagra and Lipitor. The company also manufactures cost-effective alternatives to brand-name drugs and has over-the-counter (OTC) drugs available without a prescription.
A lot happened at Viatris Inc. (NASDAQ:VTRS) in the second quarter of 2024, and it’s clearly reflected in the quarter’s financial results. The company has made several divestitures as part of a broader strategy to focus on its core high-growth therapeutics business. During the quarter, the company completed the sale of its OTC business, active pharmaceutical ingredients business, and women’s healthcare business.
This sale resulted in a significant change in our financial performance. Revenue was $3.8 billion, down 3% year over year, and net loss was $326 million in the current quarter, compared to net income of $264 million in the second quarter of 2023.
However, there is a bright side to the company’s future. Revenue and net income for the quarter were hurt primarily by strategic initiatives, with new product revenue reaching $210 million. New product revenues were driven by the successful launches of Breina and lisdexamfetamine. The increase in new product revenue gives management confidence to improve its new product revenue outlook for this year.
Furthermore, looking at the businesses remaining with the company after the sale, operating revenue increased by 2%, showing that the core business is performing well even in a difficult quarter.
Viatris Inc. (NASDAQ:VTRS) is one of the best stocks to buy under $20. In the second quarter of 2024, 45 institutional investors held.
Greenlight Capital says this about Viatris Inc. (NASDAQ:VTRS) in its Q4 2023 investor letter:
The firm established medium-sized positions in Alight (ALIT) and Viatris Inc. (NASDAQ:VTRS), and a small position in Syensqo (Belgium: SYENS). VTRS is a manufacturer of generic and off-patent branded medicines. The company was formed in 2020 through the merger of Mylan and a division of Pfizer. We previously invested in Mylan, but sold the company five years ago due to concerns about management’s ability to deliver on its commitments and the deterioration of the generic industry. These concerns were well-founded, as the stock price continued to fall by more than 60% after the company exited. After a recent change in management, we decided to take another look and found that after years of significant declines, generic drug prices have stabilized and competition has decreased. The company’s revenue and cash flow are currently increasing, and this improvement is expected to accelerate. VTRS’ new management has committed to simplifying its pharmaceutical portfolio through various divestitures and returning 50% of free cash flow to shareholders through “aggressive” share buybacks, which is in line with our estimates. This means a double-digit return on equity. We acquired the stock at an average price of $10.63, or just 4.0 times consensus 2024 earnings. VTRS stock ended the quarter at $10.83. ”
Overall, VTRS ranks #8 on our list of 8 Stocks Under $20 to Invest Now. While we recognize the growth potential of VTRS, we believe AI stocks have a better chance of delivering higher returns and in a shorter time frame. If you’re looking for promising AI stocks trading at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: $30 trillion opportunity: 15 humanoid robot stocks to buy, according to Morgan Stanley and Jim Cramer, says NVIDIA has ‘become a wasteland.’
Disclosure: None. This article was originally published on Insider Monkey.
