The broader market averages fell about 3% on Friday, starting the new month on a sour note. Investors took some risk off the table following a rebound in April that produced the best monthly performance for U.S. stocks in 33 years.
Despite that bit of positive news, the S&P 500 ended the week down 0.2%. The utility sector led the way lower, while Energy stocks were the best performer.
The main driver of volatility these days remains fear of the global spread of the coronavirus. At this point, there have been about 3.4 million global cases, with over 240,000 deaths reported. That figure includes around 1.1 million cases in the U.S., where more than 66,000 have died.
On Friday, Gilead’s (GILD) Remdesivir was approved for emergency use in treating the coronavirus. Earlier in the week, the company reported clinical results that showed a 31% faster recovery for hospital patients. Management believes that it can produce 500,000 five-day treatment courses by October.
The Week Ahead
Refinitiv has tallied that aggregate S&P 500 profits are on track to fall more than 13% in the first quarter. 68% of the 275 companies in the index that have posted results so far have exceeded expectations, which is ahead of the historical average of 65%.
Those numbers could change next week with 156 S&P 500 members scheduled to post quarterly results.
American International (AIG) kicks off the action on Monday, followed by Walt Disney (DIS) on Tuesday. General Motors (GM) highlights the calendar Wednesday and Bristol Myers (BMY) is a notable name due out with results on Thursday.
On the economic front, we’ll get the April jobs report next Friday. The consensus analyst estimates call for the loss of 21 million non-farm payrolls last month and for the headline unemployment rate to jump up to 16.2%.
Weekly unemployment claims have already totaled more than 30 million in this country since the pandemic began. This past Thursday, the initial reading of first-quarter GDP also showed a 4.8% contraction in the U.S. economy
We know that deciding what and when to buy can be challenging for any investor. This is especially true when uncertainty is high and sentiment can quickly shift from Bull to Bear.
However, the fact remains that attractive investments are out there if you’re willing to dig a little deeper.
One such Healthcare name is worth a closer look and is our Stock of the Week.
Stock of the Week: Tandem Diabetes (TNDM)
The company sells insulin pumps that help treat diabetes. The stock gained 8% this week and we believe this momentum can continue throughout 2020. Here’s why:
Management posted solid quarterly results on Thursday. Tandem lost $0.25 a share in the first quarter, as revenue increased 49% from the previous year, to $97.9 million. The company exceeded sales expectations by more than 15%, driven by higher shipments and increased pricing for its pumps.
Tandem sells its insulin pumps into a diabetes market that is steadily growing. There are about 1.7 million people in the U.S. living with type 1 of the disease. Tandem Diabetes believes that these people would benefit greatly from using an insulin pump to manage their blood sugar on a 24/7-basis.
There are also 3 million type-1 patients in foreign markets that Tandem is targeting. In addition, the company has identified another 1.6 million cases of the more prevalent type 2 version of diabetes in the U.S. as potential users for its pumps.
Currently, industry giant Medtronic (MDT) is Tandem’s chief competitor in the insulin pump business. Compared with Medtronic’s top offering, Tandem’s t:slim X2 device is 38% smaller and 13% lighter, but still offers a screen that’s 22% larger.
Even though the company lost money in the latest quarter, the consensus analyst estimates call for management to generate sustainable profitability by the end of this year. Both our experience and history have shown that one of the most lucrative times to invest in a firm is when they’re on the verge of becoming profitable for the first time.
It’s also worth noting that TNDM carries a Smart Score of 9/10 on TipRanks. This proprietary score utilizes Big Data to rank stocks based on 8 key factors that have historically been a precursor of future outperformance.
On top of the positive aspects mentioned already, the Smart Score indicates that the company has seen improving sentiment from analysts, hedge funds and financial bloggers.
FYI: This is just 1 of the 20+ stocks selected for the Smart Investor portfolio. That’s where we share more detailed insights on our weekly stock picks.
You may also want to learn more about how we use TipRanks indicators to find stocks that are primed to outperform. Discover the Smart Investor portfolio here >>
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