In this week’s stock analysis we explore two pandemic-gainers that could be back for round 2, and a wire company with eagerly-awaited earnings.
Not all pandemic gainers have crashed and burned - in fact, some stocks are well on their way back up to their previously lofty highs (although we’re still a long way from that yet). This week’s selection includes wire manufacturer Encore Wire ($WIRE), Moderna ($MRNA) of COVID vaccine fame, and cybersecurity leader Crowdstrike ($CRWD).
Encore Wire ($WIRE)
This mid-cap ($2.1bn) Texas-based company is a manufacturer of copper and aluminium wire for residential, commercial and industrial needs. Our checklist shows 3 Very Good rankings and zero Very Bad rankings.
Encore Wire has had a mixed year to date, with the stock currently down -19% since the beginning of the year. However, after a sharp decline in late June, it is actually up 5% this month. Historically, the company has had stellar growth in both revenue and earnings, with the latter coming to 846.6% over the last 2 years! The most recent earnings also handily beat expectations, at $7.96 EPS compared to $2.38 expected and a revenue of $723m compared to $568m expected. The ROE from the previous quarter was also a strong 52.4%. All this shows that the company have strong financials and know how to turn it into profit.
With the company reporting its quarterly earnings next week, analysts expect earnings of $4.15 per share for the quarter, and the Momentum ranking is accordingly Very Good. If earnings beat expectations again, the stock price could continue its recent upwards trend!
A COVID vaccine stock? Really? Well…yes. This large cap ($65bn) pharmaceutical and biotech company based in Cambridge, Massachusetts focuses on mRNA vaccines, of which its most famous product so far was their COVID vaccine. Our checklist shows 4 Very Good rankings scoring 98 or better and one Very Bad ranking.
You might be thinking that it’s too late to buy Moderna - after an incredible 2,400% gain since the start of the pandemic, where else could it go from here? The answer is: still up. Granted, the vast majority of the company’s revenue came from its COVID vaccine, and once everyone had their doses it was not surprising to see the stock fall 29% since the beginning of the year. Where would future revenues come from once COVID vaccine sales drop off?
The answer lies in 46 other programs in various therapeutic areas, with three already in phase 3 trials. The huge amount of cash generated from the pandemic has helped the company essentially fast-track production of all these programs, which gives ample opportunity for more revenue in the future thus making this a long-term play. This is alongside COVID boosters, with a new booster in line for the coming autumn months and the likelihood of annual booster shots. Moderna stock is actually up 29% in the past month too, and with Q2 earnings coming out in early August we will be able to see whether vaccines sales are already dropping off or sustaining.
Despite the average Momentum rating, focus on the 98 rating for Quality, and look out for any of their therapeutic programs progressing to mass production in the future.
Another pandemic gainer, this large cap ($41bn) cybersecurity specialist provides cloud workload and endpoint security, threat intelligence, and cyberattack response services. Our checklist shows 6 Very Good rankings and two Very Bad rankings.
Before getting into the details, it’s important to remember that Crowdstrike is currently unprofitable, with analysts only expecting it to turn a profit by 2025. However, there are still several positives to look at. Firstly, demand for cybersecurity has actually increased rapidly. With reported crypto hacks and data breaches hitting the headlines regularly, cybersecurity has become an important investment for any business.
Secondly, the company’s strong Quality ranking shows just how well-run it is. Crowdstrike has consistently ranked highly in several lists of best-run companies. With the largest market share in endpoint security, Crowdstrike has been (and is still) rapidly coming up with new innovations in the market, such as the industry’s first fully managed identity threat protection solution. Its financials are also still in good shape despite the tech crash in early 2022 - in the past year, revenue was $1.6bn, a 64% increase and FCF increased 49% to $489m. Momentum is also ranked Very Good, as we believe these innovations will continue and the company to keep producing its strong numbers.
Remember, we have a free database where we rank S&P500 stocks and over 700 funds for as a compact version of our app! Check it out here.
Thanks for reading!
Truman & Miguel 🙌
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