It's in the game 🎯
Today’s stocks include a pharmaceuticals distribution giant, a large software company, and the developer of some of the most famous video game series in history.
More tech stocks that aren’t doing that badly compared to the rest of the industry? Yes please. Today’s picks are pharmaceutical distributor McKesson ($MCK), software provider Amdocs ($DOCS), and gaming titan Electronic Arts ($EA).
This large cap ($48.5bn) Texas-based company distributes pharmaceuticals, medical supplies and other care management tools, delivering a third of all pharmaceuticals used in North America. Our checklist shows 7 Very Good rankings and 1 Very Bad ranking.
McKesson has had a solid 12 months, and is actually up 66% since this time last year. Warren Buffett also appears to be bullish on the stock, with Berkshire Hathaway reporting new stakes in the company at the end of March. McKesson’s FY 2021 revenue came in at a whopping $238.2bn, and recently announced plans to increase its regular dividend - for the sixth consecutive year - by 15% to $0.54 per share. Quality and Momentum both rank highly, but perhaps the Stability ranking is what draws the eye, especially in a market that is volatile in recent times.
The company reports earnings later today, and investors will be hoping the stock can rise even higher with a positive report.
This large cap ($10.5bn) Missouri-based company provides software and services to communications, media and financial services providers and digital enterprises. Our checklist shows 7 Very Good rankings and 1 Very Bad ranking.
Amdocs also releases its earnings later today, and it too seems to have a raft of support from hedge funds including Greenleaf Trust, Hilton Capital Management LLC and Mercer Global Advisors, with institutional investors and hedge funds owning a total of 87.1% of the company’s stock. The company is well-positioned for the future with numerous acquisitions and long-term contracts having been signed in recent times, such as acquiring Sourced Group and Openet, and a partnership with Vodafone Hungary. Amdocs has also beaten earnings expectations in 3 of the past 4 quarters, so another earnings beat today could help calm the stock price after a relatively topsy-turvy 3 months.
The company’s Quality and Momentum rankings both score highly, so even with an earnings miss this stock should still be one to look at.
Electronic Arts ($EA)
The company that gamers love to hate, EA is a large cap ($36.5bn) company headquartered in California. Our checklist shows 4 Very Good rankings and zero Very Bad rankings.
EA is up almost 8% in the last 3 months and only down 3.8% YTD, which compared with the fall of other tech giants, isn’t bad at all. As one of the biggest video game publishers in the world, EA has a solid balance sheet and this is reflected in the high Quality rank. The company owns popular long-running sports franchises FIFA and Madden NFL, and action series Battlefield along with several Star Wars titles. Despite the announcement that FIFA 23 will be the last game to hold the FIFA branding (with EA Sports FC becoming the new name in 2023), the company’s many long standing and successful franchises have become increasingly profitable through things like in-game purchases, and have cut costs through the transition to digital downloads instead of physical game discs.
One thing to keep in mind is the recent spree of mega-money acquisitions in the gaming industry - Microsoft’s purchase of Activision Blizzard, and Sony’s purchase of Bungie for example. Some questions have arisen as to whether EA will have to make acquisitions of their own to keep up, or if the company itself will be subject to purchase (with Apple being flouted as a potential buyer). However, with markets in bearish territory the likelihood of any acquisition is low.
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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