The Nasdaq has been absolutely obliterated this year, down a stunning 21.2%, which puts the tech-heavy index firmly in bear market territory. One of the biggest reasons is indeed the large tech influence of the index, but another plain and simple fact is that many of the top stocks were horribly overbought, pushed to absurd levels by the FOMO (fear of missing out) crowd.
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After a dreadful April that saw the index decline by 13.3%, many are concerned that the path of least resistance is lower. We decided to screen the index looking for the highest-yielding stocks and found that they all have some solid defensive qualities, and they are offering among the best entry points that each has provided in some time.
Four of the five are rated Buy across Wall Street, and all make sense for investors looking for value and upside potential. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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Amgen
This biotech giant remains a safer way to play the massive potential growth in biosimilars. Amgen Inc. (NASDAQ: AMGN | AMGN Price Prediction) discovers, develops, manufactures and delivers human therapeutics worldwide. It focuses on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology and neuroscience.
The company’s products include the following:
- Enbrel to treat plaque psoriasis, rheumatoid arthritis and psoriatic arthritis
- Neulasta reduces the chance of infection due a low white blood cell count in patients with cancer
- Prolia to treat postmenopausal women with osteoporosis
- Xgeva for skeletal-related events prevention
- Otezla for the treatment of adult patients with plaque psoriasis, psoriatic arthritis and oral ulcers associated with Behcet’s disease
- Aranesp to treat a lower-than-normal number of red blood cells and anemia
- Kyprolis to treat patients with relapsed or refractory multiple myeloma
- Repatha, which reduces the risks of myocardial infarction, stroke and coronary revascularization
Shareholders receive a 3.33% dividend. Oppenheimer has a $285 target price on Amgen stock, and the consensus target is $246.94. The final trade for Monday came in at $230.92 a share.
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Gilead Sciences
This is another beaten-down biotech that is trading a very reasonable 9.05 times estimated 2022 earnings and has big-time upside potential. Gilead Sciences Inc. (NASDAQ: GILD) is a research-based biopharmaceutical company that discovers, develops and commercializes medicines in the areas of unmet medical need in the United States, Europe and elsewhere.
Gilead provides Biktarvy, Genvoya, Descovy, Odefsey, Truvada, Complera/Eviplera, Stribild and Atripla products for the treatment of human immunodeficiency virus (HIV) infection; Veklury, an injection for intravenous use, for the treatment of coronavirus disease 2019; and Epclusa, Harvoni, Vosevi, Vemlidy and Viread for the treatment of liver diseases. It also offers Yescarta, Tecartus, Trodelvy and Zydelig products for the treatment of hematology, oncology and cell therapy patients.
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In addition, Gilead provides Letairis, an oral formulation for the treatment of pulmonary arterial hypertension; Ranexa, an oral formulation for the treatment of chronic angina; and AmBisome, a liposomal formulation for the treatment of serious invasive fungal infections.
The company has collaboration agreements with Arcus Biosciences, Pionyr, Tizona, Tango Therapeutics, Jounce Therapeutics, Galapagos, Janssen, Japan Tobacco, Gadeta, Bristol-Myers Squibb, Merck and Novo Nordisk.
Gilead Sciences stock investors receive a 4.92% dividend. Oppenheimer’s $90 price target is the highest on Wall Street. The consensus target is $73.10, and Monday’s closing print of $60.31 was up close to 2% for the day.
Intel
This legacy leader in semiconductors has continued working hard to focus more on Internet of Things and data center cloud spending. Intel Corp. (NASDAQ: INTC) designs, manufactures and sells integrated digital technology platforms worldwide.
The platforms are used in various computing applications, comprising notebooks, two-in-one systems, desktops, servers, tablets, smartphones, wireless and wired connectivity products, wearables, retail devices and manufacturing devices, as well as for retail, transportation, industrial, buildings, home use and other market segments.
The company announced in January it would invest up to $100 billion to build potentially the world’s largest chip-making complex in Ohio, looking to boost capacity as a global shortage of semiconductors affects everything from smartphones to automobiles.
Shareholders receive a 3.35% dividend. The $60 Credit Suisse price target is well above the $54.08 consensus target on Intel stock and Monday’s closing share price of $44.96.
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Kraft Heinz
Even in tough times, everyone has to eat, and this company stands to benefit. Kraft Heinz Co. (NASDAQ: KHC) was formed six years ago via the merger of H.J. Heinz and Kraft Foods. The company is a leading global food company, with $29 billion of annual revenues generated by such well-known brands. It is the third-largest food and beverage manufacturer in North America, deriving 76% of revenues from that market and 24% internationally.
The company’s brands include not only Kraft and Heinz but also Oscar Meyer, Maxwell House, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.
Note that Warren Buffett holds a huge position in Kraft Heinz stock at Berkshire Hathaway.
Shareholders receive a 3.75% dividend. The BofA Securities price target is $48. The consensus target is $40.79, and Kraft Heinz stock closed at $41.98 on Monday.
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Walgreens
This huge drugstore chain operator is a safe retail play for investors looking to add health care now. Walgreens Boots Alliance Inc. (NASDAQ: WBA) operates as a pharmacy-led health and beauty retail company. It operates through three segments.
The Retail Pharmacy USA segment sells prescription drugs and an assortment of retail products, including health, wellness, beauty, personal care, consumable, and general merchandise products through its retail drugstores. It also provides specialty pharmacy services and mail services; this segment operates nearly 10,000 retail stores under the Walgreens and Duane Reade brands in the United States; and six specialty pharmacies.
The Retail Pharmacy International segment sells prescription drugs and health and wellness, beauty, personal care and other consumer products through its pharmacy-led health and beauty stores and optical practices, as well as online and an integrated mobile application. This segment operated 4,428 retail stores under the Boots, Benavides and Ahumada in the United Kingdom, Thailand, Norway, the Netherlands, Mexico and elsewhere, and 550 optical practices, including 165 on a franchise basis.
The Pharmaceutical Wholesale segment engages in the wholesale and distribution of specialty and generic pharmaceuticals, health and beauty products, and home health care supplies and equipment, as well as provides related services to pharmacies and other health care providers.
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Despite the solid first-quarter results, and efforts to sell the Boots pharmacies in Europe, where bids are reported to be in the $9.3 billion area, not one Wall Street firm has a Buy rating on the shares. That in itself is a contrarian reason to own the company at levels not seen since January of 2021. The sale of the Boots chain could have analysts flooding the stock with upgrades.
Investors are paid a big 4.50% dividend. The Hold rating on Walgreens Boots Alliance stock at Mizuho comes with a $56 target price. The consensus target is lower at $53.55, and shares ended Monday at $42.52.
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Shares of these great companies have been hit during the ongoing 2022 sell-off, and all five are offering patient investors with a long-term horizon some of the best entry points in years. All are among the best companies in their respective sectors, and all have serious upside potential from current trading levels.
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