Bear markets are no fun. In fact, it could be argued that the entire purpose of a bear market is to be so uncomfortable, so unpleasant, and so destructive to portfolios that many investors and traders simply don’t have the mental, emotional, or physical resources to stay engaged.
This is unfortunate because we also know that on the other side of a bear market is the opportunity for life-changing returns.
Therefore, even though the near-term outlook remains muddled, investors should spend some time identifying the stocks with the best chances to make new highs when the bull market inevitably resumes. To be clear, it’s quite possible that stock prices could fall lower as the recession intensifies.
One strategy to take advantage of this volatility is to slowly dollar-cost-average into high-quality stocks. In terms of stock selection, investors may find the best opportunities in growth at a reasonable price (GARP) stocks. GARP is an approach that blends the best aspects of growth and value investing while mitigating their risks. Below are 2 top GARP stocks:
Anthem (ANTM)
ANTM is a managed care company, providing medical benefits to roughly 44 million members. The company offers employer, individual, and government-sponsored coverage plans. It is also the largest single provider of Blue Cross Blue Shield branded coverage. This sector has also been particularly strong due to a low unemployment rate which means that the company has seen strong growth in enrollees.
Further, the pandemic was a boost to its bottom-line as less people were going to the doctor and undergoing procedures. Therefore, the company’s payout ratio declined. Many analysts had been expecting an above-average reading as the economy normalized, but so far this has simply returned to pre-pandemic levels.
Another reason to like managed care stocks is their pricing power as healthcare spending tends to rise at a faster pace than inflation. And, they tend to be less affected by economic slowdowns. Currently, the company is seeing growth from its Medicare Advantage plans and virtual care services.
Last year, the company had $25.98 in EPS and $136.9 billion in revenue. This year, analysts are forecasting $28.61 in EPS and $153.8 billion in revenue, increases of 10.1% and 12.3%, respectively. And, they see more growth in 2023 - 13.3% for EPS and 5.2% for revenue.
With these attributes, it’s not surprising that ANTM has an overall grade of A, which translates into a Strong Buy rating in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It also evaluates stocks by select factors to generate component grades to give investors more insight. ANTM has a B for Sentiment as 14 out of 17 Wall Street analysts covering the stock have a Buy rating with a consensus price target implying 13% upside. ANTM is ranked #1 in the B-rated Medical – Health Insurance industry. For more top stocks in this industry, click here.
Bio-Techne (TECH)
TECH makes high-quality biological materials including purified proteins and reagents that are used in druge development and testing for genetic and cellular-based therapies. It also provides specialized instruments and custom manufacturing solutions.
Thus, TECH is essentially part of the supply chain for the booming genomics industry which has the potential to transform healthcare and medical treatmens. Already, genomics is being used to improve the accuracy and speed of diagnosing diseases. Earlier treatment improves the odds of success.
Later, experts believe that genomics can be used to develop custom treatments and then actually fix genetic diseases at the cellular level. As a supplier to the industry, it has less risk than investing in the companies developing drugs and bringing them to market. However, this does mean that TECH has great long-term prospects as it can grow with the industry.
The POWR Ratings are also bullish on TECH as it’s rated a B which translates to a Buy. It has a B grade for Sentiment as the Wall Street analyst community is very bullish on the stock with 5 out of 6 having a Buy rating with a consensus price target implying 30% upside.
It also has a Quality grade of B due to a strong balance sheet and returning cash to shareholders through dividends and buybacks while staying on a growth trajectory.
ANTM shares were trading at $482.58 per share on Thursday afternoon, up $12.71 (+2.71%). Year-to-date, ANTM has gained 4.67%, versus a -19.67% rise in the benchmark S&P 500 index during the same period.
About the Author: Jaimini Desai
Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Jaimini’s background, along with links to his most recent articles.
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