Encouraging developments on the COVID-19 vaccine front bodes well for economic growth, and in turn should boost value stocks mostly perceived to be cyclical in nature. These economically-sensitive stocks that have been so far battered by the pandemic can now finally turn around. When the pandemic forced the United States to go into a lockdown, these stocks, which are largely depended on the proper functioning of the economy, took a hit. Businesses and stores were shut and people had to stay at home to avoid the risk of exposure. This led the economy into a downfall wherein all indicators pointed toward a recession.
However, over the past few months, the economy has seen a turnaround. Indicators began to improve with the third-quarter GDP rising substantially. Per the “advance” estimate released by the Bureau of Economic Analysis, real GDP expanded at an annual rate of 33.1% following the dip of 31.4% in the second quarter. Moreover, the Commerce Department reported that new orders for manufactured goods held up for five consecutive months through September. It rose 1.1% in September following a 0.6% increase in August, as quoted in a Reuters article. Meanwhile, manufacturing activity continued to witness expansion. The manufacturing purchasing manager’s index expanded for the sixth month in a row in October at 59.3%, per the latest release by the Institute of Supply Management.
These positive indicators have been a result of economic activities slowly resuming with both demand and supply returning. So, the promising news with regard to vaccine for COVID-19 will only add strength to this recovery. It will also, in turn, allow value stocks to rebound as demand will increase as a result of consumers being encouraged to spend more.
Coming to vaccine news, on Nov 16, Moderna, Inc. (MRNA) announced in a press release that their vaccine candidate was found to be 94.5% effective in the first interim analysis of Phase 3. This positive news comes on the heels of Pfizer Inc. (PFE) and BioNTech SE’s (BNTX) announcement of their vaccine’s effectiveness last week. Per a press release issued by the companies on Nov 9, their vaccine candidate was found to be more than 90% effective.
Moreover, Moderna announced in another press release that its vaccine remained stable at “2° to 8°C (36° to 46°F), the temperature of a standard home or medical refrigerator, for 30 days.” It will also remain stable at “-20° C (-4°F) for up to six months.” Such news is promising for the economy as a vaccine will be effective in starting the complete recovery from the pandemic that it needs.
5 Top Value Stock to Buy Now
Positive news related to the vaccine will allow the economy to open up. These will lead to the resumption of activities, which have been hindered by the stay-at-home requirements. Hence, it will be prudent to invest in value stocks which stand to benefit from this development. Thanks to our style score system, we have been able to identify five value stocks. Our research shows that stocks with a Value Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best opportunities in the value investing space.
Brinker International, Inc. (EAT), through its subsidiaries, owns, develops, operates and franchises casual dining restaurants in the United States. The company currently has a Zacks Rank #1. It also currently has a Value Score B. The Zacks Consensus Estimate for its current-year earnings has moved 33.3% north over the past 60 days. The company’s expected earnings growth rate for the current year is 61.4%.
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