After the first down quarter since 2020, many across Wall Street are examining the winners and losers for the quarter and shuffling the deck, looking for stocks that have the best upside potential for the second quarter and beyond. Conventional wisdom would lead many to stay with the stocks that were the winners in the quarter, but some solid work by the top analysts at Jefferies suggests that just the opposite may be the best plan for the next three months and beyond in 2022.
In a new research report, Jefferies makes the case that history actually shows that placing bets on sector laggards has paid off handsomely for investors when examining stocks that underperformed their respective sectors on a trailing-12-month basis. The report noted this:
Though the S&P 500 is roughly 10% higher after its 13% drop to start the year, the party has had a fairly exclusive guest list. Just 4 of 11 sectors and ~34% of the index constituents have bested the market since the 3/8 low. And while the narrow rally may continue in the intermediate term, the strong divergence is opening the door to some outsized opportunities.
We analyzed Jefferies coverage for stocks that have underperformed their respective GICS sector by more than 15% on a trailing-12-month basis. Additionally, qualifying names needed to be Buyated by Jefferies’ analysts and fall short of being consensus Buys using standardized, aggregated ratings. This resulted in a diverse mix of 58 stocks, cross-cutting a wide array of sectors and market caps.
We screened the 58 stocks looking for the companies that paid the highest dividends, as this could be a year in which total return is the name of the game. Eight stocks stood out, and while all are Buy rated at Jefferies, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Amgen
This biotech giant remains a safer way to play the massive potential growth in biosimilars. Amgen Inc. (NASDAQ: AMGN) 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 skeletalelated 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 3.17% dividend. Jefferies has a $280 target price on Amgen stock. The consensus target is just $246.33, and the final trade for Monday came in at $244.87.
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