The strong U.S. dollar is wreaking havoc in the S&P 500. Not only is the strong dollar squashing earnings and sales at many multi-international companies, it is also depressing commodity prices — and that is raising the risk of deflation.
So, in this environment, it is more important than ever to stay focused on fundamentals and invest in stocks that are immune to the deflation risk.
Right now, healthcare, pharmaceutical, biotechnology and specialty semiconductor stocks fit the bill. Yes, many of these stocks were recently hit with some profit-taking, but they have bounced back impressively and should continue to lead the overall market.
So, we are adding these stocks, all of which are fundamentally strong and deflation resistant.
5 Stocks to Buy: Qorvo Inc (NASDAQ:QRVO)
When RF Micro Devices and TriQuint Semiconductors merged in January, a global leader in radio frequency (RF) chips was created. Qorvo Inc (NASDAQ:QRVO) provides technologies and radio frequency solutions for mobile, infrastructure and aerospace/defense applications in the U.S. and internationally.
Qorvo has a broad product line that includes amplifiers, control products, discrete transistors and ICs, filters and duplexers, frequency converters, integrated modules, optical components, oscillators, passives and switches.
These products are used in various applications that range from cable TVs to defense and aerospace, from mobile phones to optical networks. And Qorvo’s energy-efficient 4G chips are especially popular with Apple Inc. (NASDAQ:AAPL) and other cell phone manufacturers.
In its latest quarter, Qorvo’s sales rose 37.6% to $397.1 million, compared to $288.5 million in Q4 2013. Earnings rose 186.3% to $108.4 million, or $1.46 per share, up from $36.4 million, or 51 cents per share.
Excluding extraordinary items, Qorvo’s operating earnings were $1.29 cents per share, which beat analysts’ estimates by 11.2%. For the first quarter, analysts are looking for earnings of 86 cents per share on $622.65 million in sales. QRVO is a “conservative buy.”
5 Stocks to Buy: Sucampo Pharmaceuticals, Inc. (NASDAQ:SCMP)
Our final new buy for April is Sucampo Pharmaceuticals, Inc. (NASDAQ:SCMP), a biopharmaceutical company focused on the research and development of proprietary drugs in the Americas, Europe and Asia. Sucampo’s products are used to treat gastrointestinal, neurologic, ophthalmic and oncology-based inflammatory disorders.
Currently, Sucampo Pharmaceutical’s pipeline includes one main treatment, AMITIZA. AMITIZA helps treat chronic idiopathic constipation in adults, irritable bowel syndrome with constipation in adult women and opioid-induced constipation in adults with chronic non-cancer pain.
Sucampo is also in a Phase III trial for lubiprostone, a treatment for pediatric functional constipation, as well as Phase II and Phase III trials for Cobiprostone, which is used to treat oral mucositis and non-erosive reflux diseases.
In the fourth quarter, Sucampo Pharmaceuticals’ sales rose 54.7% to $37.8 million, compared to $24.5 million in Q4 2013. Earnings surged 320% to $9.3 million, or 21 cents per share, up from $2.3 million, or 5 cents per share.
For the first quarter, analysts are looking for 500% annual earnings growth and 34.4% annual sales growth. Estimates have been revised 20% higher in the past three months, and typically, strong earnings revisions precede future earnings surprises. SCMP is a “moderately aggressive buy.”
5 Stocks to Buy: Centene Corp (NYSE:CNC)
Centene Corp (NYSE:CNC) is a diversified healthcare services company that I added last month.
There’s a good reason for this: CNC continues to have robust earnings and sales growth. Not only did Centene post 61.4% annual sales growth and 89.2% annual earnings growth in the fourth quarter, but CNC has also walloped analysts’ earnings estimates in every quarter of 2014 (an average 21.23% surprise).
And for the company’s first quarter, which will be released on April 28, Centene is expected to post 62% annual earnings growth and 47.9% annual sales growth. CNC is a “conservative buy.”
5 Stocks to Buy: Amag Pharmaceuticals, Inc. (NASDAQ:AMAG)
Amag Pharmaceuticals, Inc. (NASDAQ:AMAG) was also just added in March, and AMAG has already tacked on a nice 6% gain for us.
Amag Pharmaceuticals focuses its resources on developing therapies that will improve people’s lives. For example, it has developed products that treat anemia in patients with chronic kidney disease and a treatment that reduces the risk of pre-term birth in women.
Amag Pharmaceuticals blew analysts’ estimates out of the water in the fourth quarter, reporting $4.67 per share compared to estimates for just 30 cents per share.
In the first quarter, AMAG’s earnings per share are expected to surge again, increasing to 88 cents per share, up from a 33 cents per share loss in Q1 2014. AMAG is a “moderately aggressive buy.”
5 Stocks to Buy: Ambarella Inc (NASDAQ:AMBA)
Ambarella Inc (NASDAQ:AMBA) shares have been on an upward trajectory ever since we added the stock back in December; AMBA shares are up more than 60% in the past four months.
And the reason why is simple: Ambarella develops semiconductors that are used in high-definition video cameras for automotive, security, surveillance and sports markets. AMBA is most well-known for its relationship with GoPro Inc (NASDAQ:GPRO), which manufactures action cameras for drone quad-copters.
Yet, AMBA’s business is well-diversified and has caught the attention of other big customers like Xiaomi, a Chinese cellphone manufacturer.
In the first quarter, to be announced in early June, Ambarella is expected to report 132% annual earnings growth and 62.8% annual sales growth — and estimates have been revised 35% higher in the past two months. Such aggressive earnings revisions typically precede earnings surprises. AMBA is a “moderately aggressive buy.”
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.