These Five Stocks Will Strengthen your Portfolio

The current Covid-19 crisis has left many businesses in ruins. In such trying times, the best stock that can boost your portfolio range from tech companies to pharmaceuticals and food processing companies.

PayPal (NASDAQ: PYPL)

PayPal (PYPL) is the largest online money transfer, service provider. It has grown continually over the years and remains one of the top stocks in the stock market. Since 2010, PayPal has maintained a striking record of earnings and sales growth. It earned 29 cents per share within the same year and by 2020 the company reported EPS of $3.10 per share. Analysts are expectant that the earnings will increase to 6% to $3.28 in 2020, and 23% to $4.03 by 2021.

In 2019, PayPal was one of the most preferred stocks by investors. Over the past 12 months, PayPal’s stock jumped 31%, reaching an all-time high of $143. Although PayPal shares may experience some volatility due to the current state of the stock market, Paypal may be a good pick for long-term investors. This is due to PayPal’s strong fundamentals and long-term investments are more likely to experience a profit increase.

PayPal can be considered a Buy according to its EPS Rating of 94 out of a highest possible 99. The EPS Rating measures a company’s profit growth year-over-year. It does so by using the past three to five years and the recent two-quarters of a company’s earnings growth.

Based on the SMR Rating as well, PayPal’s rating is an A. This is based on the company’s double sales growth in the recent quarters, amounting to a 25% annual pretax margin and a 23% annual ROE in 2019. The SMR Rating shows a company’s sales, profit margin, and return on equity.

The IBD Stock Checkup also rates PayPal a Buy. The company has a 95 out of a highest-possible 99 according to the IBD Composite Rating. This composite rating helps investors measure a stock’s fundamental and technical metrics easily.

PayPal which has a market cap of more than $143.5 billion dominates its market, regardless of the fast-rising competition. Wall Street was well-pleased with its Q4 earnings reports which were reported in January.

According to its Q4 reports, its revenue increased to 17% to $4.96 billion, year-over-year. While its earnings per share of 86 cents were 3 cents more than what analysts had estimated. PayPal’s operating margins increased to 23.6% from its previous 21.6% within the same period of the previous year. Its operating income also increased by 34% YoY to $800 million. The company’s total payment volume (TPV) rose 22%, with its total active accounts hitting 305 million.

NB: Total payment volume (TPV) is the total dollar value of transactions processed on a payment platform.

Visa (NASDAQ: V)

Visa is the largest payment network in the world, with branches across over 200 countries. It offers advanced technology payment services to authorize, clear, and settle transactions for individual customers, businesses, and institutions. Its proceeds of $17.9 billion made it the largest IPO in history until the Alibaba IPO in 2014. Since its inception, Visa has maintained a strong track record of business results, to date.

Since its IPO, Visa has been giving out “small but gradually rising dividend to its investors.” It began with a quarterly dividend payout of $0.0263 per share but reached $0.30 per share by January 2020. The company has also engaged in share repurchase programs over the years. In January 2020, Visa’s board of directors ratified a new repurchase program worth $9.5 billion Class A common stock share. Whereas, in FY2019, more than $10.7 billion was spent on dividend payouts and share buybacks.

Over the years, Visa has experienced rapid growth and an increase in its earnings, maintaining a healthy operating margin of 67% in FY2019. However, with the impact of the coronavirus pandemic, Visa has announced that it expects the second fiscal quarter net revenue growth to approximate at 2.5 to 3,5 percentage points lower than what it had in January.

Visa can be a good choice for strengthening your portfolio for numerous reasons. Firstly, it is a key player in the payment service provider’s market. It is the most used payment processing service in the US and other parts of the world. In 2019, Visa, MasterCard, American Express, and Discover cards jointly generated up to $6.600 trillion in purchase volume, an 8.5% increase from 2018. Visa made up 60% of the total percentage, with MasterCard occupying the second position at 26%. According to The Nilson Report, there is an estimation of general-purpose payment cards with global brands to generate 853.90 billion purchase transactions in the year 2028.

Visa is also known for its advanced financial technology. According to the EY Global FinTech Adoption Index, in 2019, 75% of the global internet-enabled consumers used fintech services for money transactions. This is compared to the 18% in 2015. To further enhance its payment system, Visa announced its $5.3 billion acquisition of Plaid in early 2020. Through Plaid, consumers can conveniently share their financial information across various apps and services such as Transferwise, Acorns, Chime, Betterment, and Venmo. According to Visa, at least one out of every four people with a US bank account have used Plaid at some point to connect to fintech developers.

Visa strongly supports cross-border payments which makes it easier for consumers to access money from anywhere in the world where Visa is operational. The company achieved this by acquiring Earthport which is the largest Independent Account Clearing House network in the world. Visa also entered into an agreement with Western Union in mid-2019. The agreement would enable Visa to implement Visa Direct, a real-time push payment platform that would help speed up the process of sending money around the world and also promote transparency in the system.

Gilead Science (NASDAQ: GILD)

Since the coronavirus outbreak in the US, Gilead and a couple of other pharmaceuticals have taken it upon themselves to develop a treatment for the diseases. Following the recent clinical testing progress report of the remdesivir (a coronavirus treatment being developed by Gilead), many people are positive that it would be a success. Many investors would consider Gilead stock a Buy and a great addition to your portfolio. Asides being in the race for developing a coronavirus treatment which would cause the remdesivir drug to be the most sought after drug in such times, Gilead Sciences is still one stock to have in your portfolio.

Besides the remdesivir currently undergoing clinical trials for the COVID-19 disease, Gilead also has a couple of drugs it is developing which includes treatment for psoriatic arthritis, Crohn’s disease, ulcerative colitis, and HIV.

When it comes to shareholders’ benefits, Gilead stands out amid other biotech companies. In 2015, Gilead initiated a dividend program through which it began distributing its dividends to its shareholders. In the last 5 years, Gilead has jumped its dividend payout by 58%.

Gilead’s payout ratio is below 60%, having great potentials for improved earnings growth in the future. Hopefully, its other drugs like filgotinib and any new drug it develops would make this possible.

Johnson and Johnson (JNJ)

Johnson & Johnson is a large pharmaceutical company, leading the market in immunology, oncology, and neuroscience drugs. JNJ reported that these three units of its drug manufacturing made up 75% of the company’s total drug sales in the first quarter. It gets better as all three segments continue to grow. Since its announcement to join in the race of developing a treatment for the coronavirus, there’s been more drive towards its stock. The company has announced that the Phase 1 trials of its vaccine would begin September, with emergency doses available by early 2021.

According to a JNJ report, the company’s drug sales increased by 8.7%. Pharmaceutical sales operationally increased by 10.1%. It’s health unit also recorded a 9.2% increase with an operational sales increase of 11.3%.

Analysts at Zacks Investment estimated total revenue of $19.66 billion, however, the company was able to generate total revenue of 3.3% to $20.7 billion and operationally jumped 4.8%. Its adjusted earnings were at $2.30 per share, up 9.5% excluding exchange rates.

In the past year, Johnson & Johnson faced a series of legal troubles that affected its overall performance. However, since it joined the wagon of pharmaceuticals developing treatment for the COVID-19, JNJ stock is gradually picking up. Its stock began to indicate an increase after the company’s Chief Executive Alex Gorsky announced on March 30 that it had planned to start developing a coronavirus vaccine.  Adding that there is a “high degree of probability of being successful.”

JNJ could be a good stock to include in your portfolio, however, you must first count the costs involved. The company holds great potentials and promises to be rewarding to its long term investors in a couple of years. However, as it currently stands, J&J shares are still 15.5% off 2020 highs. In just a matter of time, its shares dropped from $153.50 in February to $109 in March, a 28.9% decline.

On the positive side, investors can be encouraged with the stock’s near -900 basis point outperformance, in spite of the S&P 500 down to 24.3% from its highs.

Ally Bank Financial (ALLY)

Ally Financial Inc. provides consumers, businesses primarily located in the US and Canada, with financial products and services. It basically operates through Automotive Finance Operations, Corporate Finance Operations., Insurance Operations, and Mortgage Finance Operations.

Recently, Zacks upgraded Ally Financial to a Rank #2—buy. The major determining factor of Zacks rating is the changing earnings picture of a company—the Zacks Consensus Estimate. The Consensus of EPS estimates companies based on the sell-side analysts covering the stock. Many individual investors tend to use trusted rating systems to track near-term stock price movements, and make decisions based on the ratings provided.

The company has received a consensus rating of Buy, with an average rating score of 2.50 based on 7 buy ratings, 4 hold ratings, and 1 sell rating. According to the consensus of analysts’, Ally’s price target is $31.08, with a potential upside of 115.4% from its current price of $14.43. In the past 90 days, The company has been the subject of about 9 research reports including Zacks, which portrays a strong analyst interest in its stock.

As regards dividend payments, Ally Financial ensures that it pays its shareholders a dividend yield. It currently pays a dividend yield of 5.42%, making it one of the top 25% dividend-paying stocks. The company has maintained a dividend growth for 3 years, with a dividend payout ratio of 20.43%. The payout ratio is a sustainable level below 75%. Ally Financial would be also to sustain or increase its dividend over the next year if it is able to sustain a dividend payout ratio of 22.49%.

In the past 3 months, Ally Financial has sold more of its stock to insiders. The company’s insiders have bought a total of $203,000.00 in company stock and sold nothing to outsiders. Yet, only 0.36% of the company’s stock is held by insiders. The remaining 96.47% is held by institutions, which indicates strong market trust in Ally Financial.

In the coming year, the Earnings for Ally Financial are expected to grow by 143.17%, from $1.39 to $3.38 per share. The company is currently trading at a less expensive ratio, at 5.61 Price-to-Earnings ratio, compared to the market average P/E ratio of about 12.61.

Disclaimer: Investingpor owns Ally Bank, JNJ, and PayPal. Click here read more about our terms of service