3 biotech stocks that suit Benj
Although the Labor Department recorded the lowest level of jobless claims since June last week, suggesting the labor market is resilient amid a slowing economy, U.S. stock indexes fell on Thursday morning as investors continue to worry about the Federal Reserve’s rate hike potential.
At the beginning of September, the Dow Jones Industrial Average fell 0.4%, while the S&P 500 index fell 0.5% and the Nasdaq Composite fell 0.7%.
Additionally, most sectors are down, with health care posting the largest year-to-date loss.
Due to these developments, investors may be interested in healthcare companies that qualify for Benjamin Graham’s Lost Formula screen, a Premium GuruFocus feature.
Before his death in 1976, the renowned investor and author of “Security Analysis” and “The Intelligent Investor” developed a refined formula that selected companies with a price-to-earnings ratio of less than 10 and an equity-to-asset ratio of at least 0.5. The formula derives its name from the fact that he was unable to publish it before his death; hence, it was lost from public knowledge for some time.
A backtest of the strategy from 1926 to 1976 showed that it would have outperformed the benchmark Dow index by about twice as much.
The examiner found that the new biotechnology companies that met the criteria on September 1 were Altimmune Inc. (ALT, Financial), Avidity Biosciences Inc. (RNA, financial) and TG Therapeutics Inc. (TGTX, Financial).
Altimmune (ALT, Financial) has a market capitalization of $1.05 billion; its shares were trading around $21.30 on Thursday with a price-to-book ratio of 5.10, a price-to-sales ratio of 261.05 and an equity-to-assets ratio of 0.93.
The Gaithersburg, Maryland-based clinical-stage biotechnology company is focused on developing therapies that stimulate strong immune responses to prevent and treat infectious diseases.
The GF value line suggests the stock is significantly overvalued based on historical ratios, past financial performance and analysts’ future earnings projections.
GuruFocus rated Altimmune’s financial strength at 8 out of 10. Despite a robust Altman Z score of 39.57, implying the company is in good standing, the Sloan ratio indicates poor earnings quality.
The company’s profitability hasn’t been as good, scoring a 1 out of 10 due to a declining operating margin and negative returns on underperforming equity, assets and capital the competitors. Altimmune also has a low Piotroski F-Score of 3 out of 9, which means the conditions are in bad shape. Although it has seen declining earnings per share in recent years, it still has a one out of five star predictability rating. According to research by GuruFocus, companies in this ranking have an average return of 1.1% per year over a 10-year period.
With 1.54% of its shares outstanding,
Jim Simons (Businesses, Portfolio)’ Renaissance Technologies is the company’s biggest shareholder guru.
steven cohen (Trades, Portfolio) also owns the stock.
Greed Biosciences (RNA, Financial) has a market cap of $1.03 billion; its shares were trading around $20.02 on Thursday with a price-to-book ratio of 2.75, a price-to-sales ratio of 116.75 and an equity-to-assets ratio of 0.89.
The biotech company, headquartered in San Diego, is developing a new class of RNA-based therapies called antibody oligonucleotide conjugates to treat a wide range of serious diseases.
According to the price chart, the stock has fallen almost 30% since its IPO in June 2020.
Avidity’s financial strength was rated 7 out of 10 by GuruFocus. Along with a comfortable level of interest coverage, the Altman Z-Score of 13.81 indicates the company is in good standing, even though earnings per share have declined over the past 12 months.
Although the company has yet to receive a profitability ranking, the low Piotroski F-Score of 2 warns that its operations are in poor shape.
the Simons company and
Paul TudorJones (Trades, Portfolio) both have positions in Avidity currently.
Therapeutic TG (TGTX, Financial) has a market capitalization of $998.77 million; its shares were trading around $6.88 on Thursday with a price-to-book ratio of 7.74, a price-to-sales ratio of 132.22 and an equity-to-assets ratio of 0.51.
The New York-based biopharmaceutical company is focused on acquiring, developing and commercializing novel treatments for B-cell diseases.
The stock is down more than 60% since the start of the year.
TG Therapeutics’ financial strength and profitability were both rated 3 out of 10 by GuruFocus. The low Altman Z-Score of -5.83 warns that the company could be at risk of bankruptcy.
While the company’s operating margin is growing, its negative returns are lower than the majority of its industry peers. It also has a Piotroski F-Score of 4, indicating conditions are typical of a stable business, and a one-star predictability rating.
Among the gurus invested in TG Therapeutics,
Lee Ainslie (Trades, Portfolio) holds the largest stake with 4.64% of its shares outstanding. The
Vanguard Healthcare Fund (Businesses, Portfolio), Simons and
Caxton Associates (Trades, Portfolio) also have positions in the stock.