Stock laggards to buy: GNC -65%
GNC’s earnings have been weak; expectations are considered too high; and its product pricing is considered a nightmare. The company is in the middle of a major overhaul for prices, stores, and perhaps its business as it seeks an acquirer. Still, GNC is a highly profitable business with double digit operating margins.
Also, it trades at just 5x forward earnings, and pays an incredible dividend yield of 7.2%. Even if current expectations are too high, and GNC were to earn just $1.50/share instead of $2.12/share, GNC stock would be trading at only 7x forward earnings.
Regardless, GNC stock is dirt cheap, and that dividend makes it worthwhile.
Stock laggards to buy: ALXN -36%
Study failures, decelerating growth, and a CEO resignation are just a few of the many things that went wrong for Alexion Pharmaceuticals (NASDAQ:ALXN) in 2016. However, ALXN stock had been one of the best performing biotechs for more than a decade.
Its drug Soliris, is a blockbuster and really paved the way for how to commercialize rare and life threatening drugs.
With 15% growth expected in 2017, and M&A rumors galore, ALXN stock is offering investors a rare chance to buy it at a discount, 22x forward earnings. While 22 times earnings does not seem like much of a discount, it is when you consider growth, longevity, as well as Alexion’s likelihood to acquire or be acquired in the immediate future.
In other words, don’t expect ALXN stock to stay down for too long.