QVI Stock Picks Review | Winter 2024 | #5
Quality Value Investing's health care sector updates for JNJ, CVS, MCK, DGX, AMN, and PFE.
Summary:
Quality Value Investing (QVI) reviews its health care sector stock picks, Johnson & Johnson, CVS Health, McKesson, Quest Diagnostics, AMN Healthcare Services, and Pfizer in this updated coverage.
The post includes updates to QVI’s checklist research and analysis of each company’s current wealth and the stock price’s present value.
Any changes in my views (buy, hold, or sell) are reflected in the QVI Concentrated and Expanded Stock Picks Real-Time Performance Trackers.
When referencing this report, premium (paying) subscribers can access their Quality Value Investing (QVI) Glossary of Investing Terms and Metric Targets. Unless noted, all data presented is sourced from Seeking Alpha Premium as of the market close on February 13, 2024, and intended for illustration only.
In this series, Quality Value Investing reviews the QVI Real-Time Stock Picks by sector to update each holding’s performance, current wealth, and present value.
Today’s post covers QVI’s health care sector picks: Johnson & Johnson (NYSE: JNJ), CVS Health Corporation (NYSE: CVS), McKesson Corporation (NYSE: MCK), Quest Diagnostics Incorporated (NYSE: DGX), AMN Healthcare Services, Inc. (NYSE: AMN), and Pfizer, Inc. (NYSE: PFE).
Company Current Wealth
To uncover the current wealth of each company, QVI defines the value proposition, measures returns on management, and assesses enterprise downside risks.
Value Proposition
QVI’s value proposition section defines the competitive advantages of a company’s products or services to its customers compared to the industry, including the stock’s historical performance vs. the sector and market.
Value Proposition Elevator Pitches
Johnson & Johnson is like owning a mutual fund of quality healthcare products but with blue chip low risk and no advisory fees.
CVS Health is the one-stop healthcare store for insurance, primary care, and prescriptions.
McKesson is best of breed in the legal drug distributor oligopoly, equating to a long-term competitive position in the healthcare-dominated 21st Century.
Quest Diagnostics is part of the duopoly that dominates the independent reference lab market.
AMN Healthcare Services is a compelling professional medical workforce solutions provider that should prevail in the aging baby boomer, healthcare-dominated 21st Century.
Pfizer is a high-quality pharmaceutical whose drug pipeline is improving despite the endemic reversal of substantial pandemic-era growth and cash windfalls from its COVID-19 vaccine and treatments.
Performance vs. Sector and Market
The chart below illustrates each pick’s performance against the Health Care Select Sector SPDR® Fund ETF (NYSE: XLV) +114.10% and the SPDR®S&P 500 ETF Trust (NYSE: SPY) +134.80%, since May 8, 2017, when QVI’s first sector holding, JNJ, was added to the Concentrated Stock Picks.
MCK +272.90% outperformed the sector and market during the coverage timeframe. AMN +108.00%, JNJ +53.48%, DJX +38.85%, CVS +15.83%, and PFE +15.36% underperformed during the seven-year coverage timeframe.
Of note, MCK, by +17,010 basis points [bps], achieved alpha since its inception date on March 6, 2018, in the Concentrated Stock Picks. On the contrary, DGX by -1,631 bps, AMN by -3,738, JNJ by -5,427, CVS by -6,131, and PFE by -7,218 bps underperformed the S&P 500 since their respective QVI inception dates, adjusted for splits and dividends.
Next, we’ll look at each company’s returns on management and enterprise downsize risks and each stock’s present value, including shareholder yields, valuation multiples, and share price downside risks, exclusive to Quality Value Investing’s premium (paying) subscribers. The post concludes with the updated views on each covered stock.
Disclosure: I/we have beneficial long positions in the common shares of CVS, JNJ, and MCK in our family portfolio. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it other than from Substack paid subscriptions. I have no business relationship with any company whose stock is mentioned in this article.