"Coronavirus stocks," the stocks of companies that make products and provide services that are experiencing strong demand stemming from the COVID-19 pandemic, have been getting a ton of attention. (Indeed, like many financial writers, I recently wrote an article on the topic, outlining 8 top coronavirus stocks.)
However, some stocks that don't fall into this category have also been strong performers in recent months, as well as over the long term. For instance, you'd have more than doubled your money had you invested in these "non-coronavirus stocks" a year ago: diabetes specialists Insulet and DexCom and real estate investment trust Safehold.
Image source: Getty Images.
Three non-coronavirus stocks: Key stats
|
Company |
Market Cap |
Forward P/E |
Projected Annualized 5-Year EPS Growth* |
YTD 2020 Return (Loss) |
1-Year Return |
10-Year Return |
|---|---|---|---|---|---|---|
| Insulet (PODD 1.93%) | $12.6 billion | 357 | 172% | 16.7% | 132% | 1,350% |
| DexCom (DXCM 2.08%) | $31 billion | 155 | 52% | 53.2% | 177% | 2,960% |
| Safehold (SAFE) | $2.9 billion | 44.3 | 36.9% | 46.9% | 133% | N/A |
|
S&P 500 |
-- | -- | -- | (9.3%) | 0.9% | 202% |
Data sources: Yahoo! Finance and YCharts. Data as of April 30, 2020. P/E = price-to-earnings ratio. EPS = earnings per share. YTD = year to date. *Wall Street's consensus estimate.
The diabetes stocks
If you're looking for a growth market in which to invest, I'd suggest the diabetes space. Unfortunately, the incidence of the disease (both type 1 and type 2) has been rising around the world. Indeed, many healthcare experts consider diabetes an epidemic in the United States and many other countries.
Two top names in the diabetes space are medical-device makers Insulet and DexCom. Insulet makes the leading tubeless insulin pump, the Omnipod, and DexCom produces a continuous glucose monitoring (CGM) system, the G6.
In fact, these two companies are partners. In the second half of this year, Insulet plans to launch its Horizon automated insulin delivery system, which uses a DexCom CGM. Moreover, the Horizon system's insulin pump will be controlled by a smartphone.
On Tuesday, DexCom reported its first-quarter 2020 results, which crushed Wall Street's expectations. Sales rose 44% year over year to $405.1 million, sailing by the $357.6 million analyst consensus estimate. Adjusted earnings per share (EPS) landed at $0.44, compared to the year-ago period's loss of $0.05 per share. This result demolished the consensus estimate of $0.14.
Insulet is scheduled to report first-quarter results on Thursday, May 7, after market close.
Image source: Getty Images.
Safehold
Safehold is a real estate investment trust (REIT) that specializes in commercial property (but no retail) ground leases in the 25 largest markets in the U.S. It buys the land underlying commercial real estate projects, which it leases back to the owners of the structures on the land. The company uses the rental income to grow the business and pay shareholders a modest dividend, currently yielding 1.2%.
Safehold was founded in 2016 and held its initial public offering in 2017, so it's relatively small for a REIT and doesn't have much of a track record. That said, it seems worth watching.
Like most companies, Safehold expects to have some near-term pain due to the pandemic. By the end of the first quarter, deals were largely on hold across the commercial real estate market. However, management also believes the company should bounce back quickly once the dust settles a bit. Here's what CEO Jay Sugarman had to say during the April 23 first-quarter earnings call:
We continue to be engaged in conversations with customers on a number of fronts, and would expect our better price, more efficient capital to be in demand once there's more clarity about the future. We expect deals put on hold may very well come back, and that existing customers will find the opportunities to deploy capital and seek our help in capitalizing those opportunities. ...
As for the existing portfolio, all of our ground leases paid [their rent] in April.
In the first quarter, Safehold's revenue soared 84% year over year to $40.2 million. Net income jumped 56% to $17.4 million, which translated to earnings per share coming in flat with the year-ago period at $0.36. (The number of shares outstanding increased, which is why EPS was only flat while net income rose significantly.)
