The market volatility has made investors skeptical right now. The S&P 500 has dipped 17% so far this year. But for patient investors, this is the right time to invest in quality stocks that are undervalued. It is also an excellent buying opportunity for growth-oriented investors.
Diversifying one's portfolio with quality stocks from high-growth industries would be a smart move now. Here are three fantastic deals for investors wanting to put their money to good use.
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1. Exelixis
Oncology drug maker Exelixis (EXEL 0.13%) could have a shining future. Its star cancer drug Cabometyx (cabozantinib) continues driving growth for the company. Cabometyx brought in $1 billion in revenue in 2021. This drug is used to treat advanced renal cell carcinoma (RCC), among other cancers. It is also used in combination with Bristol-Myers Squibb's drug Opdivo (nivolumab) to treat advanced RCC in patients who haven't received any prior treatment for the disease.
The oncology drugmaker continues to impress every quarter. In the first quarter, Cabometyx in combination with Opdivo contributed the highest amount (around $303 million) to total revenue of $356 million. Another formulation of cabozantinib, Cometriq (used for the treatment of thyroid cancer), also contributed around $7.4 million in the quarter. Adjusted net profit jumped drastically from $28 million in the prior quarter to $84 million in Q1. This is probably the reason why its stock is up 15%, so far this year, while the market has tumbled.
Though Cabometyx has been instrumental in Exelixis's performance, management is aware that it cannot rely on one single product to drive growth. The company stated in its Q1 press release that it looks forward to "top-line results from COSMIC-313, CONTACT-01 and CONTACT-03 pivotal phase 3 clinical trials expected over the course of this year." It will be smart of Exelixis to have a diversified line-up of drugs in this challenging market.
The biotech company expects 2022 to be another strong year with revenue in the range of $1.5 billion to $1.6 billion. It ended the quarter with cash, cash equivalents, restricted cash equivalents, and investments of $2 billion that could fund its pipeline progress.
Healthcare is one sector that will always remain in demand despite the economic conditions. Companies like Exelixis that make cancer drugs will always bring in revenue. This is probably the biggest benefit of investing in healthcare and biotech stocks.
2. Green Thumb Industries
A second fantastic deal in this bear market now is U.S. cannabis multi-state operator (MSO) Green Thumb Industries (GTBIF -4.33%). Investing in a highly volatile industry like cannabis requires patience and a risk appetite but is rewarding in the long run.
Marijuana is federally illegal, but almost one-third of U.S. states have legalized it in some capacity. Even in a limited legal market, this MSO has quadrupled revenue from $216 million in 2019 to $894 million in 2021.
This MSO has proven that U.S. cannabis companies do not require federal legalization to be successful. With its aggressive expansion strategies and right product mix, it has been profitable for seven consecutive quarters in a highly competitive industry. Its Canadian counterparts are still struggling to be profitable. Its store count has increased from just 39 stores in 2019 to nearly 80 dispensaries in 15 states.
What's more intriguing is that Green Thumb doesn't just expand anywhere -- it targets the limited license markets. These state market regulators offer limited licenses to select cannabis operators, which has allowed Green Thumb to garner a strong consumer base. Plus, its high-margin products are doing well -- edibles brand Incredibles, in particular, has ranked in the top five of the 20 best edibles in the market.
These factors led to another good start to the year, with a 25% year-over-year surge in revenue to $243 million in Q1. A net income under generally accepted accounting principles (GAAP) of $29 million jumped from $10 million in the year-ago period. Q1 also marked its ninth consecutive quarter of positive cash flow from operations of $55 million, along with $175 million in cash. Obtaining capital is challenging for cannabis companies. Thus, having cash on hand will help Green Thumb repay its debt and fund future expansions.
We will learn more about Green Thumb Industries' strategy for this year in its second-quarter results on Aug 3.
3. Williams-Sonoma
Williams-Sonoma (WSM -0.12%) is a high-end kitchen and home furnishings retailer, owner of popular brand names Pottery Barn and West Elm, and some smaller labels.
The luxury market is safe from the challenges of a slower economy, as these consumers have higher spending capacity. This has helped Williams-Sonoma drive revenue consistently despite inflation and rising costs.
Its Q1 recorded an 8.1% year-over-year growth to $1.9 billion in net revenue. Its bottom line also jumped an impressive 20% to $3.50 per share.
Management stated that the company has a "solid line-up of growth initiatives and operational improvements planned for the balance of the year." It is confident of achieving $10 billion in revenue by 2024.
An added perk is that the company is also a dividend stock. It yields 2.3%, higher than the market's average of 1.6%. It has also increased its dividend consistently for the last 17 years. With rising revenue and profits, investors can be assured of consistent dividend payments in the future.
