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James Li
James Li
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4 Construction and Health Care Companies With High Financial Strength

Companies trading below Peter Lynch value in sectors with good July job growth

August 07, 2020 | About:

In light of July's job report data, four construction and health care companies with good job growth and high financial strength are AmerisourceBergen Corp. (NYSE:ABC), Biogen Inc. (NASDAQ:BIIB), Magellan Health Inc. (NASDAQ:MGLN) and MYR Group Inc. (NASDAQ:MYRG), according to the GuruFocus?All-in-One Screener, a Premium feature.

Nonfarm payroll growth tops expectations despite coronavirus resurgence

On Friday, the U.S. Bureau of Labor Statistics said that nonfarm payrolls increased 1.8 million in July, topping the Dow Jones consensus estimate of 1.48 million jobs added. Additionally, the civilian unemployment rate stood at 10.2%, down from the June level of 11.1% and outperforming the consensus estimate of 10.6%.

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The Labor Department's job report comes during a time when coronavirus cases around the globe topped 19 million, with over 4.88 million cases in the U.S. according to Johns Hopkins University statistics.

According to CNBC, Capital Economics senior U.S. economist Andrew Hunter said that July's job report shows that while the resurgence in new virus cases decelerated economic recovery, the U.S. economy "has not gone in reverse."

Michael Arone, the U.S. SPDR chief investment strategist at State Street Global Advisors, added that "we are moving in the right direction" despite having more work to do.

High job recovery evident in construction and health care

The Labor Department said that during the month, notable job gains occurred in several sectors, including leisure and hospitality, government, retail trade, professional and business services, other services and health care. Further, employment in health care is down by just 797,000 since February, compared with a decline of 2.6 million in food service.

While growth in construction increased just 20,000 in July, employment in construction is down by just 444,000 from the February level.

As such, investors might find opportunities in construction and health care companies with strong balance sheets that are trading below the Peter Lynch earnings line (an estimate of intrinsic value based on Peter Lynch's investing strategy).

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AmerisourceBergen

AmerisourceBergen engages in wholesale pharmaceutical sourcing and distribution of specialty, brand-name and generic pharmaceutical products to a wide range of medical companies. GuruFocus ranks the company's financial strength 7 out of 10. The company has a high Piotroski F-score of 8 and a strong Altman Z-score of 5 despite a debt-to-equity ratio that underperforms 75% of global competitors.

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Gurus with large holdings in AmerisourceBergen include Seth Klarman (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).

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Biogen

Biogen produces drugs and therapies for multiple sclerosis and hemophilia. The company's financial strength ranks 6 out of 10 with a?debt-to-equity ratios that underperforms 76.35% of global competitors offset by strong interest coverage, Piotroski F-scores and Altman Z-scores.

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Magellan Health

Magellan Health provides health care management services to health plans and other managed care organizations, employers, labor unions and U.S. government agencies. The company has a financial strength rank of 6. Even though the company's interest coverage underperforms 76.47% of global competitors, Magellan Health has a high Piotroski F-score of 8 and a strong Altman Z-score of 3.78.

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MYR Group

MYR Group provides specialty electrical construction services through its subsidiaries. The company has a financial strength rank of 6 on the heels of debt ratios outperforming over 63% of global competitors.

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Disclosure: Long Biogen.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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