Zacks Investment Ideas feature highlights: Apple, Tesla, HCA Healthcare, DaVita and The Progressive

For Immediate Release

Chicago, IL – March 8, 2024 – Today, Zacks Investment Ideas feature highlights Apple AAPL, Tesla TSLA, HCA Healthcare HCA, DaVita DVA and The Progressive PGR.

Market Leaders Rolling Over: Time to Invest in Defensives?

Although the stock market has rallied almost non-stop since the start of the year, cracks are beginning to form that indicate a correction may be nearing. Not that I am sounding the alarm for some severe bear market, but rather I would not be surprised to see a garden variety pullback of 5-10% over the next month or so.

One development that is bringing to my attention the possibility of a selloff is that a few market generals are seeing some considerable selling.

Namely, stocks from Apple to Tesla are seeing some soft action. And though large swaths of the market, as well as the rest of the “Magnificent Seven” continue higher, I expect they may follow soon.

In the chart below we can see each of these stocks are underperforming the broad market and are negative YTD.

Based on this market activity, I think discerning investors would benefit from adding some defensive exposure to their portfolios.

Healthcare

Two stocks that I have been recommending for the last few weeks are HCA Healthcare and DaVita. Both stocks have steadily outperformed the market and should show persistent relative strength in the case of a selloff.

I particularly like healthcare stocks during periods of uncertainty, as the sector often shows low volatility and defensive characteristics.

Both DaVita and HCA Healthcare enjoy Zacks Rank #1 (Strong Buy) ratings and are industry leading companies. HCA Healthcare is the largest investor-owned healthcare provider in the United States, operating a vast network of hospitals and outpatient facilities, while DaVita dominates the kidney dialysis care industry, and further expanded its reach in South America just this week.

Furthermore, even though the stocks have made impressive gains both stocks still boast very reasonable valuations. With forward earnings multiples of 15.8x and 14.3x, they are both below or in line with their respective 10-year median valuations.

Insurance

The Progressive is one of the nation’s leading auto insurers, and its stock has been on a tear, considerably outperforming the market. Progressive also has a Zacks Rank #1 (Strong Buy) rating, reflecting strongly upward trending earnings revisions.

Current quarter earnings estimates have increased by 24.5% over the last two months, while FY24 have climbed by 11.2% and FY25 by 8.7%. The insurance industry broadly has benefited from the rise in cost of insurance, and Progressive has been one of the top beneficiaries.

With strong sales are earnings growth forecasts you might expect PGR to have a premium valuation, however you can buy it now at a very fair price. The Progressive company is trading at a one year forward earnings multiple of 21.5x, and though that may not sound particularly cheap, it is based on EPS projections.

Earnings for the insurance provider are expected to grow 22% annually over the next 3-5 years, meaning PGR has a PEG ratio below 1. Based on the metric that is an appealing valuation.

Bottom Line

At some point the market will experience a selloff, whether its this week, next month or in six months. And while the exact timing of it will always be a challenge, most investors will not regret adding some of these defensive-oriented stocks to their portfolio.

Even better when they are already showing relative strength and have top Zacks Ranks.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Apple Inc. (AAPL) : Free Stock Analysis Report

DaVita Inc. (DVA) : Free Stock Analysis Report

The Progressive Corporation (PGR) : Free Stock Analysis Report

Tesla, Inc. (TSLA) : Free Stock Analysis Report

HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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