Should You Buy This Health Stock That Benefited From Trumps Operation Warp Speed
As the pandemic swept Earth last year the entire economy came to a screeching halt.
President Trump took extraordinary actions – some not seen since World War 2 – to boost Covid vaccine testing and manufacturing via Operation Warp Speed to get us back to normal.
On May 15th, 2020, the Trump White House announced Operation Warp Speed to accelerate development, production, and distribution of COVID-19 vaccines, therapeutics, and diagnostics to produce and deliver 300 million does of safe and effective vaccines with the initial doses available by January 2021.
OWS is an unprecedented leap toward a historic breakthrough that will save countless lives. It is leveraging the best experts from the federal government and private industry to develop effective vaccines and therapeutics quickly without compromising safety.
The above is directly from the Operation Warp Speed United States Department of Defense website.
This combination of government assets, investments and power worked.
What normally takes anywhere between 18 to 73 months to develop and test a new vaccine… Took only a about 7 months to go from development, to testing, to people getting vaccines.
And it wasn’t just one vaccine. This process helped develop 3 vaccines that are now helping us to get back to normal life.
Without Trump using special powers not used since World War 2 and enacting Operation Warp Speed during the height of the pandemic last year, we would still likely be under mass lockdowns.
Now that Biden is in charge, he and the Democrats are pushing vaccines even more… With Biden briefly even trying to claim credit for Operation Warp Speeds successes.
Since the vaccinations began to today, the United States is sitting at around 60% of U.S. adults now at least partially vaccinated… And 131 million people are now fully vaccinated.
The push is to get at least 70% of all American’s vaccinated as soon as possible to “get things back to normal.”
And it’s a strong push… So far mayors, governors, companies, and city managers are offering lottery tickets, free meals, cash, beer, and more to get people vaccinated.
But we’re not here to talk about politics today… We’re here to talk about a stock that’s benefited and will continue to benefit not only from Operation Warp Speed and the continued vaccine rollout… But one that’s done well during this whole pandemic.
Back in February 2021, I told you to buy CVS Health Corp (CVS) to protect your retirement during these uncertain times.
Today, I want to show you why it’s still a buy as Biden pushes the vaccines even more.
If you want to find out why I told you to buy it back in February, you can read the article below.
- CVS Is Still A Buy After A Record 2020
Due to its enormous competitive advantages, I first told you to buy CVS for your retirement portfolio back on June 30th, 2020.
Because people have continued to need medications, appointments, and checkups during this pandemic – while many medical offices nationwide have been closed – CVS has stepped up.
It changed many of its stores rapidly from doing in person prescription and consultations to delivering prescriptions to people’s homes… And doing telehealth business via its 24/7 Telemedicine Minute Clinic.
And these aren’t just minor increases either…
Last year CVS telehealth visits were up 600%. And CVS prescription delivers were up 1,000%.
These helped increase revenue, profits, and cash flows for the pharmacy giant.
So much, that last year CVS saw record revenue and operating profits in 2020… While most other companies flailed.
That happened in 2020… But it’s continued into 2021.
On May 4th it reported updated quarterly earnings that saw its numbers continue to rise.
- Revenue was up 3.5% in the year-to-year quarterly period to $69.1 billion.
- And both operating income and net income rose by similar percentages.
Another reason revenues and profits are up – on top of everything else mentioned above… People getting their vaccines at CVS – and then shopping at the stores.
These things combined caused CVS shares to jump 38.1% since I first recommended them.
If you bought them last June congratulations on your large gains.
But what about today?
Is it still a buy after a record 2020, Biden’s vaccine push continuing, and because of its still large competitive advantages? Most importantly, is it cheap enough to buy still?
Yes, it is.
Its P/E is now 16.
Its P/CF is 7.6.
Its forward P/E is 12.1.
And its EV/EBIT is now 15.
On all three metrics at the top, I look to buy investments below 20 to consider them undervalued.
And on EV/EBIT I look to buy stocks below 8.
These metrics combined show that CVS is still undervalued right now… But only by a slight margin after its 38.1% share price rise since last June.
And this means owning its stock does give you a large margin of safety in investing terminology.
When you invest in stocks that have a margin of safety it makes the investment safer. And it also means you should expect to earn higher returns owning it in the coming years.
The inverse of this is also true…
When you invest in a stock without a margin of safety it makes the investment riskier. And it also means you should expect to earn less owning its stock going forward.
With CVS being undervalued right now, its stock does give you a large margin of safety.
And for this reason, you should consider buying it to protect your retirement portfolio.
Recommendation – Consider buying CVS to protect and grow your retirement portfolio.
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Disclosure – Jason Rivera is a 13+ year veteran value investor who now spends much of his time helping other investors earn higher than average investment returns safely. He does not have any holdings in any securities mentioned above and the article expresses his own opinions. He has no business relationship with any company mentioned above.
P.S. Breaking Poll – Did Trumps Operation Warp Speed Save Us Last Year? Vote Here