Final Investment: SPSS Research Paper

Student’s Name
Instructor’s Name
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Investment Research
Executive Summary
The global stock market is decreased in this pandemic situation. It will result in the improvement in some markets that will create benefit by doing an attractive valuation. As an investor, it is vital to observe the short-term fluctuation of prices and look for opportunities to increase the equity positions when the prices are falling. The structural trends are essential. For a very long time, the interest rates and bond yields both are likely to remain low. The expected returns from the bonds are near about zero, and investors would like to shift to other assets where the risk is minimum. The transformation from the bond markets to other alternative investments also comes with changes in the economy, which generates some opportunities in the equity markets.
It is better to invest in companies that yield high profits, low variability, and limited debts. The improvement in digitization and technological innovations involves the 5G and artificial intelligence. It can improve the communication system and also the data generation process. Also, innovation in health care includes the capital expenditure that can help to improve the healthcare facility. In this pandemic situation, the most growing sector is healthcare rather than the rest of the sectors of the economy. The global pandemic has created such a situation where this trend is accelerating and improving in the future. This situation also creates awareness among the people about the importance of the healthcare sector. It is also true that this sector is also needed to rapid progress globally, especially in some particular regions of different countries, mostly in developing and underdeveloped nations.
Introduction
As a dynamic investor, it is pretty risky to invest because healthcare will come with innovations. Innovations are not always come with a positive outcome. Rather than invest in the innovation sector, I would like to invest in the stocks of leading companies in the healthcare sector by diversifying funds.
Advancements in technology can help to improve the quality of health care. The improvements in healthcare include product research and development. New medical treatments and facilities are constantly increasing. The management of treatments, care centers become more efficient by using the data optimally. The fear among the people about new diseases create the expectation to improve the different areas in healthcare sectors in different regions related to hygiene, vaccine, testing and prevention, diagnostics, etc. mainly as an investor; I would like to choose the stocks of the companies which are showing good progress as well as developing potential treatments and vaccines for COVID-19.
The risks related to healthcare sectors include – the high expenses for treatment in the US which creates a continued pressure on the lowering cost in the healthcare system.
In high uncertainty and development of structures, quality stocks are a good choice for investment. The companies that hold a solid financial performance and earnings growth with limitations in growth variability create a high demand for their equities. The stocks can provide returns higher than the average even if in the situation of recession also. The health crisis introduces the advantages of investing in quality stocks. The pandemic creates a shock in production, consumption, and also on the human being. In diversifying the supply chains and digitization involved in the processes of different companies, this situation also leads to a decrease in the household spending of the people. The expected returns from good quality bonds are not so high, so investors will invest in some assets which come with less risk. The lower-risk products can include corporate bonds, structured products, etc. However, it also comes with some risks like an increase in the interest rates, decreases in the liquidity of the company or currency fluctuations, etc.
The green bonds which are4 issued by US companies also result in good yields.
In the crisis, digital platforms help to accelerate the business constraints based on networks and chains. The volatility is higher in this kind of investment with a higher rate of capital risks. The extensive use of the internet helps people globally to communicate as well as survive. The improvement in communication structure must be needed to improve the quality of the delivery of services with the increase in use. 5G is the fifth wireless technology generation that can be helpful to make such a digital transformation.
My investment strategy is based on the philosophy of the category market timing versus asset selection. It is based on the market timing, which relates to the movement of the entire markets, whether it is related to financial markets or natural states, by selecting assets for a good investment.
To follow this strategy, we would like to include the market timing approaches based on technical indicators, for example, the price chart and trading volume. Also, we will investigate the Macroeconomic variables, such as the level of interest rates, to represent the state of the economy. The technical indicators include the past prices of the stocks/shares or equities. Also, it includes the trading volume and market volatility. High prices of stock volatility attended by low stock returns but followed by high stock returns. It is also observing whether the PE ratio is in the normal range or not.
I have made a conscious decision to hold seven companies in my portfolio.
In the US region, I have chosen healthcare stocks of Vertex Pharmaceuticals (NASDAQ: VRTX), UnitedHealth Group (NYSE: UNH), Teladoc Health (NYSE: TDOC), and India.
Vertex Pharmaceuticals:
The firm is discovering, developing, and commercializing small molecule drugs for the treatment of diseases. The price of the stock on May 11, 2021, was $213. The firm's Market Cap is $55B, and the P/E ratio (ttm) is 20.03.
The firm is one of the best biotech stocks on the market. The company concentrates on improving drugs that treat the problem of cystic fibrosis (CF), a rare genetic disease that infects lungs and other organs (Griese). Vertex's latest CF drug, Trikafta, could expand the number of patients its drugs can handle by more than 50%. The firm is also expanding drugs targeting rare genetic illnesses and major common diseases like type 1 diabetes (McCoy).
The stock price is improving if we consider the long-term period of 10 years and the short run. If we compare it with the S&P 500 index, it is much higher in value. So to invest in this firm for a year is showing a positive result and also the investment for upcoming three years will be more beneficiary in my concern.
UnitedHealth Group:
Health insurance serves more than 75 million people worldwide. The price of the stock on May 11, 2021, was $411.70. The firm's Market Cap is $389B, and the P/E ratio (ttm) is 23.12. The firm is the largest health insurer in the world. It operates one of the biggest PBMs. The size, security, and dividend create UnitedHealth Group as the most attractive stock payers on the market.
The stock price is improving if we consider the long-term period of 10 years and the short run. If we compare it with the S&P 500 index, it is much higher in value (Enos). So to invest in this firm for a year is showing a positive result, and also, the investment for the upcoming three years will be more beneficial in my concern (Maji).
Teladoc Health
The firm contributes video-conferencing consultations for daily clients with general medical specialists and behavioral health experts. The firm is also one of the best healthcare provider stocks. The firm contributes telehealth services, presenting healthcare remotely by the internet and over the telephone. Teladoc's acquisition of 2020 provided the firm a digital health platform for encouraging people to manage chronic diseases such as diabetes. The COVID-19 pandemic has increased the adoption of virtual care services. Teladoc's growth outlooks should be well after the pandemic also (Gadzinski). Every individual, whether an employee, government, and health insurer, all are asking to manage healthcare costs, and telehealth and chronic disease control help to reach. The price of the stock on May 11, 2021, was $145.79. The Market Cap of the firm is $23B.
It is also necessary to consider that Joe Biden's current budget plan as a political condition is $6.5 billion to form an ARPA-H agency (Advanced Research Projects Agency for Health). The naming follows the defense agency (DARPA) that produces the internet, GPS, robots, etc. The agency's purpose would be to manage the care in curing cancer, Alzheimer's, and diabetes (SEC.gov). If the agency is formed, that could grant funding to cutting-edge diabetes research from firms like CRISPR Therapeutics and Vertex Pharmaceuticals and those. They help control the disease like Teladoc.
CRISPR:
It is a biotech company that uses gene therapy to correct genetic mutations and treat or cure diseases. The most energizing ongoing investigation in diabetes has been using grouped consistently interspaced short palindromic repeats (CRISPR) - Cas9, the gene-editing tool, to reverse diabetes. On the off chance that the examination keeps on showing positive outcomes, the new agency could put critical subsidizing behind an extended investigation to make the treatment accessible sooner (Marino). That would mean income for CRISPR that the market probably is not expecting at any point shortly. A positive astonishment like that would, without a doubt, profit investors. On May 11, 2021, the price of the stock was $103.54 (Shwartz). The Market Cap of the firm is $8B.
The stock price is improving if we consider the long-term period of 10 years and the short run. If we compare it with the S&P 500 index, it is much higher in value. So to invest in this firm for a year is showing a positive result and also the investment for upcoming three years will be more beneficiary in my concern.
In the Indian region, by 2022, the size of the healthcare industry is projected to hit $372Bn. Eighty percent of the general healthcare sector is the hospital industry, ascending at a CAGR of 16-17 percent and is set to hit $132 Bn by 2023. At a CAGR of 20.4 percent, the diagnostics industry is projected to extend and is set to hit $32 Bn by 2022. From 2000 to 2014, there was a 370 percent ascend in health spending. For all Greenfield projects under the programmed way, the government has allowed 100% FDI. Telemedicine, artificial intelligence, mobile and wearable devices, and robotic operations are the primary concerns. While COVID-19 has antagonistically influenced India's stock market, it is relied upon to recuperate throughout the following not many months and keep on developing quickly from that point. The quantity of hospitals in India is developing; in any case, there is a need to add updated guidelines to bring service levels with worldwide norms. This demand has set out incredible open doors for investors.
As we can see from the above diagram, the projected improvement in the healthcare sector is very concerning. After a year and three years, the growth will results in the profit for the investment in the stocks of the healthcare sector also.
Also, if we estimate the growth of the telemedicine market size in India, it is in increasing trend till 2025 according to the above diagram.
Alembic Pharmaceuticals Ltd.
Alembic Pharmaceuticals Ltd. (APL) is an Indian MNC headquartered in Gujarat. The firm produces pharmaceutical products, substances, and intermediates. The firm is producing mainly in the macrolides segment of anti-infective drugs in India. The organization is profited by the valsartan opportunity emerging out of lack in the US. Meanwhile, the growth in worldwide business is probably going to direct in FY20 because of a high base in FY19, and openings in critical products may diminish (Ghosh). The organization spent a considerable amount during FY17-19 towards setting up facilities for assembling forte products. While the Capex intensity will decrease going ahead, the organization will probably benefit from the commercialization of new facilities. The long-term growth possibilities stay worthwhile on the rear of focused energy R&D to fabricate robust products. Subsequently, the organization could be considered as a venture from a long-term point of view. The price of the stock on May 11, 2021, was Rs.951.10. The Market Cap of the firm is Rs. 18,726 Cr. P/E ratio is 15.55, and EPS value is Rs. 61.26.
The stock price is improving if we consider the long-term period of 5 years (2016-2021) and the short run. So to invest in this firm for a year is showing a positive result and also the investment for upcoming three years will be more beneficiary in my concern.
Aurobindo Pharma Ltd
Aurobindo Pharma Ltd (APL) is a pharmaceutical company established in Hyderabad. The organization makes generic medicines and active pharmaceutical ingredients in territories like antibiotics, antiretrovirals, cardiovascular products, central nervous system products, gastroenterological, and anti-allergic. The organization's income and procuring drivers will be the gained portfolio of Sandoz and Spectrum pharma. The firm will probably contribute hugely at the EBITDA level (Aravind and Manojkrishnan). The reconciliation of Sandoz oral and dermatology business is required to add to income right away. Likewise, the Sandoz portfolio will probably contribute from the second from last quarter of the fiscal year2020 (Marvadi and Savani. 2020). With a long-term horizon, the organization is proceeding to construct its capacities in substitute measurement structures like respiratory inhalers, peptides, vaccines, and depot injectables. Subsequently, a financial backer can take a gander at the scrip from medium to long-term horizon. The price of the stock on May 11, 2021, was Rs.1017.30. The Market Cap of the firm is Rs. 60,404 Cr. P/E ratio is 11.22, and EPS value is Rs. 55.69.
The stock price is improving if we consider the long-term period of 5 years (2016-2021) and the short run. So to invest in this firm for a year is showing a positive result and also the investment for upcoming three years will be more beneficiary in my concern.
There are also two companies in India which I want to invest in and account in my portfolio. The healthcare firms are- Cipla and Dr. Reddy Laboratories. Below I have mentioned all the details of the company and its stock valuation.
CIPLA
The stock price is improving if we consider the long-term period of 5 years (2016-2021) and the short-run (Shailaja and Mande). So, to invest in this firm for a year is showing a positive result, and also, the investment for the upcoming three years will be more beneficial in my concern (Sader).
Dr. Reddy Laboratories
The stock price is improving if we consider the long-term period of 5 years (2016-2021) and the short-run (Lipton). So to invest in this firm for a year is showing a positive result, and also the investment for the upcoming three years will be more beneficial in my concern (Ta).
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