While it was a banner year for the markets, 2021 ended with a whimper as uncertainty surrounding the impact of a surge in Omicron cases, coupled with inflation fears and a monetary policy shift, pushed defensive stocks higher. Though this month's move into risk-off areas such as REITs, Utilities and Staples highlights investors' concerns, there is one area that has several stocks to watch out for as we head into the New Year. In particular, it's companies that have experienced scientific breakthroughs in response to the crisis that the COVID-19 virus caused.
While the rapid development of vaccines is one example, genomic sequencing has been behind the ability for testing of the recent variants of COVID, as the ability to unlock viral mutations has paved the way for new vaccine tests and boosters. Below are 3 stocks that are at the forefront of a concerted effort to ensure public health safety through the development of enhanced variant detectors.
DAILY CHART OF PERKINELMER, INC. (PKI)
First up is PerkinElmer (PKI), which launched research this month that's focused on accelerating the detection of COVID variants by allowing laboratories to boost sequencing output and make reliable variant identifications.
PKI added to its prior week's base breakout as analysts raised earnings estimates for the remainder of this year. On its daily chart above, the stock is finding support at its upward trending 5-day moving average and is poised for further upside.
DAILY CHART OF THERMO FISHER SCIENTIFIC INC. (TMO)
Next up is Thermo Fisher (TMO), which provides FDA-approved diagnostic kits. Last month, the company announced a single test that can distinguish between COVID and influenza, which has been instrumental in helping patients determine appropriate treatment decisions. More recently, the company entered an agreement with Merck Canada (MRK) to manufacture an oral antiviral medicine for the treatment of COVID-19. Both news items have helped pushed the stock into an uptrend and, with the RSI and MACD moving higher from a relatively low level, the stock is poised for further upside.
DAILY CHART OF FULGENT GENETICS INC. (FLGT)
Last up is Fulgent Genetics (FLGT), which confirmed that their Next Generation Sequencing tests can accurately identify the most recent variant of Covid. The company's genetic testing business offers a menu of customizable genetic tests, which puts the company at the forefront of being able to detect future mutations of the virus. The stock is poised to break out of a cup-with-handle formation at the $110 level on its way to a longer-term 5-month base breakout at the $112 level.
While next year may present some hurdles at first, I'm anticipating another strong period for the markets, as the economy continues to exhibit strong growth prospects as we recover from the pandemic. Higher interest rates are on the horizon, however, so only select areas will outperform. If you'd like to be alerted to these areas as well as the specific stocks that will benefit, trial my twice-weekly MEM Edge Report for a 4 weeks at a nominal fee.
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Happy New Year!
Warmly,
Mary Ellen McGonagle, MEM Investment Research
