Stocks that fell in pandemic could be primed to rebound

TEXAS opened its bars and then closed them again. Apple Inc. opened its stores and then closed 32 of them. Walt Disney Co. has postponed the reopening of its theme parks. These are just some of the hundreds of ripple effects from the pandemic.

In a climate of rampant

Biogen gets 80 percent of its revenue for six drugs that treat multiple sclerosis. Two key drugs in that group have patents that expire soon. The rest of revenue comes from drugs for leukemia and hemophilia.

I consider a return on stockholders’ equity of 20 percent or better to be outstanding. Biogen has achieved that nine years in a row, and last year it notched more than 40 percent.

Because of the looming patent cliff, Biogen shares sell for only eight times earnings. That’s bargain territory, and I’m willing to bet on the company’s research prowess to refill the pipeline.

Southwest Airlines

People are afraid to travel and afraid to be cooped up on a closed plane with a bunch of other people, one of whom might have coronavirus. How long will that problem persist? My guess is 18-24 months.

That’s a long time to wait, but I think Southwest Airlines Co. (LUV) has big capital-gains potential for patient holders. At about $32 a share (down from over $60 in parts of 2017 and 2018), it sells for nine times the past four quarters’ earnings. Its normal multiple is about 17.

By reputation, Southwest has the best fleet management in the airline industry. While many airlines struggle for profit, Southwest scored a return on equity above 20 percent five years in a row through 2019.

Barnes Group

Barnes Group Inc. (B) gets little press coverage and scant Wall Street coverage. Only seven analysts follow it and only three of those recommend it.

The company, based in Bristol, Connecticut, makes engineered parts for industrial and aerospace customers. It has shown a profit in each of the past 15 years, and its stock normally sells for about 19 times earnings. The multiple is only 12 now.

In a reversal of the pattern of recent years, a few Barnes insiders have purchased the stock recently, and none have sold.

Moog

Like Barnes, Moog Inc. (MOG.A) is an industrial company with a history of consistent but not spectacular profits. Headquartered in East Aurora, New York, its specialty is fluid-handling and motion-control systems. Its customers are industrial, aerospace and defense firms.

Moog shares fetch about $49. As recently as late February they were trading above $80. The price/earnings multiple normally is around 18; today it’s 9.

Past year

The recommendations in my Casualty List column from one year ago produced a 1.7 percent loss. Meanwhile, the S&P 500 advanced 3.7 percent.

National Beverage Corp. (FIXX) advanced 37 percent, and Albemarle Corp. (ALB) had a moderate gain. But big losses on Gap Inc. (GPS) and Walgreens Boots Alliance Inc. (WBA) threw the train into reverse.

Elizabeth Page Brumley Las Vegas Review-Journal file Shares of Southwest Airlines, selling at about $32, could bring a big return for investors who are able to wait for a year or more.