Vertex Pharmaceuticals (VRTX): Buy the Dip?

​Key Points

• Investors Continue with Optimism as The SEC Investigates Meme Stocks
• Dick's Sporting Goods (DKS) and Best Buy (BBY) Are Solid Retailers with Undervalued Stocks
• The 10% Drop in Vertex Pharmaceuticals (VRTX) May Mean a Buy-the-Dip Opportunity

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​Overall Market

Investors Continue with Optimism as The SEC Investigates Meme Stocks

Yesterday, we talked about how the 5% inflation rate left investors unfazed. Yesterday's market optimism rolled over to today. The NASDAQ led the indices, finishing up +.35%. Some analysts predict that the rotation of value vs. growth may be coming to a close as we leave the “reopening” stage of our economy.

With little breaking news today, I reflected on the SEC’s decision to investigate meme stocks and how the current market structure allows more prominent wholesale traders to manipulate the price. The SEC is rightfully reacting to the new market paradigm. Chairman Gary Gensler has expressly noted his focus on “wholesalers,” the companies who process retail trader orders for profit. Most new generation brokerages, such as Robinhood and Webull, make their money by selling their users' orders to market makers such as Citadel, which gives those wholesalers the ability to move the market by combining the orders.  

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​What's Up

Dick's Sporting Goods (DKS) and Best Buy (BBY) Are Solid Retailers with Undervalued Stocks 

One of my favorite Stock Card features is the ability to create and browse watchlists such as my 4-Greener watchlist. This watchlist gives me the list of companies that have high growth potential, solid operations, a history of overperforming the market, and are, for some reason, hovering in the undervalued price range.  Today,  two retailers grabbed my attention, Dick’s Sporting Goods (DKS) and Best Buy (BBY). 

Dick’s Sporting Goods (DKS) is a solid stock. Despite the company's solid upward movement since the pandemic hit, the stock is still in the undervalued range. It continues to open new stores and strengthen its eCommerce capabilities by allowing in-store and curbside pick-up. It's also quite impressive how the company acquired 8 million new customers and use its loyalty program to keep customers coming back for more. If you are a dividend-seeker, Dick's Sporting Goods could be a good one to consider. 

Like Dick's, Best Buy (BBY) has invested in its store experience and eCommerce capabilities. Both companies would inevitably put out an excellent performance in 2021 since investors are comparing the revenue and profit figures with 2020's dip when most retail operations were shut. Best Buy can be a good addition to a dividend-focused portfolio with its cash-generating operations and undervalued stock. I don't own either of the stock but may be researching them further to add to Stock Card's Dividend Seeker portfolio.

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​What's Down

The 10% Drop in Vertex Pharmaceuticals (VRTX) May Mean a Buy-the-Dip Opportunity

Yesterday, things looked quite positive for Vertex Pharmaceuticals (VRTX). It announced that its gene-editing efforts to deal with diseases such as sickle-cell were showing signs of success. It had tested multiple patients, and the months of study proved conclusively that the treatment was effective. The optimism was short-lived though.

Today, Vertex shares dropped a whopping -10.96%. With such good news the day before, the drop came as a shock. The company has just discontinued the development of another drug, VX-864. Investors were expecting a breakthrough treatment for the genetic disorder AATD but instead were informed that its effectiveness was not evident during trials.

Despite today's drop, VRTX is still among the leading stocks that are researching and shaping the future of gene editing. Its stock price is undervalued and the company has a strong balance sheet to fund its future R&D effort. If you are an investor who can tolerate market fluctuations that come with FDA-related news, this may be a chance to buy the dip in VRTX. 

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