We recently published a list of 15 Best Large-Cap Value Stocks to Buy as the Recession Hits. In this article, we are going to take a look at where Thermo Fisher Scientific Inc. (NYSE:TMO) stands against other best large-cap value stocks to buy as the recession hits.
Goldman Sachs highlighted that equities around the world traded in and out of a bear market — which is often defined as a 20% decline from the recent peak. According to Peter Oppenheimer, chief global equity strategist at Goldman Sachs Research, the history of bear markets can provide some clues regarding the duration and severity of such downturns. U.S. stocks ended significantly higher after Trump announced his decision to put a 90-day pause on the additional country-specific portion of the reciprocal tariffs. That being said, Oppenheimer believes that a sustained rebound isn’t yet in place. As per the strategist, the valuations are required to adjust further before equities can shift into the “hope” phase of the next cycle.
What to Expect from Current Earnings Season?
With the Q1 2025 earnings season underway, Morningstar informs that investors can expect more focus than usual on what companies want to say regarding their outlooks, while the uncertainty surrounding tariffs means offering weaker, less confident, or even no guidance. Tariffs can impact the corporate bottom lines in several ways, both directly and indirectly. Notably, the increased import costs put more pressure on the margins. While some firms can decide to alleviate the pressure by increasing the prices for customers, others can choose to absorb them, says the firm. Morningstar, while quoting FactSet’s consensus estimates, mentioned that analysts expect 6.8% earnings growth in Q1 for companies in the S&P 500 benchmark index. For the full year, analysts anticipate an 11.2% growth.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Amidst Tensions, What’s the Silver Lining?
Forward guidance is what generally moves the financial markets. If the firm warns that there can be a possibility to see smaller profits, the stock tends to fall. This might happen across the market, but there is a silver lining. As per Morningstar chief research and investment officer Dan Kemp, it is important to note that most of the value lies in the future. Therefore, the impact on the company’s real value is expected to be muted. According to him, widening of the gap between stock prices and future real values can be a very fertile soil for the market investors.
Christian Mueller-Glissmann, head of asset allocation research within portfolio strategy for Goldman Sachs Research, says that investors need to think about diversifying regionally and across styles. To be specific, this consists of low-volatility stocks, i.e., equities from more defensive sectors, that fluctuate less than the broader market.
Our Methodology
To list the 15 Best Large-Cap Value Stocks to Buy as the Recession Hits, we considered companies from the industries which are expected to be resilient in a recessionary environment, such as utilities, healthcare, and consumer. Next, we chose the stocks that trade at a forward P/E of less than ~20.0x. Finally, the stocks are arranged in ascending order of the hedge fund sentiments, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A workstation in a research lab stocked with laboratory products and services.
Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Hedge Fund Holders: 100
Forward P/E as of April 15: ~18.9x
Thermo Fisher Scientific Inc. (NYSE:TMO) is engaged in providing life sciences solutions, analytical instruments, specialty diagnostics, laboratory products, and biopharma services. Leerink Partners analyst Puneet Souda maintained the bullish stance on the company’s stock, providing a “Buy” rating. The analyst’s rating stems from a combination of factors surrounding Thermo Fisher Scientific Inc. (NYSE:TMO)’s strategic acquisition of Solventum’s Purification and Filtration business. The analyst opines that the acquisition is expected to enhance Thermo Fisher Scientific Inc. (NYSE:TMO)’s position in the bioprocessing sector, mainly in filtration.
Solventum’s Purification and Filtration business, as part of Thermo Fisher Scientific Inc. (NYSE: TMO), is anticipated to result in mid-to-high single-digit organic growth, and the application of the PPI Business System will allow robust margin expansion and healthy synergy realization. Elsewhere, Michael Ryskin from Bank of America Securities reiterated a “Buy” rating on Thermo Fisher Scientific Inc. (NYSE:TMO)’s stock with a price objective of $680.00. Notably, Solventum’s Purification and Filtration business is highly complementary to Thermo Fisher Scientific Inc. (NYSE:TMO)’s bioproduction business.
Polen Capital, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Thermo Fisher Scientific Inc. (NYSE:TMO) appears to continue to move past COVID-related headwinds that hampered growth in recent years. While the backdrop around big pharma budget cuts and a weaker biotech funding environment have weighed on the stock over the past year, Q4 underperformance seems more related to concerns over increased regulatory scrutiny under the new administration, given RFK Jr.’s appointment as the Trump administration’s head of U.S. Health and Human Services, and his vocal pronouncements against pharmaceutical industry drug pricing. In tough times, pharma and biotech companies lean on suppliers that can deliver the best value. We believe Thermo has a vast offering of products and services bundled at prices that competitors have a hard time matching, allowing them to take significant market share. We maintain our long-term conviction in Thermo as among the most durable compounders in the world, with the ability to drive consistent growth through good and bad macro environments.”
Overall, TMO ranks 3rd on our list of best large-cap value stocks to buy as the recession hits. While we acknowledge the potential of TMO as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than TMO but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
