In a quest to bring down the multi-decade high inflation, the Federal Reserve raised the benchmark interest rates by another 0.75 percentage point on Wednesday, taking its federal funds rate up to a range of 3%-3.25%, the highest since early 2008. Additionally, Fed officials have signaled further aggressive hikes until its terminal rate reaches 4.6% in 2023.
With central banks around the globe simultaneously raising interest rates to fight persistently high inflation, the World Bank sees the possibility of a global recession and devastating consequences for emerging markets and developing economies. “Global growth is slowing sharply, with further slowing likely as more countries fall into recession,” said David Malpass, the President of World Bank.
While the market volatility is rife, a top Morgan Stanley strategist believes the S&P 500 will revive by the end of the year. Given this backdrop, we think investors should buy fundamentally solid stocks AbbVie Inc. (ABBV), Bristol-Myers Squibb Company (BMY), Cigna Corporation (CI), and The Mosaic Company (MOS) that have the potential to outperform the market in the near term.
AbbVie Inc. (ABBV)
ABBV is engaged in developing, manufacturing, and selling pharmaceuticals globally. It offers its products in various categories: immunology, oncology, neuroscience, eye care, and women’s healthcare. The company markets its products to wholesalers, distributors, government agencies, health care facilities, and independent retailers.
On September 19, 2022, the company received a positive CMHP opinion for Risankizumab (SKYRIZI®) for treating adults with moderate to severe Crohn’s disease who have had an inadequate or intolerant response to conventional or biologic therapy. This approval should strengthen ABBV’s ability to treat patients with Crohn’s disease.
ABBV’s net revenues increased 4.5% year-over-year to $14.58 billion in the second quarter ended June 30, 2022. The company’s non-GAAP net earnings increased 10.7% from the year-ago value to $6 billion, while its adjusted EPS rose 11.2% from the prior-year quarter to $3.37.
The consensus EPS estimate of $3.60 indicates an 8.1% year-over-year increase. The consensus revenue estimate of $14.99 billion represents an increase of 4.5% year-over-year.
ABBV has gained 31% over the past year to close the last trading session at $140.31.
ABBV’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Quality and a B for Growth and Value. Within the Medical – Pharmaceuticals industry, it is ranked #9 out of 164 stocks.
To see the other ratings of ABBV for Momentum, Sentiment, and Stability, click here.
Bristol-Myers Squibb Company (BMY)
BMY discovers, develops, licenses, and markets biopharmaceutical products for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and covid-19 diseases globally. It sells to wholesalers, distributors, pharmacies, retailers, hospitals, clinics, and government agencies.
On September 16, the European Commission (EC) approved BMY’s fixed-dose combination of Opdualag (nivolumab and relatlimab) for the first-line treatment of advanced melanoma in adults and adolescents with tumor cell PD-L1 expression
In the same month, BMY announced that the U.S. Food and Drug Administration (USFDA) approved Sotyktu (deucravacitinib), a first-in-class, oral, selective, allosteric tyrosine kinase 2 (TYK2) inhibitor, for the treatment of adults with moderate-to-severe plaque psoriasis. These approvals mark significant milestones for the company.
BMY’s total revenues increased 2% year-over-year to $11.89 billion in the fiscal second quarter ended June 30, 2022. EBIT came in at $1.96 billion, up 26.1% year-over-year, while its net earnings grew 34.7% from the year-ago value to $1.43 billion. The company’s EPS grew 40.4% from the prior-year quarter to $0.66 in the same period.
Street expects BMY’s revenue for the fiscal quarter ending March 2023 to come in at $11.76 billion, indicating a marginal year-over-year increase. Also, the company’s EPS is expected to grow 7% year-over-year to $2.10 in the same period. BMY beat the consensus EPS estimates in all the trailing four quarters.
BMY gained 15% over the past year to close the last trading session at $69.46.
BMY’s strong fundamentals reflect this promising outlook. The stock has an overall rating of A, equating to Strong Buy in our POWR Ratings system. BMY also has an A grade in Value and a B in Growth, Sentiment, and Quality. It is ranked #4 in the Medical – Pharmaceuticals industry.
We’ve also rated BMY for Stability and Momentum. Get all BMY ratings here.
Cigna Corporation (CI)
CI provides insurance and related products and services in the United States. It operates through the Evernorth; and Cigna Healthcare segments. The company also offers permanent insurance contracts and distributes its products and services through insurance brokers and consultants.
On September 15, Evernorth, CI’s health services business segment, expanded its Digital Health Formulary to include five new app-based programs and help people better manage their sleep issues, anxiety, alcohol and opioid use disorders, and inflammatory conditions. This should help the company address the unmet needs of patients with chronic health conditions.
On August 29, CI declared the expansion of its ACA Marketplace exchange plans and expects to provide better access to affordable, predictable, and simple health care coverage to customers and communities in 2023. This should boost CI’s revenues in the long term.
For its second quarter ended June 30, 2022, CI’s total revenues increased 5.4% year-over-year to $45.48 billion. Its adjusted income from operations came in at $1.98 billion, up 9.6% year-over-year, while its adjusted EPS came in at $6.22, up 18.7% year-over-year.
Analysts expect CI’s revenue to increase 3.4% year-over-year to $179.90 billion in 2022. Its EPS is estimated to increase 12.3% year-over-year to $22.98 in the same period.
Over the past year, the stock has gained 40.8% to close the last trading session at $284.95.
It is no surprise that CI has an overall A rating, which translates to a Strong Buy in our proprietary rating system. It has a B grade for Growth, Value, Sentiment, and Quality. Within the A-rated Medical – Health Insurance industry, it is ranked #5 out of 11 stocks.
Click here for the additional POWR Ratings for Momentum and Stability for CI.
The Mosaic Company (MOS)
MOS and its subsidiaries manufacture and sell concentrated phosphate and potash crop nutrients in North America and other countries. It operates through three segments: Phosphates; Potash; and Mosaic Fertilizantes.
MOS’ net sales came in at $5.37 billion for the second quarter ended June 30, 2022, up 91.8% year-over-year. Its net earnings increased 136.9% year-over-year to $1.04 billion. Moreover, the company’s EPS came in at $2.85, up 150% year-over-year.
MOS’ revenue is expected to increase 67.1% year-over-year to $20.65 billion in the ongoing fiscal year. Its EPS is estimated to increase 163.7% year-over-year to $13.29 in 2022.
Over the past year, the stock has gained 80.2% to close the last trading session at $53.50.
MOS has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Growth and a B for Value and Quality. It is ranked #5 out of the 30 stocks in the Agriculture industry.
Beyond what is stated above, we’ve also rated MOS for Sentiment, Stability, and Momentum. Get all MOS ratings here.
ABBV shares were trading at $142.88 per share on Thursday morning, up $2.57 (+1.83%). Year-to-date, ABBV has gained 8.53%, versus a -20.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal’s passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More…