This year, the stock market has experienced immense volatility due to macroeconomic and geopolitical headwinds. Despite a solid recovery since July, the S&P 500 is still down 11.3% year-to-date.
The U.S. economy contracted for two consecutive quarters, making many analysts believe that a recession has arrived. While slightly lower July inflation data and better-than-expected corporate earnings made investors optimistic, the market is expected to remain volatile, with inflation remaining at uncomfortably high levels for policymakers.
Given this backdrop, fundamentally sound stock HCA Healthcare, Inc. (HCA) could be an excellent addition to one’s portfolio. However, Etsy, Inc. (ETSY) is best avoided now due to its bleak growth prospects and weak financials.
Stock to Buy:
HCA Healthcare, Inc. (HCA)
HCA is a healthcare services company that owns and operates general and acute care hospitals offering medical, surgical, emergency, and outpatient services. In addition, the company operates in two geographically organized groups: The National and American Groups.
On August 9, 2022, HCA collaborated with Johnson & Johnson to address key healthcare clinical and industry issues. Through this initiative, both the companies will focus on improving health equity and enhancing nursing support and patient care.
HCA’s revenue increased 2.7% year-over-year to $14.82 billion in the second quarter ended June 30, 2022. As of June 30, 2022, the company’s total assets increased 1.6% from the year-end value of $50.74 billion on December 31, 2021, to $51.58 billion.
The consensus EPS estimate of $4.91 for its fiscal fourth quarter (ending December 31, 2022) represents an 11.1% improvement year-over-year. The consensus revenue estimate of $15.60 billion for the next quarter indicates a 3.6% increase from the year-ago period.
The stock has gained 20.7% over the past month to close the last trading session at $215.03.
HCA’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has a B grade for Value, Stability, Sentiment, and Quality. It is ranked first among the 13 stocks in the Medical - Hospitals industry. Click here to see the additional ratings of HCA for Growth and Momentum.
Stock to Avoid:
Etsy, Inc. (ETSY)
ETSY operates two-sided online marketplaces connecting people, buyers, and sellers worldwide. The company operates through four segments: Etsy, Reverb, Depop, and Elo7.
For the fiscal second quarter ended June 30, 2022, ETSY’s total operating expenses increased 17.3% year-over-year to $341.15 million. The company’s income from operations fell 18.6% from the year-ago value to $72.56 million, while its net income declined 25.6% year-over-year to $73.12 million. Also, its EPS decreased 25% year-over-year to $0.51.
For the quarter ending September 30, 2022, ETSY’s EPS is expected to decline 12.4% year-over-year to $0.79. The stock has lost 63.6% over the past nine months to close the last trading session at $107.01.
ETSY’s POWR Ratings are consistent with this bleak outlook. The stock has an overall rating of D, equating to a Sell in our proprietary rating system.
It has a D grade for Growth, Value, and Stability. Within the Internet industry, it is ranked #39 of 65 stocks. Click here to see the other ETSY ratings for Momentum, Sentiment, and Quality.
HCA shares were trading at $213.37 per share on Monday afternoon, down $1.66 (-0.77%). Year-to-date, HCA has declined -16.52%, versus a -12.45% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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