The inflation-fighting Federal Reserve is aggressively hiking its interest rates, raising concerns of a possible recession. Current macroeconomic and geo-political headwinds have been weighing in on the investors’ sentiments leading to widespread volatility in the market.
However, U.S. companies reporting mostly positive news this earnings season are providing some relief. According to IBES data from Refinitiv, as of Tuesday, S&P 500 company earnings are estimated to have increased 8.1% year-over-year, and about 78% of earnings reports are beating Wall Street expectations.
The S&P 500 companies seem to be holding up well, with revenue in the quarter expected to have risen 12.5%, compared with 10.4% estimated at the start of July, indicating robust sales. “If you want to say, what’s the health of the economy, it’s measured in sales,” said Jonathan Golub, chief U.S. equity strategist & head of quantitative research at Credit Suisse Securities.
Given the scenario, we think investors should consider buying fundamentally solid growth stocks AmerisourceBergen Corporation (ABC) and Civeo Corporation (CVEO), which have registered stable returns despite the market downturns and look poised to soar higher.
AmerisourceBergen Corporation (ABC)
ABC is a global pharmaceutical sourcing and distribution services company that operates through two segments U.S. Healthcare Solutions; and International Healthcare Solutions. ABC is headquartered in Chesterbrook, Pa.
ABC’s revenue increased 17.4% from the prior-year quarter to $57.72 billion in its fiscal second quarter ended March 31, 2022. Its operating income was $780.16 million, up 25% year-over-year, while the net income attributable to ABC for the quarter came in at $548.01 million, reflecting a 25.9% increase year-over-year. Its EPS stood at $2.59, up 23.3% year-over-year.
ABC’s revenue for its fiscal third quarter ending June 2022 is expected to be $59.03 billion, indicating a 10.5% year-over-year growth. The company’s EPS is expected to increase 18.5% from the year-ago value to $2.56. ABC also beat the consensus EPS estimates in three of the trailing four quarters.
ABC’s revenue has grown at a 9.5% CAGR over the past three years. Its EBIT has grown at a 19% CAGR over the past three years, while its EPS has grown at a 24% CAGR over the same period.
ABC’s stock has gained 16.4% in price over the past year and 5% over the past six months to close its last trading session at $142.81.
ABC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our rating system. The POWR ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The company has an A grade in Growth and a B in Value. It is ranked #5 of 83 stocks in the Medical – Services industry. To get ABC’s ratings for Momentum, Quality, Stability, and Sentiment, click here.
Civeo Corporation (CVEO)
CVEO provides hospitality services to the natural resource industry in Canada, Australia, and the United States.
On July 18, CVEO announced that it had been awarded a 12-year contract renewal to continue providing rooms and hospitality services at its Wapasu Lodge in the Canadian oil sands for Imperial Oil Resources Limited. The contract includes approximately C$500 million of guaranteed take-or-pay revenues. This should strengthen the company’s revenue stream.
CVEO’s revenues increased 20% from the prior-year quarter to $184.95 million in the fiscal quarter ended June 30, 2022. Operating income for the quarter came in at $14.24 million, reflecting an increase of 569% year-over-year, while its net income per share came in at $0.54, up 1900% year-over-year.
CVEO’s revenue has grown at a 12.6% CAGR over the past three years and at an 11.9% CAGR over the past five years. Its EBITDA has increased at a 13.3% CAGR over the past three years.
The consensus EPS estimate of $0.40 for the fiscal quarter ending September 2022 represents a 9,086.1% improvement year-over-year. The consensus revenue estimate of $173.81 million for the same period represents a 12.1% increase year-over-year.
CVEO’s stock has gained 43.7% year-to-date and 23.4% over the past six months to close the last trading session at $27.54.
CVEO’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, translating to Strong Buy in our proprietary rating system. CVEO has a B grade in Value, Sentiment, Growth, Quality, and Stability. It is ranked #1 of 42 stocks in the Outsourcing - Business Services industry.
Beyond what is stated above, we’ve also rated CVEO for Momentum. Get all the CVEO ratings here.
ABC shares were trading at $138.93 per share on Wednesday morning, down $3.88 (-2.72%). Year-to-date, ABC has gained 5.21%, versus a -12.37% 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.
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