Despite the recent slowdown in inflation, it seems like it will require substantial evidence for the Fed to be confident that inflation is on a sustained downward path. During Wednesday’s conference, Chairman Powell said that sticky services inflation might cause the central bank to continue raising rates.
However, as the U.S. economy saw some positive signs, some experts are also hopeful that jitters about the economy will ease soon. Eric Marshall, portfolio manager with Hodges Capital, said, “The market has been very much anticipating a recession all year. This could be a shallower recession.”
Moreover, Forbes predicts a 77.9% chance of a Santa Rally in December. Moreover, December is generally considered a good month for investors.
Amid this backdrop, monster-growth stocks CVS Health Corporation (CVS) and Sysco Corporation (SYY) might be attractive buys now.
CVS Health Corporation (CVS)
CVS provides health services in the United States. The company operates through three segments: Health Care Benefits; Pharmacy Services; and Retail/LTC.
On December 15, CVS announced that its board of directors had approved a 10% increase in its quarterly dividend to 60.5 cents a share, payable February 1. Its annual dividend of $2.42 per share yields 2.48 % at the current price. Its dividends grew at 3.2% CAGR over the past three years.
On December 1, CVS opened its first MinuteClinic locations in northern Delaware, expanding its presence. MinuteClinic, the medical clinics inside select CVS Pharmacy stores, offers high-quality, affordable, and convenient care for various acute and chronic conditions for patients ages 18 months and older.
Over the past three years, CVS’ revenue and EBIT have grown at CAGRs of 11.5% and 8.5%, respectively.
CVS’ trailing-12-month EBITDA margin of 6.08% is 63.09% higher than the industry average of 3.73%. Moreover, its trailing-12-month ROCE and ROTC of 4.35% and 6.26% compare with their industry average of negative 39.56% and 21.95%
For the fiscal 2022 third quarter ended September 30, 2022, CVS’ total revenues increased 10% year-over-year to $81.16 billion. Its adjusted operating income increased by 3.9% from the prior-year period to $4.23 billion. In addition, the company’s adjusted earnings per share came in at $2.09, up 6.1% year-over-year.
Street expects CVS’ revenue and EPS for the current fiscal year ending December 2022 to rise 7.7% and 2.6% from the prior year to $314.49 billion and $8.62, respectively. The company has also surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Over the past six months, the stock has gained 6.7% to close the last trading session at $97.60.
CVS’ POWR Ratings reflect its strong fundamentals. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR ratings assess stocks by 118 different factors, each with its own weighting.
CVS has an A grade for Growth and a B for Stability and Sentiment. It is ranked first among the four stocks in the B-rated Medical – Drug Stores industry. In addition, we have also given CVS grades for Value, Momentum, and Quality. Get all CVS ratings here.
Sysco Corporation (SYY)
SYY distributes various food and related products primarily to the food service or food-away-from-home industry. The company operates through U.S. Foodservice Operations; International Foodservice Operations; SYGMA; and Other segments.
On December 7, SYY announced the launch of its tenth professional truck driver training facility in March 2022. The operation of Commercial Driver’s License (CDL) training facilities at its sites should benefit the company.
On November 17, SYY declared a regular quarterly dividend of $0.49 per share, payable to shareholders on January 27, 2023. Its annual dividend of $1.96 yields 2.50% on current market prices. It has a 4-year average dividend yield of 2.41%. The company has raised its dividend at a 7.2% CAGR over the past three years. Moreover, it has seven years of consecutive dividend growth history.
Over the past five years, SYY’s revenue and EBIT have grown at CAGRs of 4.9% and 3.1%, respectively.
Its trailing-12-month cash from operations of $1.84 billion is 501% higher than the industry average of $306 million. Additionally, its trailing-12-month ROCE and ROTC of 103.73% and 12.54% are 879.41% and 103% higher than their industry averages of 10.59% and 6.18%.
SYY’s sales increased 16.2% year-over-year to $19.13 billion in the fiscal first quarter ended October 1. Its non-GAAP net earnings and non-GAAP EPS improved 14.6% and 16.9% from the prior-year period to $492.60 million and $0.97, respectively.
Analysts expect SYY’s EPS for the fiscal year ending December 2022 to increase 27.7% year-over-year to $4.15. Likewise, they expect its revenue to improve by 10.9% from the prior-year period to $76.13 billion. It has surpassed its revenue estimates in each of the trailing four quarters.
SYY’s stock has declined marginally year-to-date to close its last trading session at $78.29.
It’s no surprise that SYY has an overall A rating, which translates to Strong Buy in our POWR Ratings system. It also has an A grade for Growth and a B for Value and Stability. It is ranked #7 out of the 83-stock Food Makers industry.
To see the additional POWR Ratings for Momentum, Sentiment, and Quality for SYY, click here.
CVS shares were trading at $95.08 per share on Friday afternoon, down $2.52 (-2.58%). Year-to-date, CVS has declined -5.75%, versus a -18.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
2 Monster Growth Stocks to Buy Now StockNews.com
