Amid the Fed’s aggressive rate hikes to battle the sky-high inflation, economists and leaders sparked recessionary warnings. However, the past month has brought with it encouraging inflation data that shows cooling down price pressures, raising hopes that this would prompt the Fed to slow the pace of its rate hikes.
Goldman Sachs Research recently published that the U.S. is forecasted to narrowly avoid a recession as inflation fades and unemployment nudges up slightly. Their economists say there’s a 35% probability of the U.S. tipping into recession over the next year, an estimate well below the median of 65% among forecasters in a Wall Street Journal survey.
Amid surging optimism, investors could buy shares of Comcast Corporation (CMCSA) and Vertex Pharmaceuticals Incorporated (VRTX) to capitalize on their solid fundamentals.
Comcast Corporation (CMCSA)
CMCSA operates as a media and technology company worldwide. It operates through Cable Communications; Media; Studios; Theme Parks; and Sky segments.
On November 17, Comcast Business announced a $3 million investment to expand its smart, fast, and reliable fiber-rich network in Virginia, with plans to complete it by the end of this year.
Barry DuVal, President & CEO Virginia Chamber of Commerce, said, “The latest investments and network expansions across Virginia are a testament to Comcast Business’ commitment to fostering economic development in our local communities.”
On November 16, CMCSA launched the industry’s first Large Button Voice Remote, a groundbreaking innovation designed for users with mobility, dexterity, or vision impairments. This powerful device combines the company’s award-winning voice control technology with industry-first advancements in accessible hardware design, inclusive packaging, and customer experience.
On October 27, CMCSA declared a quarterly dividend of $0.27 a share on the company’s common stock, payable on January 25, 2023.
Its annual dividend of $1.08 yields 3.08%, and its four-year average dividend yield is 2.06%. Its dividend payouts have increased at 11.7% CAGR over the past five years. The company increased dividends for five consecutive years.
CMCSA’s revenue has grown at a CAGR of 3.8% over the past three years and a CAGR of 7.6% over the past five years.
For the third quarter of the fiscal year 2022 ended September 30, CMCSA’s adjusted EBITDA increased 5.9% year-over-year to $9.48 billion, while its adjusted net income grew 4.5% year-over-year to $4.22 billion. The company’s adjusted EPS rose 10.3% year-over-year to $0.96.
Analysts expect CMCSA’s revenue to increase 4.3% year-over-year to $121.38 billion in the current fiscal year ending December 2022. Its EPS is expected to increase 12.3% year-over-year to $3.63 in the current year. Additionally, it has surpassed EPS estimates in all four trailing quarters.
Over the past month, the stock has gained 15.2% to close the last trading session at $35.10.
CMCSA’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
CMCSA has a B grade for Growth and Quality and is ranked the first among the nine stocks in the Entertainment – TV & Internet Providers industry.
Beyond what we’ve stated above, we have also given CMCSA grades for Value, Momentum, Stability, and Sentiment. Get all the CMCSA ratings here.
Vertex Pharmaceuticals Incorporated (VRTX)
VRTX is a biotechnology company that develops and commercializes therapies for treating cystic fibrosis. The company sells its products primarily to specialty pharmacies and distributors in the United States, as well as specialty distributors, retail chains, hospitals, and clinics internationally.
On October 11, VRTX announced that the U.S. Food and Drug Administration had cleared the Investigational New Drug Application for VX-634, enabling the company to initiate a first-in-human clinical trial for this small molecule AAT corrector in healthy volunteers. If it passes the clinical trials successfully, this might drive up the company's revenue in the future.
On September 27, VRTX and CRISPR Therapeutics (CRSP) announced that the FDA granted exagamglogene autotemcel a rolling review for the potential treatment of sickle cell disease (SCD) and transfusion-dependent beta thalassemia. Exa-cel is being investigated in multiple ongoing clinical trials as a potential one-time therapy for patients with either SCD or TDT.
VRTX’s revenue has grown at a CAGR of 34% over the past three years and a CAGR of 30.5% over the past five years.
VRTX’s total revenues rose 17.7% year-over-year to $2.33 billion for the third quarter that ended September 30, 2022. Its non-GAAP operating income increased 11% from its prior-year quarter to $1.29 billion. The company’s non-GAAP net income grew 14% year-over-year to $1.04 billion, while its non-GAAP EPS improved 14.2% year-over-year to $4.01 for the quarter.
The consensus EPS estimate of $14.68 for the current fiscal year ending December 2022 represents a 12.7% improvement year-over-year. The consensus revenue estimate of $8.93 billion for the same year represents an 18% increase from last year’s value. The company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters.
Over the past year, the stock has gained 77.1% to close the last trading session at $321.48. It has gained 46.4% year-to-date.
VRTX’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Sentiment and Quality and a B for Value. It is ranked first among 379 stocks in the Biotech industry.
Click here to see the VRTX ratings for Growth, Momentum, and Stability.
CMCSA shares were trading at $35.51 per share on Wednesday afternoon, up $0.41 (+1.17%). Year-to-date, CMCSA has declined -27.58%, versus a -14.58% 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.
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