The Fed raised interest rates by 50 bps yesterday, thereby taking the benchmark interest rate to the highest level in 15 years. However, it represented a slowdown from the four consecutive 75-bps hikes earlier.
Fed Chair Jerome Powell said, “Inflation data received so far for October and November show a welcome reduction in the monthly pace of price increases.”
Moreover, Megan Greene, chief economist at Kroll Global, believes that “peak inflation is probably behind us.” Also, CNBC’s Jim Cramer believes the economy is stabilizing and might avoid a recession.
Nonetheless, the market is expected to remain uncertain as the central bank intends to keep raising rates through 2023. Therefore, holding on to quality stocks Pfizer Inc. (PFE) and Lockheed Martin Corporation (LMT) could be wise. These stocks are rated A (Strong Buy) in our POWR Ratings system.
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas.
On December 14, 2022, PFE and China Meheco Group Co Ltd. (China Meheco) signed an agreement under which China Meheco will import and distribute PFE’s oral COVID-19 treatment Paxlovid in mainland China amid the resurgence of covid cases. This deal is expected to generate additional revenue for PFE shortly.
Moreover, on December 8, 2022, PFE and BioNTech SE (BNTX) achieved the U.S. Food and Drug Administration’s Emergency Use Authorization for their Omicron BA.4/BA.5-adapted bivalent COVID-19 vaccine. It is the third 3-µg dose in the three-dose primary series for children between 6 months and four years, and it adds to the companies’ covid portfolio.
PFE has paid dividends for 33 consecutive years. Its dividend payouts have increased at 5.7% CAGR over the past five years. Its current dividend yield is 3.09%, while its four-year average yield is 3.63%.
For its third quarter that ended October 2, 2022, PFE’s United States segment revenues came in at $13.85 billion, up 97.3% year-over-year. Its non-GAAP net income came in at $10.17 billion, up 39.7% year-over-year. Also, its non-GAAP EPS came in at $1.78, up 40.2% year-over-year.
PFE’s revenue is expected to increase 23.3% year-over-year to $100.25 billion in 2022. Its EPS is expected to increase 46.4% year-over-year to $6.47 in 2022. It surpassed EPS estimates in all four trailing quarters. Over the past month, the stock has gained 10.6% to close the last trading session at $54.48.
PFE’s POWR Ratings reflect its promising outlook. It has an overall A rating representing a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PFE has an A grade for Value and a B for Growth, Sentiment, and Quality. It is ranked #2 out of 160 stocks in the Medical – Pharmaceuticals industry. Click here for additional PFE ratings (Momentum and Stability).
Lockheed Martin Corporation (LMT)
Security and aerospace company LMT researches, designs, develops, manufactures, integrates, and sustains technology systems, products, and services worldwide. It has four segments: Aeronautics; Missiles and Fire Control; Rotary and Mission Systems; and Space.
On December 7, 2022, LMT and Sintavia, LLC announced a collaboration to expand research of metal additive manufacturing opportunities as an alternative to castings and forgings. Additive manufacturing is expected to offer advanced detail and design facilities while reducing operating costs and enhancing supply chains.
Also, on November 16, 2022, LMT and Microsoft Corporation (MSFT) announced a landmark expansion of their strategic relationship to help power the next generation of technology for the Department of Defense. This agreement is a potential game-changer for the defense industry and is expected to benefit LMT significantly.
LMT has paid dividends for 27 consecutive years. Its dividend payouts have increased at 8.9% CAGR over the past five years. Its current dividend yield is 2.50%, while its four-year average yield is 2.61%.
LMT’s net sales came in at $16.58 billion for the third quarter that ended September 25, 2022, up 3.5% year-over-year. Its net earnings came in at $1.78 billion, up 189.6% year-over-year, while its adjusted EPS came in at $6.87, up 4.1% year-over-year.
LMT’s revenue is estimated to increase 3.1% year-over-year to $18.28 billion for the quarter ending December 2022. Its EPS is expected to increase by 7.9% per annum for the next five years. It surpasses EPS estimates in three of four trailing quarters. Over the past year, the stock has gained 40.4% to close the last trading session at $485.19.
LMT’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall A rating equates to a Strong Buy in our rating system. It has a B grade for Sentiment and Quality. It is ranked #3 out of 73 stocks in the Air/Defense Services industry.
Beyond what is stated above, we’ve also rated LMT for Growth, Value, Momentum, and Stability. Get all LMT ratings here.
PFE shares fell $0.05 (-0.09%) in premarket trading Thursday. Year-to-date, PFE has declined -4.74%, versus a -14.94% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
2 Strong Buy Stocks You Should Never Sell StockNews.com
