The Fed’s aggressive fight against sky-rocketing inflation has hit investors’ sentiments and pushed stocks into bear market territory. With the fourth consecutive 75-basis-point rate hike by the Fed, Chair Jerome Powell indicated that even if they were to slow the pace of rate hikes moving ahead, it is nowhere close to ending.
On the other hand, the U.S. economy grew at an annual rate of 2.6% in the third quarter of 2022, marking a sharp turnaround after six months of contraction. Despite lingering recession fears, the economy seems to be resilient and could soon expect a market recovery.
Amid this scenario, investors could consider buying quality stocks, Abbott Laboratories (ABT), Verizon Communications Inc. (VZ), and The Mosaic Company (MOS). These stocks are currently trading at attractive valuations.
Abbott Laboratories (ABT)
ABT discovers, develops, and sells healthcare products worldwide. It operates in four segments: Established Pharmaceutical Products; Diagnostic Products; Nutritional Products; and Medical Devices. The company sells its products directly to wholesalers, distributors, government agencies, healthcare facilities, pharmacies, and independent retailers.
In September, ABT declared a quarterly common dividend of 47 cents per share, payable on November 15. This marks the 395th consecutive quarterly dividend to be paid by ABT since 1924, which underscores the company’s ability to pay its shareholders sustainably.
On August 23, ABT announced that the U.S. Food and Drug Administration (FDA) approved its new Proclaim™ Plus spinal cord stimulation (SCS) system featuring FlexBurst360™ therapy that offers pain coverage and enables programming that can be adjusted with a person's evolving therapeutic needs. This should expand the company’s customer base.
In terms of its forward Price/Sales, ABT is currently trading at 3.96x, 6.6% lower than the industry average of 4.24x. Its trailing-12-month P/E multiple of 22.13 is 8.6% lower than the industry average of 24.22.
ABT’s net sales came in at $33.56 billion for the nine months that ended September 30, 2022, up 6.2% year-over-year. Its net earnings came in at $5.90 billion, up 16.1% year-over-year, while its EPS came in at $3.32, up 17.3% year-over-year.
Street expects ABT’s revenue to increase marginally year-over-year to $43.17 billion in the ongoing fiscal year. The company surpassed EPS estimates in all four trailing quarters, which is impressive.
Over the past three years, the stock has gained 19.3% to close the last trading session at $98.07.
ABT’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It also has a B grade for Stability, Sentiment, and Quality. ABT is ranked #5 of 142 stocks in the Medical – Devices & Equipment industry.
Click here to see the additional POWR Ratings for ABT (Growth, Value, and Momentum).
Verizon Communications Inc. (VZ)
VZ offers communications, technology, information, and entertainment products and services worldwide to consumers, businesses, and governmental entities. The company operates through the Consumer and Business segments.
On October 31, VZ and World Champion Fantasy (WCF), a leading technology developer of next-generation online fantasy Esports platform PlayerX, announced a multi-year contract under which VZ will integrate its tools, services, and techstack into WCF’s industry disruptive PlayerX platform. This partnership with an innovative company should be strategically beneficial for VZ.
In the same month, VZ, Reset Digital and Yahoo announced a new partnership to help Verizon improve its audience engagement through the use of Reset Digital’s advertising network. “Reset Digital’s science and technology-driven approach can help us identify the right content for our audience, and can help us reach diverse audiences that represent the communities we serve,” said Tony Wells, SVP of Marketing, VZ.
VZ’s forward P/E multiple of 7.91 is 51.4% lower than the industry average of 16.26. In terms of its forward EV/EBIT, the stock is trading at 10.81x, 24.7% lower than the industry average of 14.35x.
For the fiscal third quarter ended September 30, 2022, VZ’s total operating revenues increased 4% year-over-year to $34.24 billion. The company’s wireless equipment revenue grew 22.7% from the prior-year period to $5.56 billion.
Analysts expect VZ’s revenue for the fourth quarter ending December 2022 to come in at $35.43 billion, representing an increase of 4% from the prior-year period. Also, its revenue for the ongoing fiscal year is expected to rise 2.4% year-over-year to $136.80 billion. The company surpassed the consensus EPS estimates in three of four trailing quarters.
The stock has gained marginally intraday to close the last trading session at $37.24.
VZ has an overall rating of B, translating to a Buy in our POWR Rating system. The stock also has a B grade for Growth and Stability. It is ranked #2 out of 20 stocks in the Telecom-Domestic industry.
Beyond what is stated above, we have also given VZ grades for Value, Sentiment, Momentum, and Quality. Get access to all VZ ratings here.
The Mosaic Company (MOS)
MOS produces and markets concentrated phosphate and potash crop nutrients in North America and other countries. The company operates through its Phosphates; Potash; and Mosaic Fertilizantes segments.
On October 19, MOS declared a quarterly dividend of $0.15 per share on its common stock. The dividend is expected to be paid to shareholders on December 15, 2022 and reflects the company’s strong cash position.
MOS’ forward EV/EBITDA multiple of 2.83 is 57.2% lower than the industry average of 6.61. In terms of its forward EV/EBIT, the stock is trading at 3.24x, 67.3% lower than the industry average of 9.89x.
For the second quarter that ended June 30, MOS’ net sales increased 91.8% year-over-year to $5.37 billion, while its operating earnings increased 245.9% year-over-year to $1.67 billion. In the same period, adjusted EBITDA and net income attributable to MOS increased 144.6% and 136.9% year-over-year to $2.03 billion and $1.04 billion, respectively.
MOS’ revenue is expected to increase 64.2% year-over-year to $20.29 billion, while its EPS is estimated to grow 156.3% year-over-year to $12.92 in the current fiscal year ending December 2022.
The stock has gained 27% over the past year and 25.5% year-to-date to close the last trading session at $49.29.
It is no surprise that MOS has an overall rating of B, equating to a Buy in our POWR Rating system. The stock has an A grade for Growth and a B for Value and Quality. In the 31-stock Agriculture industry, MOS is ranked #6.
To get MOS ratings for Momentum, Sentiment, and Stability, click here.
ABT shares were trading at $99.52 per share on Monday afternoon, up $1.45 (+1.48%). Year-to-date, ABT has declined -28.10%, versus a -19.11% 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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