The Federal Reserve raised interest rates by 25 basis points, bringing the benchmark funds rate to a range of 4.75% to 5%, the highest since October 2007. The Fed’s monetary policy tightening, along with the expected tighter lending by banks, could lead to a recession this year.
In this scenario, investors could look to add high-quality stocks Visa Inc. (V), Amgen Inc. (AMGN), and Box, Inc. (BOX) to their watchlists.
Before we delve deeper into why keeping these stocks on your watchlist could be prudent, let’s discuss why the stock market is likely to remain under pressure this year.
Federal Reserve Chair Jerome Powell acknowledged that the recent issues in the banking system would create tighter credit conditions. Although it’s too early to anticipate the banking crisis’ effect, the Fed will closely monitor incoming data and assess the effects of tighter credit conditions on economic activity, the labor market, and inflation.
With the Fed strongly committed to returning inflation to its 2% objective, Powell added that the central bank would conduct more rate hikes if needed. The central bank’s statement said, “The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.”
These factors are increasing the risk of a recession this year.
Amid this backdrop, it could be wise for investors to add V, AMGN, and BOX to their watchlists, given their strong fundamentals and solid growth prospects.
Visa Inc. (V)
V operates as a payments technology company worldwide. The company operates VisaNet, Visa Direct, Visa B2B Connect, Visa Treasury as a Service, and Visa DPS.
In terms of the trailing-12-month EBIT margin, V’s 67.14% is 203% higher than the 22.16% industry average. Its 50.02% trailing-12-month levered FCF margin is 176.4% higher than the 18.10% industry average. Likewise, its 22.12% trailing-12-month Return on Total Capital is 341.7% higher than the industry average of 5.01%.
V’s net revenues increased 12.4% year-over-year to $7.94 billion for the fiscal first quarter that ended December 31, 2022. Its non-GAAP net income rose 17.4% year-over-year to $4.58 billion. The company’s non-GAAP EPS increased 20.4% from the year-ago value to $2.18.
V’s EPS and revenue for the quarter ending March 31, 2023, are expected to increase 10.3% and 7.9% year-over-year to $1.98 and $7.76 billion, respectively. The company has an impressive earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 18.4% to close the last trading session at $220.04.
V’s strong fundamentals are reflected in its POWR Ratings. It 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.
In addition, it has an A grade for Quality and a B for Stability and Sentiment. Within the Consumer Financial Services industry, it is ranked #5 of 47 stocks. To see V’s POWR Ratings for Growth, Value, and Momentum, click here.
Amgen Inc. (AMGN)
AMGN discovers, develops, manufactures, and delivers human therapeutics worldwide. It focuses on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology, and neuroscience areas.
In terms of the trailing-12-month gross profit margin, AMGN’s 75.66% is 35.9% higher than the 55.67% industry average. Likewise, its 0.42x trailing-12-month asset turnover ratio is 22.7% higher than the industry average of 0.34x.
On December 12, 2022, AMGN announced its acquisition of Horizon Therapeutics plc for approximately $27.80 billion. AMGN’s Chairman and CEO, Robert A. Bradway, said, “The acquisition of Horizon is a compelling opportunity for Amgen and one that is consistent with our strategy of delivering long-term growth by providing innovative medicines that address the needs of patients who suffer from serious diseases.”
“Additionally, the potential new medicines in Horizon’s pipeline strongly complement our own R&D portfolio. The acquisition of Horizon will drive growth in Amgen’s revenue and non-GAAP EPS and is expected to be accretive from 2024,” he added.
For the fourth quarter ended December 31, 2022, AMGN’s non-GAAP operating income increased marginally year-over-year to $3.01 billion. The company’s non-GAAP net income and EPS came in at $2.20 billion and $4.09, respectively.
For the fiscal year ended December 31, 2022, AMGN’s total revenues increased 1.3% year-over-year to $26.32 billion. Its non-GAAP operating income rose 21.3% over the prior-year period to $12.76 billion. The company’s non-GAAP net income increased 20% year-over-year to $9.57 billion. Also, its non-GAAP EPS came in at $17.69, representing an increase of 27.1% year-over-year.
AMGN’s revenue for the quarter ending March 31, 2023, is expected to increase marginally year-over-year to $6.24 billion. Its EPS for the quarter ending September 30, 2023, is expected to increase 0.5% year-over-year to $4.72. It has a commendable earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters.
Over the past six months, the stock has gained 0.9% to close the last trading session at $229.83.
AMGN’s POWR Ratings reflect solid prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. Within the Biotech industry, it is ranked #12 out of 385 stocks.
It has an A grade for Quality and a B for Stability. Click here to see the additional ratings of AMGN for Growth, Value, Momentum, and Sentiment.
Box, Inc. (BOX)
BOX provides a cloud content management platform that enables organizations of various sizes to manage and share their content from anywhere on any device. The company’s Software-as-a-Service platform allows users to collaborate on content, automate content-driven business processes, develop custom applications, and implement data protection, security, and compliance features.
In terms of the trailing-12-month gross profit margin, BOX’s 74.51% is 48% higher than the 50.35% industry average. Its 30.35% trailing-12-month levered FCF margin is 399.3% higher than the 6.08% industry average. Likewise, its 2.22% trailing-12-month Return on Total Assets is 215.9% higher than the industry average of 0.70%.
For the fiscal fourth quarter ended January 31, 2023, BOX’s revenue increased 9.9% year-over-year to $256.48 million. The company’s non-GAAP gross profit increased 14.9% year-over-year to $201.26 million. Its non-GAAP operating income increased 37.3% year-over-year to $66.56 million.
Its non-GAAP net income attributable to common stockholders rose 52.7% year-over-year to $56.29 million. Additionally, its non-GAAP net EPS attributable to common stockholders increased 54.2% from the prior-year period to $0.37.
BOX’s EPS and revenue for the quarter ending April 30, 2023, are expected to increase 18.3% and 4.5% year-over-year to $0.27 and $249.25 million, respectively. It has a creditable earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters.
Over the past nine months. the stock has gained 5.4% to close the last trading session at $25.46.
BOX’s positive outlook is reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. It is ranked #5 out of 81 stocks in the Technology - Services industry. It has an A grade for Growth and Quality and a B for Value.
In total, we rate BOX on eight different levels. Beyond what we stated above, we have also given BOX grades for Momentum, Stability, and Sentiment. Get all BOX ratings here.
Consider This Before Placing Your Next Trade…
We are still in the midst of a bear market.
Yes, some special stocks may go up like the ones discussed in this article. But most will tumble as the bear market claws ever lower this year.
That is why you need to discover the “REVISED: 2023 Stock Market Outlook” that was just created by 40 year investment veteran Steve Reitmeister. There he explains:
- 5 Warnings Signs the Bear Returns Starting Now!
- Banking Crisis Concerns Another Nail in the Coffin
- How Low Will Stocks Go?
- 7 Timely Trades to Profit on the Way Down
- Plan to Bottom Fish For Next Bull Market
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You owe it to yourself to watch this timely presentation before placing your next trade.
REVISED: 2023 Stock Market Outlook >
V shares rose $0.51 (+0.23%) in premarket trading Thursday. Year-to-date, V has gained 6.48%, versus a 3.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
3 High-Quality Stocks to Add to Your Watchlist Now StockNews.com
