The Fed raised its interest rates by 25 basis points at the first Federal Open Market Committee (FOMC) meeting of 2023, bringing the federal funds rate to a target range of 4.5% to 4.75%. While Fed Chairman Jerome Powell acknowledged that the “disinflationary process” has begun, he warned that continued rate hikes would be appropriate.
Furthermore, Powell cautioned about better-than-expected economic data. The January U.S. jobs data showed that nonfarm payrolls grew by 517,000 jobs, nearly triple the Wall Street estimate. Such a robust employment report might bolster the Fed’s determination to raise interest rates above 5% and keep them high for the remainder of the year.
Aggressive interest rate increases could dampen the economy or cool the demand for goods and services, potentially leading to a much-feared recession. Therefore, 2023 could be another volatile year for the stock market.
Value stocks staged a comeback last year, with the SPDR Portfolio S&P 500 Value ETF (SPYV) gaining 7.8% over the past six months, while iShares S&P 500 Growth ETF (IVW) is 8.7% down. As macroeconomic uncertainty is expected to continue this year, value stocks with solid fundamentals could be ideal picks for investors in the long run.
Hence, it could be wise to invest in high-value stocks Gilead Sciences, Inc. (GILD), Stellantis N.V. (STLA), and Bluegreen Vacations Holding Corporation (BVH) and hold them for a lifetime.
Gilead Sciences, Inc. (GILD)
GILD is a biopharmaceutical company focusing on discovering, developing, and commercializing medicines to prevent and treat diseases such as HIV, viral hepatitis, and cancer. The company is also working to restore immune balance with agonists that target immune inhibitory receptors.
On February 2, 2023, GILD announced an increase in the quarterly dividend of 2.7%, beginning in the first quarter of 2023. A quarterly dividend of $0.75 per share of common stock would be paid to stockholders on March 30, 2023.
Moreover, on January 30, Kite, a GILD company, and Arcellx, Inc. (ACLX), declared the closing of their previously announced global strategic agreement to co-develop and commercialize CART-ddBCMA, ACLX’s primary late-stage product candidate as a therapy option for people with relapsed or refractory multiple myeloma.
Kite and ACLX are expected to jointly advance and commercialize the CART-ddBCMA asset in the United States, while Kite would market the product outside of the United States. The company could benefit from its efforts to improve patient care.
Furthermore, on January 3, GILD and EVOQ Therapeutics, Inc. announced a collaboration and licensing agreement to advance EVOQ’s proprietary technology for treating lupus and rheumatoid arthritis (RA). The collaboration would enable GILD to expand its autoimmune pipeline.
For the fourth quarter that ended December 31, 2022, GILD’s product sales increased 2.4% year-over-year to $7.33 billion, and its non-GAAP operating income grew 79.1% from the year-ago value to $2.70 billion. Also, non-GAAP net income attributable to GILD and non-GAAP EPS stood at $2.11 billion and $1.67, up 143.2% and 142% year-over-year, respectively.
In terms of forward non-GAAP P/E, GILD is trading at 12.56x, 36.3% lower than the industry average of 19.71x. The stock’s forward EV/Sales of 3.75x is 10.1% lower than the industry average of 4.17x. Also, its forward EV/EBITDA of 7.45 compares with the 13.78x industry average.
Analysts expect GILD’s revenue to increase 1.6% from the previous year to $26.99 billion for the fiscal year ending December 2024. The company’s EPS for the same year is expected to rise 5.8% year-over-year to $7.25. Furthermore, GILD surpassed its consensus EPS estimates in all four trailing quarters, which is impressive.
Shares of GILD have gained 39.1% over the past six months to close the last trading session at $85.67.
GILD’s POWR Ratings reflect its strong outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock also has an A grade for Growth and Value and a B for Quality. In the 401-stock Biotech industry, it is ranked #2.
Beyond what we stated above, we also have GILD’s ratings for Sentiment, Stability, and Momentum. Get all GILD ratings here.
Stellantis N.V. (STLA)
Headquartered in Hoofddorp, the Netherlands, STLA is a global manufacturer and distributor of automobiles and light commercial vehicles, metallurgical materials, and production systems. It offers luxury, premium, and mainstream passenger vehicles, retail and dealer financing, leasing, and rental services.
On January 4, 2023, STLA and Archer Aviation Inc. (ACHR) announced their collaboration to build Midnight, ACHR’s flagship electric vertical take-off and landing (eVTOL) aircraft. STLA would contribute advanced manufacturing technologies, expertise, skilled workers, and capital to the cooperation.
STLA’s goal to mass produce ACHR’s eVTOL aircraft as its exclusive contract manufacturer could benefit the company strategically.
On December 22, 2022, the company acquired aiMotive, a leading developer of advanced artificial intelligence and autonomous driving software. aiMotive would operate as a subsidiary of STLA while maintaining its operational independence.
STLA could enhance its artificial intelligence and autonomous driving core technology, increase its worldwide talent pool, and nurture the mid-term development of its all-new STLA AutoDrive platform by leveraging aiMotive’s world-class expertise.
For the fiscal 2022 third quarter, STLA’s net revenues increased 29.1% year-over-year to €42.10 billion ($45.20 billion). The increase mainly reflects higher volumes, strong net pricing, and favorable FX translation effects. The company’s consolidated shipments grew 13.3% from the year-ago value to 1.28 million units, driven by improvement in semiconductor order fulfillment.
In terms of forward non-GAAP P/E, the stock is trading at 2.91x, 80.5% lower than the industry average of 14.94x. Moreover, STLA’s forward EV/Sales of 0.16x is 86.5% lower than the industry average of 1.22x, while its forward EV/EBITDA of 1.02 is 89.8% lower than the 10.06x industry average.
The consensus revenue estimate of $194.02 billion for the fiscal year that ended December 2022 indicates a 12.9% year-over-year improvement. Furthermore, the consensus revenue estimate of $197.90 billion for the current year (ending December 2023) reflects a 2% rise from the previous year.
The stock has gained 7.2% over the past six months to close the last trading session at $16.18.
STLA’s promising fundamentals are apparent in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
STLA has an A grade for Value and a B for Sentiment and Stability. Within the Auto & Vehicle Manufacturers, it is ranked #8 of 61 stocks.
In addition to the POWR Ratings I’ve just highlighted, you can see STLA ratings for Growth, Quality, and Momentum here.
Bluegreen Vacations Holding Corporation (BVH)
BVH is a vacation ownership company. It markets and sells vacation ownership interests (VOI) and manages resorts in leisure and urban settings. The company provides resort management, mortgage, reservation, building design, and development services. It also offers financing to qualifying VOI purchasers.
On October 12, 2022, BVH announced the acquisition of two buildings in the Streamside at Vail Resort enclave in Vail, Colorado, as well as a 320-room resort and spa in Panama City Beach, Florida. The company also announced the commencement of construction of a new resort in Pigeon Forge, Tennessee. The addition of new resorts should boost the company’s growth and profitability.
BVH’s total revenue grew 16.9% year-over-year to $250.84 million in the fiscal third quarter that ended September 30, 2022, while its EBITDA rose 4.1% year-over-year to $45.75 million. Furthermore, the company’s net income and EPS increased by 1.2% and 12.3% from the year-ago values to $27.65 million and $1.19, respectively.
In terms of forward non-GAAP P/E, BVH is trading at 9.43x, 36.9% lower than the industry average of 14.94x, while its forward EV/EBITDA of 8.58x is 14.7% lower than the industry average of 10.06x. Also, the stock’s forward Price/Sales of 0.61 is 37.8% lower than the 0.97x industry average.
Analysts expect BVH’s revenue to increase 18.8% year-over-year to $899.70 million for the fiscal year that ended December 2022. The company’s EPS for the same year is expected to rise 20.1% from the previous year to $3.46. Also, the company’s revenue and EPS for the fiscal year 2023 are expected to grow 4.4% and 8.3% year-over-year to $939.24 million and $3.74, respectively.
Shares of BVH have gained 24.7% over the past month and 35.6% over the past six months to close the last trading session at $32.37.
BVH’s POWR Ratings reflect its promising prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
BVH has an A grade for Value and Sentiment and a B for Quality. It has topped the B-rated 22-stock Travel - Hotels/Resorts industry.
To see additional POWR Ratings for Growth, Stability, and Momentum for BVH, click here.
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GILD shares were trading at $86.20 per share on Thursday afternoon, up $0.53 (+0.62%). Year-to-date, GILD has gained 0.41%, versus a 7.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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