The data released by the Institute for Supply Management reported a service-sector activity rise of 56.5% for November, compared to 54.4% for October. In addition, better-than-expected jobs added during the last month signal an economic resilience that even the Federal Reserve is finding difficult to subdue in its fight against inflation.
In the run-up to year-end festivities, increased consumer spending is also set to increase, thereby adding more wind to the sails of businesses that have been under pressure by aggressive interest rate hikes and other macroeconomic headwinds for a greater part of the year.
Given this backdrop, it could be wise to invest in quality stocks Pfizer Inc. (PFE), Broadcom Inc. (AVGO), and Restaurant Brands International Inc. (QSR), which have gained momentum lately and are well-positioned to maintain the same.
Pfizer Inc. (PFE)
PFE is a world-renowned research-based biopharmaceutical company. The company discovers, develops, manufactures, sells, and distributes biopharmaceutical products, such as medicines, vaccines, and other therapies. The company operates through two segments: Biopharma and PC1.
On December 1, PFE and Valneva SE (VALN) reported antibody persistence data six months after the completion of a three-dose (Month 0-2-6) or a two-dose (Month 0-6) vaccination schedule with their Lyme disease vaccine candidate, VLA15, in both children and adults.
The study confirmed that antibody levels declined over time in all study groups but remained above baseline, demonstrating their persistence six months after completing both vaccination schedules.
On November 4, PFE and BioNTech SE (BNTX) announced updated data from a Phase 2/3 clinical trial. The trial demonstrated a robust neutralizing immune response one month after a 30-µg booster dose of the companies’ Omicron BA.4/BA.5-adapted bivalent COVID-19 vaccine. This marks an important step for the company in managing covid infections worldwide.
On November 3, PFE announced that its investigational cancer immunotherapy, elranatamab, received Breakthrough Therapy Designation from the U.S. Food and Drug Administration (FDA) for treating people with relapsed or refractory multiple myeloma (RRMM). This finalized the 12th FDA breakthrough therapy’s designation in Oncology.
This milestone is consistent with PFE’s vision to set the highest standards for quality and value in medicines and vaccines.
During the fiscal third quarter, ended September 2022, PFE’s income from continuing operations improved 5.8% year-over-year to $8.65 billion. Its non-GAAP net income attributable to Pfizer Inc. common shareholders rose 39.7% year-over-year to $10.17 billion, while its non-GAAP EPS grew 40.2% year-over-year to $1.78.
Analysts expect PFE’s revenue and EPS for the fiscal year 2022 to increase 23.2% and 46.4% year-over-year to $100.21 billion and $6.47, respectively. Moreover, the company has an impressive earnings surprise history as it has topped the consensus EPS estimates in each of the trailing four quarters.
The stock is trading above its 50-day and 200-day moving averages of $46.20 and $49.09, respectively, indicating an uptrend. It has gained 7.3% over the past month to close the last trading session at $50.73
PFE’s stellar prospects are reflected in its POWR Ratings. It has an overall rating of A, which translates to a Strong Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PFE also has an A grade for Value and a B for Growth, Sentiment, and Quality. It is ranked #2 of 162 stocks in the Medical – Pharmaceutical industry.
Click here for PFE’s ratings for Momentum and Stability.
Broadcom Inc. (AVGO)
AVGO develops and supplies various semiconductor devices worldwide. The company operates in two segments: Semiconductor Solutions; and Infrastructure Software.
AVGO’s offerings include set-top box system-on-chips (SoCs), ethernet switching and routing merchant silicon products, fiber optic transmitter and receiver components, internet protocol (IP) licensing, radio frequency (RF) semiconductor devices, custom touch controllers, and connectivity solutions.
On September 30, AVGO’s 8.00% Mandatory Convertible Preferred Stock, Series A, automatically got converted into shares of the company’s common stock as per the agreed conversion rate. In addition to the conversion, holders of preferred shares at the close of business on September 15, 2022, received a final quarterly cash dividend of $20.00 per share.
In May, AVGO announced an agreement with VMWare (VMW) to acquire all the outstanding shares of VMW for approximately $61 billion in cash and stock. The acquisition advances AVGO’s strategy to build the world’s leading infrastructure technology company. Through this acquisition, the company aims to add approximately $8.5 billion of pro forma EBITDA within three years.
For the fiscal 2022 third quarter ended July 31, 2022, AVGO’s net revenues increased 24.9% year-over-year to $8.46 billion. During the same period, the company’s non-GAAP operating income and non-GAAP EBITDA increased 31.8% and 30.4% year-over-year to $5.20 billion and $5.38 billion, respectively.
As a result, the non-GAAP net income for the quarter came in at $4.24 billion, up 35.8% from the previous-year quarter. Also, its non-GAAP EPS came in at $9.73, up 39.8% year-over-year.
For the fiscal year 2023, analysts expect AVGO’s revenue and EPS to increase 5.3% and 7.8% year-over-year to $34.93 billion and $40.41, respectively. The company has also impressed by surpassing EPS estimates in each of the trailing four quarters.
The stock has gained 14% over the past month to close the last trading session at $530.64, above its 50-day moving average of $479.27.
AVGO’s overall B rating translates to a Buy in our POWR Ratings system. It also has an A grade for Quality and a B for Growth and Sentiment.
AVGO is ranked #8 of 93 stocks in the Semiconductor & Wireless Chip industry.
Click here for the additional POWR Ratings for Value, Momentum, and Stability for AVGO.
Restaurant Brands International Inc. (QSR)
Headquartered in Toronto, Canada, QSR is a global quick-service restaurant company. It operates through four segments: Tim Hortons (TH); Burger King (BK); Popeyes Louisiana Kitchen (PLK); and Firehouse Subs (FHS).
On November 29, QSR and McWin, one of the most reputable operators in Europe, announced an execution of Master Franchise and Development Agreements to develop Burger King in the Czech Republic, Poland, Romania, and Popeyes in the Czech Republic. There are plans to open 600 restaurants throughout these countries over the next ten years.
On September 9, Burger King (BK) shared the details of its "Reclaim the Flame'' plan to accelerate sales growth and drive Franchisees profitability. The plan was built in collaboration with Franchisee leaders from across the country and was shared with all U.S. Franchisees at its annual convention this week by Tom Curtis, President of Burger King North America.
As per the plan, BK would be investing $400 million over the next two years, with $150 million for advertising and digital investments and $250 million for enhancements involving restaurant technology, kitchen equipment, building, and high-quality remodels and relocations.
These corporate investments are in addition to BK recently expanding its field team to provide increased support to Franchisees as they continue improving restaurant-level profitability and execution.
During the third quarter of the fiscal year ended September 30, QSR’s total revenues increased 15.5% year-over-year to $1.73 billion. During the same period, the company’s adjusted EBITDA increased 5.8% year-over-year to $642 million, while its adjusted net income increased 23.5% year-over-year to $436 million. As a result, its adjusted quarterly EPS increased 26.3% year-over-year to $0.96.
Analysts expect QSR’s revenue for fiscal 2022 to increase 13% year-over-year to $6.48 billion, while its EPS is estimated to grow 11.7% year-over-year to $3.15 during the same period. The company has also impressed by surpassing consensus EPS estimates in each of the trailing four quarters.
The stock is trading above its 50-day and 200-day moving averages of $59.19 and $56.32, respectively, indicating an uptrend. It has gained 10.5% over the past month and 10.7% year-to-date to close the last trading session at $66.56.
QSR has an overall B rating, equating to a Buy in our POWR Ratings systems. It has a grade of B for Stability, Sentiment, and Quality.
QSR is ranked #12 of 45 stocks B-rated Restaurants industry.
Click here for additional POWR Ratings for Growth, Value, and Momentum.
PFE shares were trading at $49.40 per share on Tuesday afternoon, down $1.33 (-2.62%). Year-to-date, PFE has declined -13.63%, versus a -16.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Santanu Roy
Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.
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