The Fed is expected to keep hiking rates well into 2023. However, the rate hike aggression is expected to be eased, which might bode well for the stock market. According to Fed Chair Jerome Powell, "We wouldn't just raise rates and try to crash the economy and then clean up afterward. I wouldn't take that approach at all."
Moreover, in the face of rising recession odds, the U.S. labor market remains tight. National Economic Council Director Brian Deese believes the U.S. economy is showing "continued resilience" despite a forecasted growth slowdown.
Furthermore, the UCLA Anderson Forecast expects the final quarter of 2022 to be strong for the United States. In addition, December has proved to be a strong month for the stock market over the past 70 years.
Given this backdrop, investors might consider adding rock-solid stocks Microsoft Corporation (MSFT), Bristol-Myers Squibb Company (BMY), and Veritiv Corporation (VRTV) to their portfolios before the year ends.
Microsoft Corporation (MSFT)
MSFT develops, licenses, and supports software, services, devices, and solutions worldwide. The company operates in three segments: Productivity and Business Processes; Intelligent Cloud; and More Personal Computing.
On December 7, 2022, a new Industry Data for Society Partnership was co-launched by MSFT, GitHub, Hewlett Packard Enterprise (HPE), LinkedIn, Northumbrian Water Group, R2 Factory, and U.K. Power Networks, which is a first-of-its-kind cross-industry partnership to enhance accessible private-sector data for social benefits.
All companies are expected to be sound beneficiaries of this agreement.
Also, on November 16, 2022, MSFT announced a landmark partnership expansion with Lockheed Martin Corporation (LMT) to enhance the next generation of technology for the Department of Defense.
For its fiscal 2023 first quarter that ended September 30, 2022, MSFT's total revenue came in at $50.12 billion, up 10.6% year-over-year. Its adjusted net income came in at $17.56 billion, up 2% year-over-year, while its adjusted EPS came in at $2.35, up 3.5% year-over-year. Also, its operating income came in at $21.52 billion, up 6.3% year-over-year.
Analysts expect MSFT's revenue to be $212.46 billion in 2023, representing a 7.2% year-over-year rise. The company's EPS is expected to increase 3.7% year-over-year to $9.55 in 2023. It surpassed EPS estimates in three of four trailing quarters. Over the past month, the stock has gained 7.2% to close the last trading session at $244.37.
MSFT's POWR Ratings reflect this promising outlook. The stock has an overall B rating, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has a B grade for Stability, Sentiment, and Quality. It is ranked #9 out of 52 stocks in the Software – Business industry. See MSFT's additional POWR Ratings for Growth, Value, and Momentum here.
Bristol-Myers Squibb Company (BMY)
BMY discovers, develops, licenses, manufactures, and markets biopharmaceutical products worldwide. It offers products for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and covid-19 diseases.
On November 29, 2022, BMY and Envisagenics, an Artificial Intelligence -driven biotechnology company, announced their research collaboration agreement. Under the agreement, Envisagenics' SpliceCore® AI platform will enhance BMY's oncology portfolio.
Also, on November 10, 2022, BMY announced Health Canada's approval of CAMZYOSTM (mavacamten capsules) for treating symptomatic obstructive hypertrophic cardiomyopathy. This marks yet another milestone achievement for the company.
BMY's total U.S. revenues came in at $5.21 billion for the third quarter that ended September 30, 2022, up 16.6% year-over-year. Its net earnings came in at $1.61 billion, up 3.9% year-over-year, while its non-GAAP EPS came in at $1.99, up 3.1% year-over-year.
Street expects BMY's revenue to increase 2.7% year-over-year to $47.11 billion in 2023. Its EPS is expected to increase 4.5% year-over-year to $7.95 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past month, the stock has gained marginally to close the last trading session at $79.93.
It's no surprise that BMY has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Value and a B for Stability, Sentiment, and Quality.
BMY is ranked #3 out of 161 stocks in the Medical – Pharmaceuticals industry. To see the additional POWR Ratings for BMY (Growth and Momentum), click here.
Veritiv Corporation (VRTV)
VRTV operates as a business-to-business provider of value-added packaging products and services, facility solutions, and print and publishing products and services in the United States and internationally. The company operates through four segments: Packaging; Facility Solutions; Print; and Publishing and Print Management.
On November 8, 2022, Sal Abbate, CEO, said, "We believe our strategic actions over the past several years have fundamentally improved our business and positions us well to navigate the uncertain global economic environment."
VRTV's net sales came in at $1.80 billion for the third quarter that ended September 30, 2022, up 2.1% year-over-year. Its net income came in at $96.70 million, up 141.8% year-over-year. Moreover, its EPS came in at $6.86, up 170.1% year-over-year.
VRTV's revenue is expected to increase 5.6% year-over-year to $7.23 billion in 2022. Its EPS is expected to increase 156.4% year-over-year to $23.10 in 2022. It surpassed EPS estimates in all four trailing quarters. Over the past month, the stock has gained 29% to close the last trading session at $140.36.
VRTV has an overall A grade, equating to a Strong Buy in our POWR Ratings system.
It has an A grade for Value and a B for Growth and Quality. It is ranked first among 22 stocks in the A-rated Industrial – Packaging industry. Click here to see Momentum, Stability, and Sentiment ratings for VRTV.
MSFT shares were trading at $244.02 per share on Thursday morning, down $0.35 (-0.14%). Year-to-date, MSFT has declined -26.76%, versus a -15.92% 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.
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