Following the hotter-than-expected CPI data for August, the Fed hiked interest rates by another 75 basis points this week. Officials have also hinted at maintaining their hawkish stance until the target level of 2% inflation is achieved. Moreover, many top analysts believe that the economy might soon tip into a recession as the Fed continues on a path of outsized interest rate hikes.
According to CNBC’s September Fed survey, fund managers and strategists see a 52% chance that the U.S. could enter into recession over the next 12 months.
On the other hand, Ark Invest’s Cathie Wood believes that the Fed is overly focused on hiking interest rates to tame inflation as the leading indicators show signs of deflation. “Leading inflation indicators like gold and copper are flagging the risk of deflation. Even the oil price has dropped more than 35% from its peak, erasing most of the gain this year,” she said.
As the market volatility is unlikely to subside anytime soon, we think investors should buy rock-solid stocks Bristol-Myers Squibb Company (BMY), AT&T Inc. (T), and Gilead Sciences, Inc. (GILD) that have the potential to deliver solid returns despite market uncertainties.
Bristol-Myers Squibb Company (BMY)
BMY discovers, develops, licenses, and markets biopharmaceutical products for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and covid-19 diseases globally. It sells to wholesalers, distributors, pharmacies, retailers, hospitals, clinics, and government agencies.
On September 16, the European Commission (EC) approved BMY’s fixed-dose combination of Opdualag (nivolumab and relatlimab) for the first-line treatment of advanced melanoma in adults and adolescents with tumor cell PD-L1 expression < 1%.
In the same month, BMY announced that the U.S. Food and Drug Administration (USFDA) approved Sotyktu (deucravacitinib), a first-in-class, oral, selective, allosteric tyrosine kinase 2 (TYK2) inhibitor, for the treatment of adults with moderate-to-severe plaque psoriasis. These approvals mark significant milestones for the company.
BMY’s total revenues increased 2% year-over-year to $11.89 billion in the fiscal second quarter ended June 30, 2022. EBIT came in at $1.96 billion, up 26.1% year-over-year, while its net earnings grew 34.7% from the year-ago value to $1.43 billion. The company’s EPS grew 40.4% from the prior-year quarter to $0.66 in the same period.
Street expects BMY’s revenue for the fiscal quarter ending March 2023 to come in at $11.76 billion, indicating a marginal year-over-year increase. Also, the company’s EPS is expected to grow 7% year-over-year to $2.10 in the same period. BMY beat the consensus EPS estimates in all the trailing four quarters.
BMY gained 18.5% over the past year to close the last trading session at $71.29.
BMY’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
BMY also has an A grade in Value and a B in Growth, Sentiment, and Quality. Out of the 165 stocks in the Medical - Pharmaceuticals industry, BMY is ranked #4.
We’ve also rated BMY for Stability and Momentum. Get all BMY ratings here.
AT&T Inc. (T)
T is a leading global telecommunication, media, and technology service provider. The company operates through three segments: Communication; WarnerMedia; and Latin America.
On August 30, 2022, T announced the expansion of its fiber internet services to bring reliable and high-speed broadband in Arizona. “Fiber is hands-down the best technology to deliver high-speed broadband, and this expansion is allowing AT&T to aggressively roll out service to the Mesa area,” said John Stankey, T’s CEO.
For the fiscal second quarter ended June 30, 2022, T’s net income increased 164.8% year-over-year to $4.16 billion. The company’s operating expenses decreased 12.3% from the year-ago value to $24.69 billion. Also, its EPS grew 154.5% year-over-year to $0.56.
The company has an impressive earnings surprise history as it surpassed the consensus EPS estimates in each of the trailing four quarters.
T’s stock declined marginally intraday to close the last trading session at $16.24.
T’s POWR Ratings reflect solid prospects. It has a B grade for Value. Within the Telecom - Domestic industry, it is ranked #6 of 20 stocks.
Click here to see the additional POWR Ratings of T for Growth, Momentum, Stability, Sentiment, and Quality.
Gilead Sciences, Inc. (GILD)
Biopharmaceutical company GILD discovers, develops, and commercializes medicines in the United States, Europe, and internationally for treating life-threatening diseases, including HIV, viral hepatitis, and cancer.
On September 22, GILD announced a new multi-year public-private initiative with the Partnership for Health Advancement in Vietnam (HAIVN) to address barriers that limit the diagnosis of viral hepatitis at primary healthcare facilities in Vietnam and the Philippines.
“This approach has significant potential for application in many other disease areas and low and middle-income countries where specialist providers are scarce,” said Dr. Harald Nusser, Vice President, Head of Global Patient Solutions, GILD.
GILD’s total revenue increased marginally year-over-year to $6.26 billion for the fiscal second quarter that ended June 30, 2022. The company’s total product sales from the HIV segment increased 7.3% year-over-year to $4.22 billion. Moreover, its current liabilities declined 20.5% to $9.22 billion in the six-month period ended June 30, 2022.
For the fiscal fourth quarter ending December 2022, GILD’s EPS is expected to increase 101.3% year-over-year to $1.39. In the same period, its consensus revenue is estimated to be $6.32 billion.
Over the past six months, the stock has gained 6.3% to close the last trading session at $63.77.
It is no surprise that GILD has an overall B rating, translating to a Buy in our proprietary rating system. The stock has an A grade for Value and a B for Quality. Within the 396-stock Biotech industry, GILD is ranked #10.
To see the other ratings of GILD for Growth, Momentum, Stability, and Sentiment, click here.
BMY shares were trading at $70.64 per share on Friday afternoon, down $0.65 (-0.91%). Year-to-date, BMY has gained 15.93%, versus a -21.72% 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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