Amid speculation of easing inflation, booming economic data, and interest rate hikes concluding soon, the stock market kicked off with a strong start. However, amid anxieties over an impending Fed-induced recession, U.S. stocks closed out February in a subdued fashion.
Despite uncertainties, some experts anticipate a bull market and a “no-recession” scenario. Against this backdrop, let us explore some stocks UnitedHealth Group Incorporated (UNH), Johnson & Johnson (JNJ), and Salesforce, Inc. (CRM) now.
The stock market started the year with a state of euphoria, closing up around 6% by the end of January, mainly premised on the idea of cooling inflation and the Fed possibly concluding the interest rate hikes soon. But, the rally lost steam in February amid fears that interest rate hikes are not likely to stop anytime soon.
In addition, some experts anticipate that such persistent interest rate hikes could trigger a recession. Conversely, some experts believe that unemployment continuing to drop and Gross Domestic Product (GDP) growth remaining robust is opposite to how a recession is characterized.
Where on the one hand, some economists think that a soft landing is not possible, on the other hand, some economists argue for the opposite.
Although uncertainties exist, on the bright side, an impending bull market is still a possibility. Therefore, quality stocks UNH, JNJ, and CRM might be solid buys now.
UnitedHealth Group Incorporated (UNH)
UNH is a diversified healthcare company. The company operates through four segments: Optum Health; OptumInsight; OptumRx; and UnitedHealthcare. It offers consumer-oriented health benefit plans and services, software and information products, health care coverage, and well-being services.
On January 23, Optum Rx, UNH’s pharmacy services company, launched Price Edge, a tool that seamlessly compares direct-to-consumer pricing for traditional generic drugs with insurance pricing to ensure members receive the lowest prescription drug price. This should benefit the company.
On February 27, UNH’s board of directors authorized a dividend payment of $1.65 per share to be paid to shareholders on March 21, 2023. This reflects the company’s ability to pay back its shareholders.
Its annual dividend of $6.60 yields 1.39% on prevailing prices. The company’s dividend payouts have increased at a 15.6% CAGR over the past three years and 17.4% CAGR over the past five years. UNH’s four-year average dividend yield is 1.36%.
The stock’s trailing-12-month EBITDA margin of 9.82% is 163.6% higher than the industry average of 3.73%. Its trailing-12-month ROCE is 26.26% compared to the industry average of negative 39.86%.
For the fiscal fourth quarter that ended December 31, 2022, UNH’s total revenues increased 12.3% year-over-year to $82.79 billion. In addition, adjusted net earnings attributable to UNH common shareholders came in at $5.06 billion and $5.34 per share, up 18.1% and 19.2% year-over-year, respectively.
Analysts expect UNH’s revenue for the fiscal first quarter ending March 2023 to come in at $89.76 billion, indicating a 12% year-over-year growth. Street expects the company’s EPS for the same quarter to grow 10.6% year-over-year to $6.07. The company surpassed the consensus EPS and revenue estimates in each of the trailing four quarters, which is impressive.
UNH has gained marginally over the past year to close the last trading session at $475.94. Its five-year monthly beta is 0.69, indicating lesser volatility than the overall market.
UNH’s POWR Ratings reflect its fundamental strength. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
UNH has a B grade for Growth, Stability, Sentiment, and Quality. In the A-rated 11-stock Medical – Health Insurance industry, it is ranked #4.
Beyond what has been stated above, we’ve also given UNH grades for Value and Momentum. Get all UNH ratings here.
Johnson & Johnson (JNJ)
JNJ researches, develops, manufactures, and sells various products in the healthcare field worldwide. The company operates through the broad segments of Consumer Health; Pharmaceuticals; and MedTech.
On February 24, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) recommended the marketing authorization for AKEEGA® (niraparib and AA), given with prednisolone, to treat adult patients with metastatic castration-resistant prostate cancer (mCRPC) and BRCA1/2 mutations (germline and/or somatic).
On December 22, 2022, JNJ announced that it had completed its acquisition of Abiomed, Inc. (ABMD), a heart, lung, and kidney support technologies company, for an enterprise value of approximately $16.60 billion. This acquisition is expected to broaden JNJ’s MedTech segment’s position as a cardiovascular innovator.
On January 3, JNJ declared a dividend for the first quarter of 2023 of $1.13 per share on its common stock, payable to shareholders on March 7, 2023. This reflects its cash generation abilities.
Its annual dividend of $4.52 yields 2.95% on prevailing prices. The company’s dividend payouts have increased at a 6% CAGR over the past three years and a 6.1% CAGR over the past five years. JNJ’s four-year average dividend yield is 2.60%. JNJ has raised dividends for 60 consecutive years.
JNJ’s trailing-12-month gross profit margin of 67.36% is 20.6% higher than the industry average of 55.48%. Its trailing-12-month EBITDA of 34.46% is 824.9% higher than the 3.73% industry average.
For the fiscal fourth quarter of 2022, JNJ’s reported sales came at $23.71 billion. Its non-GAAP adjusted net earnings rose 9.5% year-over-year to $6.22 billion. The company’s non-GAAP adjusted net earnings per share rose 10.3% from its year-ago value to $2.35.
For the fiscal first quarter ending March 2023, the consensus EPS estimate is $2.53. Its revenue is expected to increase marginally year-over-year to $23.59 billion for the same quarter. Additionally, JNJ topped consensus EPS estimates in each of the trailing four quarters.
The stock lost 1.5% intraday to close its last trading session at $153.26. It has a five-year beta of 0.54.
JNJ’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
JNJ is rated an A for Stability and a B for Value, Sentiment, and Quality. Within the Medical – Pharmaceuticals industry, it is ranked #5 out of 173 stocks.
Click here to see additional POWR Ratings for Momentum and Growth for JNJ.
Salesforce, Inc. (CRM)
CRM is a customer relationship management technology provider. The company’s Customer 360 platform enables its customers to work together to deliver connected experiences.
On January 12, CRM announced a series of new innovations to help retailers grow and optimize advertising sales, gain a single view of transactions across digital and physical stores, and unlock value from their customer data.
Jujhar Singh, EVP and GM of CRM, said, "Salesforce for retail brings together the power and flexibility of Salesforce's platform with an expansive ecosystem so retailers can leverage real-time data to acquire new customers, deliver personalized experiences, generate advertising revenue, increase margins, and drive efficiency."
On December 15, CRM announced that Casey's General Stores, Inc. (CASY), a convenience store retailer and pizza chain, has realized increased revenue and engagement with its customer base with the help of CRM’s technology. This demonstrates the company’s operative capability.
CRM’s trailing-12-month gross profit margin of 72.69% is 47.8% higher than the industry average of 49.19%. Its trailing-12-month levered FCF margin of 30.62% is 331.85% higher than the 7.09% industry average.
For the fiscal third quarter that ended October 31, 2022, CRM’s total revenues increased 14.2% year-over-year to $7.84 billion. Non-GAAP income from operations rose 30.9% from the prior-year quarter to $1.78 billion. Non-GAAP net income and non-GAAP net income per share came in at $1.40 billion and $1.40, up 9.8% and 10.2% year-over-year, respectively.
For the full year (fiscal 2023), the company estimates a revenue between $30.9 billion and $31 billion and non-GAAP EPS between $4.92 and $4.94.
CRM’s revenue is expected to increase 8.3% year-over-year to $8.03 billion in the fiscal first quarter ending April 2023. Its EPS is expected to grow 35.1% year-over-year to $1.32 in the same quarter. CRM topped Street EPS and revenue estimates in each of the trailing four quarters, which is impressive.
CRM’s shares have gained 4.8% over the past six months to close the last trading session at $163.61. Moreover, it has gained 1.2% over the past five days.
CRM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
CRM has an A grade for Growth and a B for Sentiment. In the 139-stock Software – Application industry, it is ranked #23.
Click here to see the additional POWR Ratings for CRM (Momentum, Value, Stability, and Quality).
What To Do Next?
Get your hands on this special report:
What gives these stocks the right stuff to become big winners, even in this brutal stock market?
First, because they are all low-priced companies with the most upside potential in today’s volatile markets.
But even more important is that they are all top Buy rated stocks according to our coveted POWR Ratings system, and they excel in key areas of growth, sentiment and momentum.
Click below now to see these 3 exciting stocks that could double or more in the year ahead.
UNH shares were unchanged in premarket trading Wednesday. Year-to-date, UNH has declined -10.23%, versus a 3.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
3 Stocks to Buy Now if You Think a Bull Market Is on Its Way StockNews.com
