Sky-high inflation moderated for the sixth consecutive month in December. In line with the Dow Jones estimate, CPI increased by 6.5% year-over-year and dipped 0.1% over the prior month. Although this raised hopes that the Fed would dial down its interest rate hikes, the central bank has expressed its intentions to continue rate hikes until it falls below 2%.
Furthermore, St. Louis Fed President James Bullard, in support of rate hikes, stated that the U.S. central bank should raise interest rates above 5% expeditiously to ensure price pressures are subdued.
The Fed officials’ hawkish comments are weighing down on the stock market. An economic slowdown triggered by such persistent rate hikes could ultimately push the economy into a recession.
Moreover, JPMorgan Asset Management's chief investment officer Bob Michele warned about a possible recession. He said, "The delayed and cumulative impact of all the tightening that we are seeing ultimately will bite.”
The stock market is expected to remain under some pressure amid recessionary fears. However, this might be an opportune time for investors to invest in fundamentally strong stocks to garner returns. Quality stocks Amgen Inc. (AMGN), Polaris Inc. (PII), and Informatica Inc. (INFA) might be solid portfolio additions now.
Amgen Inc. (AMGN)
AMGN discovers, develops, manufactures, and delivers human therapeutics globally. The company primarily focuses on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology, and neuroscience.
On December 12, 2022, AMGN signed an agreement to acquire the complete issued and to-be-issued ordinary share capital of Horizon Therapeutics (HZNP) for an enterprise value of nearly $28.30 billion. The takeover is anticipated to boost AMGN’s innovative therapeutics portfolio.
On December 12, AMGN’s board of directors declared a $2.13 per share dividend for the first quarter of 2023, payable to all stockholders on March 8, 2023. This represents a 10% increase from the dividends paid in each of the previous four quarters. Furthermore, it reflects the company’s shareholder return ability.
On October 20, AMGN announced that it had completed its acquisition of ChemoCentryx, Inc. (CCXI), a biopharmaceutical company, for $52 per share in cash, representing aggregate merger consideration of approximately $3.70 billion. The acquisition should enhance AMGN’s inflammation and nephrology portfolio.
For the third quarter of 2022, AMGN’s non-GAAP operating income rose 7.4% year-over-year to $3.28 billion. Its non-GAAP net income increased 8.9% year-over-year to $2.53 billion, while its non-GAAP EPS grew 15.2% year-over-year to $4.70.
AMGN’s revenue is expected to increase 3.8% year-over-year to $6.47 billion in the fiscal first quarter ending March 2023. Its EPS is expected to increase 6% year-over-year to $4.50 in the same quarter. Additionally, it surpassed EPS estimates in all four trailing quarters, which is impressive.
The stock has gained 8.4% over the past six months to close the last trading session at $264.39. Over the past three months, the stock has gained 4.9%.
AMGN’s POWR Ratings reflect this promising outlook. The company 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.
AMGN has an A grade for Quality and B for Value, Stability, and Sentiment. Within the Biotech industry, it is ranked #10 out of 398 stocks.
Beyond what is stated above, one can see the additional AMGN grades for Growth and Momentum here.
Polaris Inc. (PII)
PII designs, engineers, manufactures, and markets power sports vehicles worldwide. The company operates through its three broad segments: Off-Road; On-Road; and Marine.
On December 6, 2022, PII unveiled its Polaris Slingshot’s 2023 lineup. Chris Sergeant, Polaris Slingshot Vice President, said, “Each year we continue to evolve the lineup by listening to our riders, and this year is another example of thoughtful additions and enhancements that answer the call and serve our passionate owners.”
In November, PII’s Polaris Adventures reached a milestone of one million customer rides, bringing the adventure offered by power sports vehicles to an ever-growing audience. Furthermore, amid the growing popularity of adventure tourism, it opened an Outfitter location in Mexico and expanded to Wanaka, New Zealand, later in November.
On November 3, PII declared a regular quarterly cash dividend of $0.64 per share, paid to shareholders on December 15, 2022. This reflects the cash generation ability of the company.
In the third quarter that ended September 30, 2022, PII’s sales increased 31.7% year-over-year to $2.34 billion. Its adjusted gross profit increased 32.5% year-over-year to $559.20 million. Adjusted net income and adjusted EPS from continuing operations attributable to PII increased 58% and 64.1% year-over-year to $195.10 million and $3.25, respectively.
The company expects its 2022 sales to increase by 15% to 16%. Its adjusted EPS from continuing operations attributed to PII common shareholders is expected to be between $10.10 and $10.30 for the full year 2022.
Analysts expect PII’s revenue and EPS for the fiscal second quarter ending June 2023 to increase 4.6% and 10.5% year-over-year to $2.16 billion and $2.67, respectively. In addition, PII surpassed the consensus EPS estimates in three out of the trailing four quarters.
PII has gained 4.4% over the past three months to close the last trading session at $103.15.
It’s no surprise that PII has an overall rating of B, which translates to Buy in our POWR Ratings system. It has an A grade for Growth and B for Value. It is ranked #19 out of 65 stocks in the Auto & Vehicle Manufacturers industry.
We have also given PII grades for Momentum, Stability, Sentiment, and Quality. Get all PII ratings here.
Informatica Inc. (INFA)
INFA develops an artificial intelligence-powered platform that connects, manages, and unifies data across multi-cloud, hybrid systems at an enterprise scale. The company’s platform includes a suite of interoperable data management products, API, and application integration products.
On November 8, 2022, INFA announced that the company is expanding its SaaS version of multidomain Master Data Management (MDM) to Asia with Microsoft Azure. The expanded reach in the region is expected to help companies use cloud-native MDM to attain better business outcomes.
In the same month, INFA announced the availability of the Intelligent Data Management Cloud (IDMC) platform for state and local governments. The platform is anticipated to help government agencies deliver timely and efficient public services with multiple capabilities.
INFA’s total revenues for the third quarter that ended September 30, 2022, increased 2.8% year-over-year to $371.95 million. Its subscription revenue increased 10.5% from the prior-year period to $214 million.
The company’s gross profit increased 1.3% from the same period the prior year to $284.76 million. Its non-GAAP net income and net income per share came in at $52.61 million and $0.18, respectively.
Analysts expect INFA’s EPS for the fiscal first quarter ending March 2023 to increase 2.4% year-over-year to $0.20. Its revenue for the same quarter is expected to increase 6.4% year-over-year to $385.43 million. The company surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 1.1% over the past month to close the last trading session at $16.48. Moreover, it has gained 2.3% over the past five days.
INFA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. In addition, INFA has a B grade for Value. It is ranked first out of the 25-stock Software – SAAS industry.
In addition to the POWR Ratings stated above, one can see INFA ratings for Growth, Momentum, Stability, Sentiment, and Quality here.
AMGN shares were trading at $261.41 per share on Thursday morning, down $2.98 (-1.13%). Year-to-date, AMGN has declined -0.47%, versus a 1.62% 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 Help You Start the New Year off Right StockNews.com
