The Fed approved its fourth consecutive rate increase of 0.75 percentage points earlier this month, raising the benchmark federal-funds rate to a range between 3.75% and 4% as it fights to bring inflation down to its target level of 2%.
While Chairman Jerome Powell said officials would contemplate a smaller hike at their next meeting in December, he also cautioned that they might raise borrowing costs next year more than they have projected.
According to a University of Michigan survey, consumers were feeling slightly worse about the U.S. economy in November amid punishing rate hikes and decades-high inflation. The survey showed that sentiment slumped both for current and future economic conditions.
On top of it, the International Monetary Fund last month cut its global growth forecast for 2023 to 2.7% from a previous forecast of 2.9%. The global lender recently said that the global economic outlook is even gloomier than projected last month because of the steady worsening in purchasing manager surveys in recent months.
Given this backdrop, owning shares of fundamentally solid stocks Bristol-Myers Squibb Company (BMY), Cigna Corporation (CI), and J.Jill, Inc. (JILL) could be wise.
Bristol-Myers Squibb Company (BMY)
BMY engages in the discovery, development, licensing, manufacture, and sale of biopharmaceutical products globally. The company’s offerings include products for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and COVID-19 diseases.
On November 3, it was announced that BMY had offered a $25 million equity investment to Kura Oncology, Inc. (KURA), a clinical-stage biopharmaceutical company committed to realizing the promise of precision medicines for the treatment of cancer.
Troy Wilson, Ph.D., J.D., President and Chief Executive Officer of Kura Oncology, said, “This equity investment strengthens the relationship between our organizations and enables Bristol Myers Squibb to provide valuable strategic input into our global development strategy. We are honored and excited to have their support and look forward to their input as we work to deliver innovative science with the potential to benefit patients.”
On October 31, BMY announced positive topline results of the Phase 3 COMMANDS trial. This brings the company one step closer to addressing a significant need for new and better first-line treatment options for patients with transfusion-dependent myelodysplastic syndromes (MDS).
On November 1, BMY paid its quarterly dividend of $0.54 per share. The company pays a $2.16 per share dividend annually, which yields 2.84%.
In terms of its forward EV/EBIT, BMY is currently trading at 10.54x, 39.4% below the industry average of 17.39x. Its forward non-GAAP P/E multiple of 9.98 is 47.5% lower than the industry average of 19.00.
In the fiscal third quarter ended September 30, BMY’s earnings before income taxes increased 2.4% year-over-year to $2.21 billion. The company’s net earnings amounted to $1.61 billion, up 3.6% year-over-year, while the non-GAAP EPS improved 3.1% from the prior-year quarter to $1.99.
Analysts expect BMY’s revenue for the fiscal second quarter ending June 2023 to grow 1.2% year-over-year to $12.03 billion. The company’s EPS is expected to rise by 7.2% from the prior year to $2.07 for the same fiscal quarter. BMY has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
BMY has gained 27.8% over the past year to close its last trading session at $75.96. The stock has gained 7.3% over the past month.
BMY’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.
BMY has a B for Value, Stability, and Sentiment. In the 164-stock Medical -Pharmaceuticals industry, it is ranked #13.
Beyond what we’ve stated above, we have also given BMY grades for Momentum, Growth, and Quality. Get all BMY ratings here.
Cigna Corporation (CI)
CI provides insurance and related products and services in the United States. CI has two segments: Evernorth and Cigna Healthcare. The company distributes its products and services through insurance brokers and consultants.
On October 28, CI announced that its health plans would be available on the individual marketplace for Indiana residents in eight counties, providing more people and communities access to affordable, predictable, and simple healthcare coverage in 2023.
On October 26, CI declared a dividend of $1.12 per share on its common stock, which was payable to shareholders on December 21. The company’s annual dividend of $4.48 yields 1.47% annually.
In terms of its forward EV/Sales, CI is currently trading at 65x, 83.5% below the industry average of 3.9x. Its forward Price/Sales multiple of 0.51 is 88.1% lower than the industry average of 4.31.
For its third quarter ended September 30, 2022, CI’s adjusted revenues increased 2.4% year-over-year to $45.36 billion. Its shareholders’ net income and net income per share came in at $2.76 billion and $8.97, up 70.1% and 86.9% year-over-year, respectively.
Street expects CI’s revenue to increase 3.7% year-over-year to $180.44 billion for the current fiscal year ending December 2022. Its consensus EPS is expected to increase 13% year-over-year to $23.14 in the same year. It has surpassed EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 48.5% to close its last trading session at $303.82. It has gained 32.3% year-to-date.
As expected, CI has an overall A rating, which equates to a Strong Buy in our proprietary rating system. It has a B grade for Value, Sentiment, and Quality. Within the A-rated Medical – Health Insurance industry, it is ranked #5 out of 11 stocks.
Click here for the additional POWR Ratings for Growth, Momentum, and Stability for CI.
J.Jill, Inc. (JILL)
JILL is an omnichannel retailer of women’s apparel. The company’s flagship brand J.Jill is focused on clothing for women in the 45-age segment. It offers two sub-brands extensions of its brand aesthetic: Pure Jill and Wearever.
In terms of forward non-GAAP P/E, the stock is trading at 8.94x, 33.2% lower than the industry average of 13.39x. Its forward Price /Sales of 0.40x is 54.6% lower than the 0.89x industry average.
For the second quarter of fiscal 2022 ended July 30, JILL’s net sales increased marginally year-over-year to $160.34 million, while its adjusted income from operations increased 16.8% year-over-year to $28.19 million. The company’s adjusted EBITDA and net income grew 8.8% and 34.6% year-over-year to $35.57 million and $17.69 million, respectively.
The consensus EPS estimate of $2.70 for the current fiscal ending January 2022 represents a 26.8% improvement year-over-year. The consensus revenue estimate of $608.80 million for the same year represents a 4% increase from last year. The company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in each of the trailing four quarters.
JLL’s stock has gained 41.3% over the past three months to close the last trading session at $24.13.
It is no surprise that JILL has an overall rating of A, which translates to Strong Buy in our POWR Ratings system. It also has a grade of A for Sentiment and Quality and a B for Value. JILL tops the list of 66 stocks in the Fashion & Luxury industry.
To see additional POWR Ratings for Growth, Stability, and Momentum for JILL, click here.
BMY shares fell $0.01 (-0.01%) in premarket trading Monday. Year-to-date, BMY has gained 25.60%, versus a -15.38% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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