November’s headline and core CPI rates moderating at 7.1% and 6% were welcomed with a rally in the stock market and declining bond yields. Indeed, hopes of the market are high that this month might mark the beginning of the end of aggressive interest rate hikes that have dominated the macroeconomic climate this year.
Michael Smith, senior portfolio manager at Allspring Global Investments, expressed his optimism by saying, “I think that we may have reached the end of upside surprises of inflation, which is obviously positive.”
Moreover, November’s employment report shows stronger-than-expected hiring momentum amid uncertain macroeconomic conditions. Despite a string of layoffs, mostly in tech, demand for workers continues to outpace the number of unemployed people looking for work.
In such a scenario, it could be wise to take advantage of fundamentally sound stocks AbbVie Inc. (ABBV), Oracle Corporation (ORCL), and McKesson Corporation (MCK) to boost your portfolio returns.
AbbVie Inc. (ABBV)
ABBV is a biopharmaceutical company engaged in the research, development, manufacturing, commercialization, and sale of medicines and therapies worldwide. The company’s products are segmented into seven categories: Immunology; Oncology; Anaesthetics; Neuroscience; Eyecare; Women’s Health; and Others.
On December 6, ABBV and HotSpot Therapeutics, Inc. announced an exclusive worldwide collaboration and option to license agreement for HotSpot’s discovery-stage IRF5 program for treating autoimmune diseases.
The company expects this collaboration to deliver an entirely new target class of modulators to patients with severe autoimmune diseases, strengthening its robust immunology pipeline.
ABBV’s worldwide net revenues increased 3.3% year-over-year to $14.81 billion in the third quarter that ended September 30, 2022. During the same period, the company’s adjusted net earnings increased 29.1% from the year-ago value to $6.53 billion, while its adjusted EPS rose 29.3% from the prior-year quarter to $3.66.
Analysts expect ABBV’s revenue and EPS to increase 3.9% and 9% year-over-year to $58.31 billion and $13.84, respectively, in the current fiscal. Moreover, the company’s impressive earnings surprise history has seen it beat Street EPS estimates in each of the trailing four quarters.
The stock has gained 8% over the past month and 21.7% year-to-date to close the last trading session at $164.79.
ABBV’s strong fundamentals are reflected in its POWR Ratings. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ABBV also has an A grade for Quality and grade B for Growth. It is ranked #14 of 160 stocks in the Medical – Pharmaceuticals industry.
Click here to see the additional POWR Ratings of ABBV for Value, Momentum, Sentiment, and Stability.
Oracle Corporation (ORCL)
ORCL offers services and products tailored to the needs of enterprise IT environments worldwide. The company directly offers its license, cloud, hardware, services, and support to businesses in various industries, educational institutions, and government agencies.
On November 3, ORCL announced the launch of Oracle Public Safety Services, a new technology platform for law enforcement and first responders. The platform has a unified hardware and software suite and is a significant addition to the company’s offerings.
On October 20, ORCL announced its expanded partnership with NVIDIA Corp. (NVDA) to add tens of thousands of NVDA’s AI-processing graphics chips to its cloud and provide customers access to NVIDIA software tools that can extract even more performance from them. High-performance cloud computing services broaden access to self-learning, data-hungry AI systems, which were previously out of reach.
For the second quarter of the fiscal year 2023 ended November 30, 2022, ORCL’s total revenue increased 18.5% year-over-year to $12.28 billion. During the same period, the company’s non-GAAP operating income increased 4.8% year-over-year to $5.09 billion, while its non-GAAP net income came in at $3.31 billion or $1.21 per share.
ORCL’s total assets stood at $128.47 billion as of November 30, 2022, compared to $109.30 billion as of May 31, 2022.
Analysts expect ORCL’s revenue and EPS for the fiscal third quarter ending February 2023 to increase 18.1% and 6.2% year-over-year to $12.41 billion and $1.20, respectively. The stock has gained 3.1% over the past month and 25.8% over the past six months to close the last trading session at $80.56.
ORCL’s POWR Ratings reflect its stable outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. It also has a grade of B for Stability.
ORCL is ranked #24 out of 138 stocks in the Software – Application industry.
Click here to see additional POWR Ratings for Value, Momentum, Growth, Sentiment, and Quality for ORCL.
McKesson Corporation (MCK)
MCK is a diversified healthcare service provider focusing on advancing patients’ health outcomes globally. The company operates through four segments: U.S. Pharmaceutical, Prescription Technology Solutions (RxTS), Medical-Surgical Solutions, and International.
On October 27, MCK announced a regular quarterly dividend of $0.54 per share of common stock, payable on January 3, 2023. The company pays $2.16 annually as dividends, which translates to a yield of 0.58% at the current price. It has increased its dividend payouts for 15 consecutive years.
On September 29, MCK announced that it had extended its pharmaceutical distribution agreement with CVS Health (CVS) through June 2027. MCK and CVS have been partnering to develop patient value propositions for over 20 years.
On September 19, MCK signed a definitive agreement to acquire Rx Savings Solutions (RxSS), a prescription price transparency and benefit insight company. The acquisition, valued at a maximum of $875 million, aligns with McKesson’s strategic growth focus by connecting biopharma and payer services to patients.
In the fiscal 2022 second quarter ended September 30, 2022, MCK’s total revenues increased 5.4% year-over-year to $70.16 billion. During the same period, its income from continuing operations increased 249.1% year-over-year to $932 million, while EPS increased 277.8% year-over-year to $6.46.
Analysts expect MCK to report revenue and EPS of $275.87 billion and $24.74 for the fiscal year ending March 2023, indicating increases of 4.5% and 4.4% year-over-year, respectively.
MCK’s stock has gained 1.7% over the past month and 49.6% year-to-date to close the last trading session at $371.09.
MCK has an overall rating of A, equating to a Strong Buy in our POWR Ratings system. It also has an A grade for Growth and a B for Value, Stability, and Quality.
Unsurprisingly, MCK tops the list of 79 stocks in the Medical – Services industry.
Click here to see the additional ratings of MCK’s Momentum and Sentiment.
ABBV shares were trading at $164.87 per share on Wednesday afternoon, up $0.08 (+0.05%). Year-to-date, ABBV has gained 26.51%, versus a -14.81% rise in the benchmark S&P 500 index during the same period.
About the Author: Santanu Roy
Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.
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