The Fed raised interest rates six times this year to bring the multi-decade-high inflation down to its target 2% level. The aggressive rate hikes have raised the odds of a recession. Along with raising interest rates by 75-basis-point for the fourth consecutive time earlier this month, the central bank hinted at continuing with rate hikes, albeit at a lower rate.
However, the U.S. economy witnessed an annual GDP growth rate of 2.6% in the third quarter of 2022, marking a sharp turnaround after the contraction for two consecutive quarters. Furthermore, Goldman Sachs Group Inc.’s top economist sees a significant chance for the economy to avoid a recession despite the Fed’s policy tightening and geopolitical uncertainties.
Given the backdrop, investors could add fundamentally strong stocks Pfizer Inc. (PFE), Cisco Systems, Inc. (CSCO), and United Parcel Service, Inc. (UPS) to take advantage of the next bull market.
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. The company serves wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, individual provider offices, and disease control and prevention centers.
On November 4, PFE and BioNTech SE (BNTX) announced updated data from a Phase 2/3 clinical trial demonstrating a robust neutralizing immune response one month after a 30-µg booster dose of the companies’ Omicron BA.4/BA.5-adapted bivalent COVID-19 vaccine. This should continue to garner significant returns as Covid-19 remains a concern.
On November 3, 2022, PFE’s investigational cancer immunotherapy, elranatamab, received Breakthrough Therapy Designation from the U.S. Food and Drug Administration (FDA) for treating people with relapsed or refractory multiple myeloma (RRMM). This marks a significant milestone for the company.
For the fiscal third quarter of 2022, PFE’s income from continuing operations came in at $8.65 billion, up 5.8% year-over-year. Its net income increased 5.7% year-over-year to $8.61 billion, while its EPS came in at $1.51, up 6.3% from the prior-year period.
Analysts expect PFE’s revenue to increase 23% year-over-year to $99.96 billion in fiscal 2022. Its EPS is estimated to grow 45.7% year-over-year to $6.44 in the same period. The company also surpassed EPS estimates in all four trailing quarters.
Over the past month, the stock has gained 11.3% to close the last trading session at $47.09.
PFE’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PFE also has an A grade for Value and a B for Growth and Quality. Within the Medical – Pharmaceuticals industry, it is ranked #5 out of 163 stocks.
Click here to get additional POWR Ratings for Momentum, Stability, and Sentiment for PFE.
Cisco Systems, Inc. (CSCO)
CSCO manufactures and sells Internet Protocol-based networking and other products related to the communications and information technology industry. The company serves businesses of various sizes, governments, public institutions, and service providers.
On November 1, CSCO expanded its portfolio of specializations available through the company’s top-notch partner program. The six new specializations are tied to its customer priorities and represent fast-growing market opportunities for the company and its partners.
It also announced new capabilities across its security portfolio to ensure team protection and enhance productivity. The company is continuously enhancing the Cisco Security Cloud, which aims to protect the integrity of an organization’s IT ecosystem.
For the fiscal year ended July 30, 2022, CSCO’s total revenue increased 3.5% year-over-year to $51.56 billion. The company’s non-GAAP net income increased 3.4% year-over-year to $14.09 billion. CSCO’s non-GAAP EPS for the fiscal year increased by 4.3% from the prior year to $3.36.
For the fiscal quarter ended October 2022, Street expects CSCO’s revenue to come in at $13.27 billion, representing an increase of 2.8% year-over-year. For the same quarter, the consensus EPS estimate of $0.84 indicates a 1.8% year-over-year increase. The company has an impressive earnings surprise history as it beat the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 10.6% over the past month to close its last trading session at $44.55.
It’s no surprise that CSCO has an overall B rating, which translates to a Buy in our proprietary rating system. The stock has an A rating for Quality. It is ranked #4 of 48 stocks in the Technology – Communication/Networking industry,
To access additional POWR Ratings for CSCO for Momentum, Value, Sentiment, Stability, and Growth, click here.
United Parcel Service, Inc. (UPS)
UPS offers letter and package delivery, transportation, logistics, and related services. The company also provides international air and ocean freight forwarding, customs brokerage, distribution and post-sales, and mail and consulting services in approximately 200 countries. It operates through two segments, U.S. Domestic Package and International Package.
UPS’ revenue increased 4.2% year-over-year to $24.16 billion for the third quarter that ended September 30, 2022. Its operating profit came in at $3.11 billion, up 7.5% year-over-year. Moreover, Its EPS came in at $2.96, up 11.7% year-over-year.
UPS’ revenue is expected to increase 4.2% year-over-year to $101.32 billion in fiscal 2022. Its EPS is estimated to grow 6.4% year-over-year to $12.91 in the same period. The company also beat the EPS estimates in all four trailing quarters.
Over the past month, the stock has gained 6.3% to close the last trading session at $169.13.
UPS has an overall B rating, which equates to a Buy in our POWR Ratings system. It has an A grade for Quality and a B for Stability and Sentiment. It is ranked #5 of 17 stocks in the A-rated Air Freight & Shipping Services industry.
In addition to the POWR Rating grades stated above, you can get UPS ratings for Growth, Momentum, and Value here.
PFE shares were trading at $47.46 per share on Tuesday morning, up $0.37 (+0.79%). Year-to-date, PFE has declined -17.02%, versus a -18.07% 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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