Amid the current volatile macroeconomic situation, we suggest considering surefire stocks of financially resilient companies such as Johnson & Johnson (JNJ), Canon Inc. (CAJ), and Forrester Research, Inc. (FORR). Let’s delve deeper to understand why these stocks could rack up significant returns in the long run.
According to January’s jobs report, the unemployment rate fell to 3.4% versus the estimate of 3.6%, marking its lowest level since May 1969. Despite this sign of hope for the economy, the market could remain under pressure from persistent inflation and interest rate hikes.
While January’s inflation data exceeded analysts’ expectations, the Federal Reserve is expected to continue to raise interest rates to cool it. Moreover, there are concerns over whether it can execute a soft landing and not push the economy into a recession.
Given these factors, investors trying to navigate a volatile market could benefit from fundamentally strong stocks JNJ, CAJ, and FORR.
Johnson & Johnson (JNJ)
JNJ researches, develops, manufactures, and sells various products in the healthcare field worldwide. It operates under three segments: Consumer Health; Pharmaceutical; and MedTech.
In terms of the trailing-12-month gross profit margin, JNJ’s 67.36% is 20.9% higher than the 55.70% industry average. Likewise, its 0.51% trailing-12-month asset turnover ratio is 51.4% higher than the industry average of 0.34%.
On December 22, 2022, JNJ announced its acquisition of Abiomed, Inc. (ABMD). JNJ’s CEO, Joaquin Duato, believes that this acquisition is essential to accelerate growth in its MedTech business segment and deliver innovative medical technologies to more people around the world.
JNJ’s U.S. sales increased 2.9% year-over-year to $12.52 billion for the fourth quarter that ended December 31, 2022. Its non-GAAP net earnings rose 9.5% year-over-year to $6.22 billion. The company’s non-GAAP EPS increased 10.3% from the year-ago value to $2.35.
JNJ's EPS for the quarter ending June 30, 2023, is expected to increase 0.9% year-over-year to $2.61. Its revenue for the quarter ending March 31, 2023, is expected to increase 0.7% year-over-year to $23.58 billion.
The company has an impressive earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. Over the past six months, the stock has declined 5.9% to close the last trading session at $157.78.
JNJ’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 assess stocks by 118 different factors, each with its own weighting.
In addition, it has an A grade for Stability and a B for Value and Quality. Within the Medical - Pharmaceuticals industry, it is ranked #6 of 173 stocks.
Click here to see the additional POWR Ratings of JNJ (Growth, Momentum, and Sentiment).
Canon Inc. (CAJ)
Headquartered in Tokyo, Japan, CAJ manufactures and sells office multifunction devices, plain paper copying machines, laser and inkjet printers, cameras, diagnostic equipment, and lithography equipment. The company operates through four segments: Printing Business Unit; Imaging Business Unit; Medical Business Unit; and Industrial and Others Business Unit.
In terms of the trailing-12-month EBIT margin, CAJ’s 8.77% is 44.6% higher than the 6.06% industry average. Likewise, its 8.15% trailing-12-month ROCE is 71.4% higher than the industry average of 4.75%.
On November 16, 2022, CAJ, in collaboration with TEKLYNX International, the global leader in barcode label and RFID software, announced the development of new TEKLYNX native printer drivers for CAJ's on-demand color label printer lineup.
CAJ’s senior vice president and general manager, Isao "Sammy" Kobayashi, believes that the collaboration with TEKLYNX demonstrates the company’s commitment to its customers, providing companies with the ability to print colorful and vivid labels quickly and efficiently.
CAJ’s net sales for the fiscal third quarter that ended September 30, 2022, increased 21.1% year-over-year to ¥1.16 trillion ($8.58 billion). The company’s operating profit increased 29.2% year-over-year to ¥97.3 billion ($722.15 million). Net income attributable to CAJ increased 41.9% year-over-year to ¥84.8 billion ($629.41 million).
Analysts expect CAJ’s EPS and revenue for the quarter ending March 31, 2023, to increase 30% and 5% year-over-year to $0.47 and $7.25 billion, respectively. The stock has fallen 3.4% over the past month to close the last trading session at $21.58.
It is no surprise that CAJ has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It is ranked #3 out of 43 stocks in the Technology - Hardware industry. In addition, it has a B grade for Value, Stability, and Quality.
We have also given CAJ grades for Growth, Momentum, and Sentiment. Get all CAJ ratings here.
Forrester Research, Inc. (FORR)
FORR operates as an independent research and advisory services company. The company operates in three segments: Research; Consulting; and Events. It sells its products and services through a direct sales force in various locations worldwide.
In terms of the trailing-12-month gross profit margin, FORR’s 58.39% is 100.8% higher than the 29.08% industry average. Likewise, its 11.01% trailing-12-month levered FCF margin is 227.5% higher than the industry average of 3.36%.
On January 23, 2023, FORR introduced Forrester Decisions for Partner Ecosystem Marketing, the next generation of its Forrester Decisions for Channel Marketing service.
FORR’s VP and research director, Maria Chien, said, "The Partner Ecosystem Marketing service within our Forrester Decisions portfolio will ensure that marketing leaders have access to the research and tools they need to fully capitalize on their partner ecosystems to drive business growth."
For the fiscal fourth quarter that ended December 31, 2022, FORR’s total revenues increased 2.4% year-over-year to $136.89 million. The company’s adjusted net income for the fiscal year that ended December 31, 2022, increased 16.5% from the prior year to $47.22 million. In addition, its adjusted net EPS came in at $0.45.
FORR’s EPS and revenue for the fiscal year 2024 are expected to increase 14.1% and 5.4% year-over-year to $2.67 and $556.91 million, respectively. The company has an impressive earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters.
Over the past three months, the stock has fallen 6.5% to close the last trading session at $33.22.
FORR’s POWR Ratings reflect solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. Within the Financial Services (Enterprise) industry, it is ranked first out of 106 stocks. The company has an A grade for Quality and a B for Value.
Click here to see the additional POWR Ratings of FORR for Growth, Momentum, Stability, and Sentiment.
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JNJ shares were trading at $157.83 per share on Thursday morning, up $0.05 (+0.03%). Year-to-date, JNJ has declined -10.01%, versus a 4.41% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
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