Investors have been increasingly concerned over recession possibilities as the Fed raised interest rates to tame the high inflation. The economy is facing the worst-hit inflation in 41 years, with the consumer price index rising 9.1% from a year ago in June.
Despite the bouts of market volatility, experts believe it’s important to stay invested and to focus on longer-term investing goals, in line with an age-old adage, “It’s all about time in the markets, not timing the markets.” In addition, according to FactSet, S&P 500 companies are expected to post high profits, with a 9.9% earnings increase in 2022, despite the growing recession fears.
Amid this backdrop, fundamentally sound stocks Pfizer Inc. (PFE), Broadcom Inc. (AVGO), and Comcast Corporation (CMCSA), which currently seem to be trading at a discount, could be solid additions to your watchlist.
Pfizer Inc. (PFE)
PFE, a research-based global company, engages in the discovery, development, manufacturing, marketing, sales, and distribution of biopharmaceutical products. The company’s global portfolio includes medicines and vaccines.
On June 30, PFE announced a new drug application submission to the U.S. FDA for the approval of PAXLOVID™ to treat patients at high risk for progression to severe illness from COVID-19. If approved, this should garner significant returns amid the rising covid cases.
In the same month, the company also announced an agreement to supply 105 million doses of vaccine to the U.S. government to support the continued fight against COVID-19 and cope with the next covid wave.
For the fiscal first quarter, PFE’s total revenues increased 76.8% year-over-year to $25.66 billion. Its adjusted net income grew 74.5% from the year-ago value to $9.34 billion, while its adjusted EPS stood at $1.62, reflecting a 70.5% increase year-over-year.
The consensus EPS estimate of $1.81 for the fiscal first quarter ended June 2022 represents a 69% improvement year-over-year. The consensus revenue estimate of $26.11 billion for the same quarter represents a 37.6% increase from the same period last year. It has an impressive earnings surprise history, as it topped Street EPS estimates in each of the trailing four quarters.
In terms of its forward Price/Sales, PFE is currently trading at 2.80x, 38.6% lower than the industry average of 4.55x. Its forward EV/EBIT multiple of 7.10 is 57.7% lower than the industry average of 16.78.
Over the past year, the stock has gained 29.1% to close yesterday’s trading session at $51.75. It gained 8% in the past month.
PFE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to 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.
PFE has a B grade in Growth, Quality, and Value. It is ranked #4 of 169 stocks in the Medical - Pharmaceuticals industry.
Beyond what is stated above, we’ve also rated PFE for Momentum, Sentiment, and Stability. Get all the PFE ratings here.
Broadcom Inc. (AVGO)
AVGO designs, develops, and supplies various semiconductor devices worldwide. The company operates in two segments, Semiconductor Solutions; and Infrastructure Software.
On May 26, AVGO announced an agreement to acquire all the outstanding shares of VMware, Inc. (VMW), a leading innovator in enterprise software, for a valuation of approximately $61 billion. This should benefit the company.
For the fiscal second quarter, AVGO’s net revenue increased 22.6% year-over-year to $8.10 billion. Its non-GAAP net income grew 34.2% from the year-ago value to $4 billion. Non-GAAP EPS for the quarter stood at $9.07, reflecting a 37% increase year-over-year. Moreover, its adjusted EBITDA was $5.11 billion, up 29.1% from the prior-year quarter.
Street expects AVGO’s EPS for the current quarter ending July 2022 to improve 37.3% year-over-year to $9.55. The consensus revenue estimate of $8.41 billion for the same period represents a 24.1% increase year-over-year. The company also surpassed the consensus EPS estimates in each of the trailing four quarters.
In terms of its forward non-GAAP P/E, AVGO is trading at 13.38x, 21.6% lower than the industry average of 17.06x. Its forward EV/EBIT multiple of 11.43 is 24.1% lower than the industry average of 15.1.
The stock has gained 3.6% over the past year to close yesterday’s trading session at $494.46.
AVGO’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to Strong Buy in our POWR Ratings system.
The company also has an A grade in Quality and Growth and a B in Sentiment. It is ranked #5 out of the 95 stocks in the B-rated Semiconductor & Wireless Chip industry.
To get AVGO’s ratings for Momentum, Stability, and Value, click here.
Comcast Corporation (CMCSA)
CMCSA operates as a media and technology company worldwide through its Cable Communications; Media; Studios; Theme Parks; and Sky segments.
CMCSA’s revenue increased 14% year-over-year to $31.01 billion in the fiscal first quarter of 2022. Adjusted net income increased by 10.5% from the prior-year quarter to $3.90 billion. Adjusted EBITDA increased 8.8% from the same period the prior year to $9.15 billion, while its adjusted EPS came in at $0.86, up 13.2% year-over-year.
Analysts expect CMCSA’s revenue in the quarter ended June 2022 to come in at $29.75 billion, indicating an increase of 4.2% year-over-year, while its EPS is expected to improve 9.2% year-over-year to $0.92. CMCSA also beat the consensus EPS estimates in each of the trailing four quarters.
In terms of its forward non-GAAP P/E, CMCSA is currently trading at 11.41x, 31.2% lower than the industry average of 16.57x. Its forward EV/EBITDA multiple of 7.42 is 11.2% lower than the industry average of 8.36.
CMCSA’s shares have gained 1.9% over the past month to close the last trading session at $41.06.
The company has an overall rating of A, translating to Strong Buy in our proprietary rating system. CMCSA is rated B in Quality, Stability, and Growth.
Within the Entertainment - TV & Internet Providers industry, it is ranked #1 of 9 stocks. Click here to see additional POWR Ratings for Momentum, Sentiment, and Value for CMCSA.
PFE shares were trading at $51.44 per share on Monday morning, down $0.31 (-0.60%). Year-to-date, PFE has declined -11.51%, versus a -17.68% 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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