The Fed’s aggressive interest rate hikes since last year are showing results as inflation eased for the seventh consecutive month in January. The consumer price index rose 6.4% year-over-year and 0.5% sequentially. The sequential rise in inflation follows the hotter-than-expected jobs data in January.
Fed Chair Jerome Powell has warned that the central bank may have to raise its benchmark rates higher than previously projected if inflation fails to ease and the jobs market remains tight. This could push the economy into a recession.
Amid this macroeconomic uncertainty, it could be wise for investors to buy stocks whose businesses remain resilient irrespective of the economic cycle. Their strong business models and solid dividend payouts could help investors cushion their portfolios against a potential economic slowdown.
To that end, it could be wise for investors to buy fundamentally strong stocks under $100, The Coca-Cola Company (KO), Bristol-Myers Squibb Company (BMY), Cardinal Health, Inc. (CAH), and Bluegreen Vacations Holding Corporation (BVH).
The Coca-Cola Company (KO)
Popular beverage company KO manufactures, markets, and sells various non-alcoholic beverages. The company provides sparkling soft drinks; flavored and enhanced water and sports drinks; juice, dairy, and plant-based beverages; tea and coffee; and energy drinks.
KO's four-year average dividend yield is 3.06%, and its forward annual dividend of $1.76 per share translates to a 2.95% yield. It paid a quarterly dividend of $0.44 per share on December 15, 2022.
In terms of the trailing-12-month gross profit margin, KO's 58.1% is 84.4% higher than the 31.53% industry average. Likewise, its 40.51% trailing-12-month ROCE is 289.6% higher than the industry average of 10.40%.
On December 14, 2022, KO teamed up with two legendary names in music sampling, Mark Ronson and Madlib, to launch "Recycled Records." VP and GM of Sustainability at KO North America, Kurt Ritter, believes that switching from green to clear plastic increases the amount of high-quality, food-grade recycled plastic available in the marketplace.
KO’s net operating revenues increased 7% year-over-year to $10.13 billion for the fourth quarter that ended December 31, 2022. Its non-GAAP gross profit increased 6% year-over-year to $5.76 billion. The company’s non-GAAP operating income increased 10.9% year-over-year to $2.32 billion. Its non-GAAP net income and non-GAAP EPS came in at $1.94 billion and $0.45, respectively.
KO’s EPS and revenue for the quarter ending March 31, 2023, are expected to increase 0.8% and 3.7% year-over-year to $0.65 and $10.89 billion, respectively. The company has a commendable earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. Over the past three months, the stock has fallen 1.9% to close the last trading session at $59.59.
KO’s POWR Ratings reflect its solid prospects. The stock has an overall rating of B, equating to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the B-rated Beverages industry, it is ranked #16 out of 37 stocks. The company has an A grade for Sentiment and a B for Stability and Quality. Click here to see the additional POWR Ratings of KO for Growth, Value, and Momentum.
Bristol-Myers Squibb Company (BMY)
BMY discovers, develops, licenses, manufactures, and markets biopharmaceutical products worldwide. It offers products for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and COVID-19 diseases.
Over the last three years, BMY’s dividend payouts have grown at a 9.2% CAGR. Its four-year average dividend yield is 3.02%, and its forward annual dividend of $2.28 per share translates to a 3.16% yield. It paid a quarterly dividend of $0.57 per share on February 1, 2023.
In terms of the trailing-12-month gross profit margin, BMY's 78% is 40.5% higher than the 55.6% industry average. Likewise, its 0.45x trailing-12-month asset turnover ratio is 32.3% higher than the industry average of 0.34x.
For the fiscal year that ended December 31, 2022, BMY's U.S. revenues increased 9% from the prior-year period to $31.83 billion. Net earnings attributable to BMY increased 2.8% year-over-year to $16.53 billion. The company’s non-GAAP EPS came in at $7.70, representing an increase of 7.5% year-over-year.
BMY’s EPS for the quarter ending March 31, 2023, is expected to increase 1.5% year-over-year to $1.99. Its revenue for the quarter ending June 30 is expected to increase 0.5% year-over-year to $11.95 billion. It has an impressive earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 8.1% to close the last trading session at $72.25.
BMY’s promising prospects are reflected in its POWR Ratings. The company has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. It is ranked #4 out of 172 stocks in the Medical - Pharmaceuticals industry. In addition, it has an A grade for Value and a B for Growth, Stability, Sentiment, and Quality.
To see BMY’s rating for Momentum, click here.
Cardinal Health, Inc. (CAH)
CAH operates as an integrated healthcare services and products company worldwide. It provides customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices, and patients in the home. The company operates in two segments, Pharmaceutical and Medical.
On January 26, 2023, CAH announced its strategic collaboration with Palantir Technologies Inc. (PLTR), a leading builder of operating systems for the modern enterprise.
Senior VP and GM of Health System and Provider Distribution & Services at CAH, Peter J. Siavelis, said, "By utilizing Palantir's platform, we are working to reshape the pharmaceutical supply chain with innovative processes, products and solutions to improve access to critical medications and streamline pharmacy inventory management."
Over the last three years, CAH’s dividend payouts have grown at a 1% CAGR. Its four-year average dividend yield is 3.61%, and its forward annual dividend of $1.98 per share translates to a 2.52% yield on prevailing prices. It is expected to pay a quarterly dividend of $0.50 per share on April 15, 2023.
For the fiscal second quarter, CAH’s revenue increased 13.2% year-over-year to $51.47 billion. Its non-GAAP gross margin increased 2.8% year-over-year to $1.66 billion. Moreover, its non-GAAP EPS increased 3.9% year-over-year to $1.32. Also, its non-GAAP net earnings came in at $346 million.
CAH’s EPS and revenue for the quarter ending March 31, 2023, are expected to increase 1.9% and 10.3% year-over-year to $1.48 and $49.47 billion, respectively. Over the past nine months, the stock has gained 41.6% to close the last trading session at $78.75.
It is no surprise that CAH has an overall rating of A, translating to a Strong Buy in our proprietary rating system. It is ranked #4 out of 79 stocks in the Medical - Services industry. The company has a B grade for Growth, Value, Sentiment, and Quality.
Click here to see the additional POWR Ratings of CAH for Momentum and Stability.
Bluegreen Vacations Holding Corporation (BVH)
BVH operates as a vacation ownership company. It markets and sells vacation ownership interests and manages resorts in leisure and urban destinations. The company provides resort management, mortgage, title, reservation, construction design, and other services.
Over the last three years, BVH’s dividend payouts have grown at a 32.8% CAGR. Its four-year average dividend yield is 0.77%, and its forward annual dividend of $0.45 per share translates to a 1.37% yield on the current price level. It paid a quarterly dividend of $0.15 per share on November 21, 2022.
In terms of the trailing-12-month gross profit margin, BVH's 87.8% is 148.5% higher than the 35.3% industry average. Likewise, its 28.8% trailing-12-month ROCE is 129.4% higher than the industry average of 12.6%.
For the fiscal third quarter that ended September 30, 2022, BVH’s total revenue increased 16.9% year-over-year to $250.84 million. The company’s net income attributable to shareholders came in at $22.96 million. In addition, its EPS came in at $1.19, representing a 12.3% increase from the prior-year quarter. Its adjusted EBITDA came in at $46.60 million.
Analysts expect BVH’s EPS and revenue estimates for the quarter that ended December 31, 2022, to increase 8.1% and 2.7% year-over-year to $0.64 and $208.46 million, respectively. Over the past three months, the stock has gained 57.8% to close the last trading session at $32.89.
BVH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It is ranked first out of 22 stocks in the B-rated Travel - Hotels/Resorts industry. It has an A grade for Value and Sentiment and a B for Quality.
We have also given BVH grades for Growth, Momentum, and Stability. Get all BVH ratings here.
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KO shares were trading at $59.40 per share on Wednesday afternoon, down $0.19 (-0.32%). Year-to-date, KO has declined -6.62%, versus a 7.64% 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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