The stock market has been witnessing unprecedented volatility over the past few months on a few concerns. The Fed has indicated an interest rate hike of 50 basis points this month to fight 40-year high inflation. Furthermore, along with the ongoing Russia-Ukraine war, extended COVID-19 lockdowns in China, the world’s second-largest economy, have intensified supply chain disruptions. The U.S. GDP declined at a 1.4% annualized pace in the first quarter of 2022, and analysts expect the rate to decline further in the current quarter.
Since these concerns have caused the benchmark stock indexes to witness sell offs, several large-cap stocks are currently trading well below their intrinsic values. Given their broader market reach, financial flexibility, and pricing power, large-cap stocks usually survive market disruptions better than their small- and mid-cap counterparts. Therefore, we think it could be an opportune time to invest in quality large-cap stocks.
Bristol-Myers Squibb Company (BMY), Micron Technology, Inc. (MU), Cardinal Health, Inc. (CAH), and Tyson Foods, Inc. (TSN) are trading at significant discounts to their peers. So, these stocks could be solid bets now.
Bristol-Myers Squibb Company (BMY)
New York City-based BMY develops, manufactures, and markets biopharmaceutical products worldwide. The company provides products for hematology, cardiovascular, oncology, immunology, neuroscience, and COVID-19 19. Its product portfolio includes Revlimid to treat multiple myeloma, Eliquis to treat DVT/PE, Opdivo for anti-cancer indications, and Orencia to treat active RA and psoriatic arthritis. BMY has a $159.44 billion market capitalization.
Last month, BMY announced that the U.S. Food and Drug Administration (FDA) approved Camzyos for the treatment of adults with symptomatic New York Heart Association (NYHA) class II-III obstructive hypertrophic cardiomyopathy (HCM) to improve functional capacity and symptoms. This approval is expected to boost the company’s growth and profitability.
Also in April, BMY received European Commission (EC) approval for Breyanzi, a CD19-directed chimeric antigen receptor (CAR) T cell immunotherapy to treat adults with large B-cell lymphoma. In addition, the company received EC approval for Opdivo (nivolumab) with chemotherapy as first-line treatment for adult patients with unresectable advanced, recurrent, or metastatic esophageal squamous cell carcinoma (ESCC) with tumor cell PD-L1 expression ≥ 1%.
In its fiscal year 2022 first quarter, ended March 31, 2022, BMY's total revenues grew 5.2% year-over-year to $11.65 billion, while its gross profit improved 6.7% from its year-ago value to $9.23 billion. The company's earnings before income taxes rose 5.8% year-over-year to $5.05 billion. Its net earnings attributable to BMY and earnings per share came in at $4.25 billion and $1.96, respectively, registering an increase of 7.1% and 12.6% from the prior-year period.
The $48.60 billion consensus revenue estimate for its fiscal year 2023, ending Dec. 31, 2023, represents a 4.2% increase from the previous year. The $8.20 consensus EPS estimate for the next year indicates a 7.2% year-over-year rise. BMY has surpassed the consensus EPS estimates in each of the trailing four quarters.
In terms of non-GAAP forward P/E, BMY is currently trading at 9.81x, which is 50.7% lower than the 19.9x industry average. Furthermore, BMY’s 3.43x forward Price/Sales is 26.9% lower than the 4.69x industry average.
The stock has gained 20.4% in price year-to-date and 17.4% over the past year and closed yesterday's trading session at $75.08.
BMY's POWR Ratings reflect this promising outlook. It has an overall A grade, which equates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
BMY has an A grade for Value and a B grade for Growth and Quality. Within the Medical - Pharmaceuticals industry, it is ranked #5 of 167 stocks. To see additional POWR Ratings (Stability, Momentum, and Sentiment) for BMY, click here.
Click here to checkout our Healthcare Sector Report for 2022
Micron Technology, Inc. (MU)
MU in New York City designs, manufactures, and sells memory and storage products worldwide. The company operates through four segments: Compute and Networking Business Unit; Mobile Business Unit; Storage Business Unit; and Embedded Business Unit. It offers memory and storage technologies that comprise DRAM, NAND, and NOR products. It also provides memory products for the cloud server, enterprise, graphics, networking, and mobile-device markets. The stock has a market capitalization of $78.84 billion.
On April 12, MU unveiled its latest 16Gb GDDR6X memory, which features twice the capacity and up to 15% higher performance. These additional capabilities allow users to experience sharp visuals, higher frame rates, and superior performance in memory-intensive applications like gaming and content creation. This introduction is expected to extend the company’s customer reach and profits.
On March 23, MU partnered with Idaho Power to advance solar-powered renewable energy in Idaho. The latter will facilitate constructing a new 40-megawatt (MW) solar project. MU might meet its sustainability goals and boost its profitability and growth with this solar project.
MU's revenue increased 24.9% year-over-year to $7.79 billion in its fiscal 2022 second quarter, ended March 3, 2022. Its non-GAAP gross margin improved 81.3% year-over-year to $3.72 billion, while its non-GAAP operating income grew 118.8% from its year-ago value to $2.75 billion. The company’s non-GAAP net income and non-GAAP earnings per share came in at $2.44 billion and $2.14, respectively, registering a 116.7% and 118.4% increase year-over-year.
Analysts expect MU's revenue for its fiscal year 2022 third quarter ending May 2022 to come in at $8.70 billion, representing a 17.2% rise year-over-year. It has surpassed the consensus revenue estimates in each of the trailing four quarters. The Street expects the company's EPS for the current quarter to come in at $2.46, representing a 30.9% increase year-over-year. Furthermore, the company has surpassed the consensus EPS estimates in each of the trailing four quarters.
In terms of forward non-GAAP P/E, MU is currently trading at 7.33x, which is 61.2% lower than the 18.89x industry average. Its 2.34 forward Price/Sales multiple is 23.7% lower than the 3.07x industry average. Its forward Price/Cash Flow and EV/EBITDA ratios of 4.91 and 3.79, respectively, compare with industry averages of 17.72 and 12.23.
The stock has gained 5.3% in price over the past five days. It closed yesterday's trading session at $70.60.
MU’s POWR Ratings reflect a strong outlook. The stock has an overall rating of A, which translates to Strong Buy in our POWR Ratings system.
MU has a grade of A for Value. It has a grade of B for Growth, Sentiment, and Quality. It is ranked #6 of 95 stocks in the B-rated Semiconductor & Wireless Chip industry. Click here to see MU’s POWR Ratings for Stability and Momentum.
Click here to checkout our Semiconductor Industry Report for 2022
Cardinal Health, Inc. (CAH)
CAH provides integrated healthcare services and products in the U.S., Canada, Europe, Asia, and internationally. The Dublin, Ohio, company operates through two segments: Pharmaceutical; and Medical. It offers customized solutions for hospitals, healthcare systems, clinical laboratories, pharmacies, and at-home patients. CAH provides specialty pharmaceutical products, medication therapy management, patient outcomes services, laboratory products, and devices. It has a market capitalization of $16.09 billion.
In March, CAH revealed plans to expand its medical distribution footprint in Ohio by building a 574,670 square foot medical distribution center in Columbus, Ohio. This new building will integrate automation and technology to work alongside Cardinal Health employees. In addition, it will improve safety and quality, deliver operational efficiencies, and provide a stable customer experience.
For its fiscal 2022 second quarter, ended Dec. 31, 2021, CAH’s revenue increased 9.4% year-over-year to $45.46 billion, and its profit from the pharmaceutical segment improved 3.1% year-over-year to $426 million. The company’s total current assets amounted to 31.85 billion as of December 31. In addition, its net cash provided by operating amounted to $1.20 billion for the second quarter.
The $43.20 billion consensus revenue estimate for its fiscal 2022 third quarter, ended March 31, 2022, represents a 10% growth from the same period in 2021. The company has surpassed the consensus revenue estimates in three of the trailing four quarters. Analysts expect CAH's EPS for the fourth quarter ending June 30, 2022, to be $1.20, representing a 56.3% rise year-over-year.
In terms of forward non-GAAP P/E, CAH is currently trading at 10.98x, which is 44.8% lower than the 19.90x industry average. Its forward 0.09 Price/Sales multiple is 98.1% lower than the 4.69x industry average.
Shares of CAH have increased 12.8% year-to-date and 13.2% over the past three months and closed yesterday's trading session at $58.08.
CAH's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A grade, which equates to Strong Buy in our proprietary rating system.
CAH has an A grade for Growth and Value. Within the Medical - Services industry, it is ranked #6 of 82 stocks. To see additional POWR Ratings (Momentum, Stability, Quality, and Sentiment) for CAH, click here.
Click here to checkout our Healthcare Sector Report for 2022
Tyson Foods, Inc. (TSN)
Tyson in Springdale, Ark., is a leading food company. It operates through four segments: Beef; Pork; Chicken; and Prepared Foods. The company sells meat cuts, case-ready beef, and pork and offers chicken and other specialty products. It sells its products through its sales staff to grocery retailers, grocery wholesalers, meat distributors, chain restaurants, and industrial food processing companies. TSN has a market capitalization of $33.67 billion.
In February, TSN’s board of directors declared a quarterly dividend of $0.46 per share on its Class A common stock and $0.41 per share on its Class B common stock. The quarterly dividend is payable to shareholders on June 15, 2022. This reflects the company’s commitment to return value to the shareholders.
TSN's sales increased 23.6% year-over-year to $12.93 billion, and its gross profit grew 71.2% year-over-year to $2.02 billion in its fiscal 2022 first quarter, ended Jan.1, 2022. Its adjusted operating income improved 39.7% year-over-year to $1.43 billion. Its adjusted EBITDA rose 32% year-over-year to $1.76 billion. And the company’s net income increased 138.6% from its year-ago value to $1.13 billion, and its adjusted EPS rose 47.9% year-over-year to $2.87.
Analysts expect TSN's revenue for its fiscal 2022 second quarter, ended March 31, 2022, to come in at $12.84 billion, representing a 13.7% rise year-over-year. The Street expects the company's EPS for the to-be-reported quarter to come in at $1.86, representing 38.6% growth year-over-year. TSN has surpassed the consensus EPS estimates in each of the trailing four quarters.
In terms of forward non-GAAP P/E, TSN is currently trading at 10.91x, which is 39.8% lower than the 18.11x industry average. Its 0.65 forward Price/Sales multiple is 48.9% lower than the 1.27x industry average.
The stock has increased 6.6% in price year-to-date and 19.4% over the past year. It closed yesterday's trading session at $92.90.
TSN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A grade, which equates to a Strong Buy in our proprietary rating system.
TSN has a grade of A for Value and B for Sentiment and Growth. Within the B-rated Food Makers industry, it is ranked #7 of 87 stocks. To see additional POWR Ratings (Stability, Quality, and Momentum) for TSN, click here.
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BMY shares were trading at $75.48 per share on Tuesday afternoon, up $0.40 (+0.53%). Year-to-date, BMY has gained 23.02%, versus a -11.90% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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