Record-high inflation and consecutive 75-bps rate hikes have crippled the overall markets. The interest rate-sensitive and tech-heavy Nasdaq composite has lost 32.5% year-to-date. However, the benchmark index has gained marginally over the past month.
Moreover, rate hikes are expected to slow down in the coming months. Traders are now betting on 61% odds of a 50-bps rate hike at the Fed's next meeting in December.
Given the backdrop, investors might not regret buying quality Nasdaq stocks Microsoft Corporation (MSFT), PepsiCo, Inc. (PEP), Biogen Inc. (BIIB), and Fortinet, Inc. (FTNT).
Microsoft Corporation (MSFT)
MSFT develops, licenses, and supports software, services, devices, and solutions worldwide. The company operates in three segments: Productivity and Business Processes; Intelligent Cloud; and More Personal Computing.
On November 3, 2022, MSFT and aerospace and defense company Raytheon Technologies Corporation (RTX) strengthened their collaboration to co-develop capabilities. With this partnership, the companies aim to achieve advanced digital transformation.
Moreover, on October 20, 2022, MSFT and UBS Group (UBS) announced a landmark expansion of their partnership. This is yet another step toward innovative digital transformation.
MSFT's total revenues came in at $50.12 billion for the first quarter that ended September 30, 2022, up 10.6% year-over-year. Moreover, its gross margin came in at $34.67 billion, up 9.5% year-over-year. Also, its operating income came in at $21.52 billion, up 6.3% year-over-year.
Analysts expect MSFT's revenue to increase 7.2% year-over-year to $212.47 billion in 2023. Its EPS is expected to increase 3.7% year-over-year to $9.55 in 2023. It surpassed EPS estimates in three of four trailing quarters. MSFT's shares have gained 2.9% intraday to close the last trading session at $227.87.
MSFT's strong fundamentals are reflected in its POWR Ratings. The stock's overall B rating indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
MSFT has a B grade for Stability and Quality. In the Software – Business industry, it is ranked #10 out of 53 stocks. Click here for the additional POWR Ratings for Value, Growth, Momentum, and Sentiment for MSFT.
PepsiCo, Inc. (PEP)
PEP manufactures, markets, distributes, and sells beverages and convenient foods worldwide. It has seven segments- Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East, and South Asia; Asia Pacific, Australia and New Zealand; and China Region.
On September 14, 2022, PEP and agriculture company Archer Daniels Midland Co. (ADM) announced a 7.5-year strategic commercial partnership. This collaboration is a commendable step toward sustainable development because it aims to improve regenerative agriculture across the companies' shared North American supply chains.
PEP's net revenue came in at $21.97 billion for the third quarter that ended September 3, 2022, up 8.8% year-over-year. Its gross profit increased 8% year-over-year to $11.66 billion. Also, its operating profit came in at $3.53 billion, up 6.1% year-over-year.
Analysts expect PEP's revenue to increase 7.1% year-over-year to $85.1 billion in the current year. Its EPS is estimated to grow 8.1% year-over-year to $6.77 in 2022. It has surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 8.6% to close the last trading session at $180.21.
PEP's overall B rating indicates a Buy in our proprietary rating system. The stock also has an A grade for Quality and a B for Growth, Stability, and Sentiment.
In the A-rated Beverages industry, it is ranked #10 out of 33 stocks. Click here for the additional POWR Ratings for Value and Momentum for PEP.
Biogen Inc. (BIIB)
BIIB discovers, develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases. It offers TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI, and FAMPYRA for multiple sclerosis (MS); SPINRAZA for spinal muscular atrophy; and FUMADERM to treat plaque psoriasis.
On October 25, 2022, Michel Vounatsos, BIIB's CEO, said, "We continue to make progress toward delivering new impactful therapies for patients suffering from depression and SOD1 ALS, with important upcoming regulatory milestones."
BIIB's net income came in at $1.13 billion for the third quarter that ended September 30, 2022, up 256.8% year-over-year. Moreover, its EPS came in at $7.84, up 253.2% year-over-year. Its total assets came in at $24.85 billion for the period September 30, 2022, compared to $23.88 billion for the period ended December 31, 2021.
BIIB's EPS is expected to increase 11.6% year-over-year to $4.04 for the quarter ending March 2023. It surpassed EPS estimates in three of four trailing quarters. Over the past six months, the stock has gained 47% to close the last trading session at $284.62.
BIIB's overall A rating equates to a Buy in our POWR Ratings system. It has an A grade for Value, Quality, and Sentiment. The stock is ranked #5 out of 387 stocks in the Biotech industry.
We've also rated BIIB for Stability, Momentum, and Growth. Get all BIIB ratings here.
Fortinet, Inc. (FTNT)
FTNT provides broad, integrated, and automated cybersecurity solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It provides FortiGate hardware and software licenses for various security and networking services.
FTNT's revenue came in at $1.15 billion for the third quarter that ended September 30, 2022, up 32.6% year-over-year. Its net income came in at $231.6 million, up 42% year-over-year, while its EPS came in at $0.29, up 52.6% year-over-year.
Street expects FTNT's revenue to increase 32.4% year-over-year to $4.43 billion in 2022. Its EPS is estimated to grow 43.7% year-over-year to $1.15 in 2022. It surpassed EPS estimates in all four trailing quarters. FTNT's shares have gained marginally intraday to close the last trading session at $47.86.
FTNT has an overall rating of B, which equates to a Buy in our POWR Ratings system. It also has an A grade for Sentiment and Quality and a B for Growth.
FTNT is ranked #1 among 24 stocks in the Software - Security industry. Click here for the additional POWR Ratings for FTNT (Value, Stability, and Momentum).
MSFT shares were trading at $229.75 per share on Tuesday afternoon, up $1.88 (+0.83%). Year-to-date, MSFT has declined -31.24%, versus a -18.44% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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