CNBC's Jim Cramer believes the market's current rally could last through the middle of next month. The October producer price index data signaled that inflation is cooling. Moreover, the minutes from the Fed’s policy meeting earlier this month suggest that the central bank will slow down the current pace of rate hikes.
Although there are concerns that the economy could be heading into a recession, many analysts believe it could be mild. Many fundamentally strong stocks with solid growth prospects have fallen considerably this year due to macroeconomic and geopolitical headwinds and are trading much below their 52-week highs.
To capitalize on the positive sentiment, investors could consider buying fundamentally strong stocks Lockheed Martin Corporation (LMT), Elevance Health Inc. (ELV), HCA Healthcare, Inc. (HCA), and Albertsons Companies, Inc. (ACI), which are trading much below their 52-week highs.
Lockheed Martin Corporation (LMT)
LMT is a security and aerospace company engaging in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide. It operates through four segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space.
On November 16, 2022, LMT and Microsoft announced a landmark expansion of their strategic relationship to help power the next generation of technology for the Department of Defense.
LMT’s senior VP, Enterprise Business and Digital Transformation and chief information officer, Yvonne Hodge, believes that the agreement allows the creation of faster, safer, and more affordable 21st Century Security solutions that infuse immersive experiences and other advanced commercial technologies into the most capable defense systems.
LMT’s total assets for the fiscal third quarter ended September 25, 2022, increased 2.3% to $52.03 billion, compared to $50.87 billion for the fiscal year ended December 31, 2021. Its net sales increased 3.5% year-over-year to $16.58 billion, while its net earnings increased 189.6% year-over-year to $1.78 billion. In addition, its non-GAAP EPS came in at $6.87, representing a 4.1% from the prior-year quarter.
Analysts expect LMT’s EPS and revenue for the quarter ending December 31, 2022, to increase 1.7% and 3.1% year-over-year to $7.37 and $18.27 billion, respectively. It has a commendable earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 35.4% year-to-date to close the last trading session at $481.07. It is currently trading 2.8% below its 52-week high of $494.66, which it hit on November 8, 2022.
LMT’s POWR Ratings reflect solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the Air/Defense Services industry, it is ranked #3 out of 74 stocks. The company has a B grade for Value, Sentiment, and Quality.
Click here to see the additional POWR Ratings of LMT for Growth, Momentum, and Stability.
Elevance Health Inc. (ELV)
ELV operates as a health benefits company. It supports consumers, families, and communities across the entire care journey connecting to the care, support, and resources to lead healthier lives. It serves millions of people through a portfolio of medical, digital, pharmacy, behavioral, clinical, and care solutions.
On November 9, 2022, ELV agreed with CarepathRx, a portfolio company of Nautic Partners, to acquire BioPlus. Pete Haytaian, Executive Vice President of ELV and President of Carelon, believes that the acquisition of BioPlus helps the company deliver on its whole-health strategy that gives consumers improved access, greater affordability, and reliability to their prescriptions when they need it most.
For the fiscal third quarter ended September 30, 2022, ELV’s total revenues increased 11.5% year-over-year to $39.94 billion. The company’s adjusted shareholders’ net income increased 9.1% from the year-ago period to $1.82 billion. Additionally, its adjusted net income came in at $7.53, representing a 10.9% increase from the prior-year quarter.
Analysts expect ELV’s EPS and revenue for the quarter ending December 31, 2022, to increase 1.4% and 9.7% year-over-year to $5.21 and $39.49 billion, respectively. The company has a commendable earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 9.4% year-to-date to close the last trading session at $507.16. It is currently trading 7.7% below its 52-week high of $549.52, which it hit on October 31, 2022.
ELV’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 in the A-rated Medical – Health Insurance industry. In addition, it has an A for Growth, Value, Stability, Sentiment, and Quality.
We have also given ELV a grade for Momentum. Get all ELV ratings here.
HCA Healthcare, Inc. (HCA)
HCA provides health care services in the United States. The company operates general and acute care hospitals offering medical and surgical services and outpatient and physical therapy.
On August 9, 2022, HCA announced its collaboration with Johnson & Johnson to address key healthcare industry issues. HCA’s CEO, Sam Hazen, said, “We believe strongly in the power of strategic partnerships, and we are excited to collaborate to advance health equity, enhance patient care and provide even greater support to our nurses.”
For the fiscal third quarter ended September 30, 2022, HCA’s total assets increased 1.5% to $51.48 billion, compared to $50.74 billion for the fiscal year ended December 31, 2021. Its revenues for the nine months ended September 30, 2022, increased 2.4% year-over-year to $44.74 billion.
HCA’s EPS and revenue for the quarter ending December 31, 2022, are expected to increase 8.2% and 3.5% year-over-year to $4.78 and $15.59 billion, respectively. Over the past six months, the stock has gained 15.7% to close the last trading session at $237.28. It is currently trading 15% below its 52-week high of $279.02, which it hit on April 21, 2022.
HCA’s positive outlook is reflected in its POWR Ratings. The company has an overall rating of B, which equates to a Buy. It is ranked first out of 12 stocks in the Medical – Hospitals industry. In addition, it has a B grade for Stability, Sentiment, and Quality.
Click here to see the additional ratings of HCA for Growth, Value, and Momentum.
Albertsons Companies, Inc. (ACI)
ACI engages in the operation of food and drug stores. The company offers grocery products, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services. It also manufactures and processes food products for sale in stores.
On October 14, 2022, Kroger (KR) and ACI announced that they had entered into a definitive merger agreement. CEO of ACI, Vivek Sankaran, believes that together with Kroger, they will be able to provide customers with greater value and access to fresh food and essential pharmacy services and positively impact their associates and communities.
ACI’s net sales and other revenue for the second quarter ended September 10, 2022, increased 8.6% year-over-year to $17.92 billion. The company’s adjusted net income increased 13.2% year-over-year to $418.30 million. Moreover, its adjusted EBITDA increased 8.6% year-over-year to $1.05 billion, while its adjusted net EPS came in at $0.72, representing a 12.5% increase from the prior-year quarter.
Analysts expect ACI’s EPS for the quarter ending May 31, 2023, to increase 1.2% year-over-year to $0.85. Its revenue for the quarter ending November 30, 2022, is expected to increase 4.3% year-over-year to $17.45 billion.
The stock has fallen 3% over the past month to close the last trading session at $20.44. It is currently trading 46.2% below its 52-week high of $37.99, which it hit on March 7, 2022.
It's no surprise that ACI has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It is ranked #5 out of 39 stocks in the Grocery/Big Box Retailers industry. It has an A grade for Value and a B for Quality.
In total, we rate ACI on eight different levels. Beyond what we stated above, we have also given ACI grades for Growth, Momentum, Stability, and Sentiment. Get all ACI ratings here.
LMT shares were trading at $482.99 per share on Friday afternoon, up $1.92 (+0.40%). Year-to-date, LMT has gained 38.60%, versus a -14.31% 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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