Inflation has been a major concern for the market this year, resulting in a massive stock market sell-off. The year's first half ended up being the worst for the stock market in 50 years. High consumer demand and supply constraints have driven prices higher.
While the recently released CPI data shows a slight decline in inflation from the 40-year high level, it remained elevated. Food and rent continued to march higher. Therefore, the Fed might consider continuing its aggressive interest rate hikes given the red-hot job market.
As the fears of economic contraction are expected to keep the market volatile, it could be wise to invest in quality stocks AbbVie Inc. (ABBV), Merck & Co. Inc. (MRK), and Commvault System Inc. (CVLT), and The Hackett Group Inc. (HCKT). These stocks are rated Strong Buy in our proprietary POWR Ratings system.
AbbVie Inc. (ABBV)
ABBV is a biopharmaceutical research company. The company is involved in the research, development, manufacturing, commercialization, and sale of medicines and therapies. From AbbVie-owned distribution centers and public warehouses, the company's products are sold directly to wholesalers, distributors, government agencies, health care facilities, and independent retailers worldwide.
This month, Sosei Group Corporation and ABBV, a global biopharmaceutical company focused on research, have announced a new drug discovery collaboration and option-to-license agreement to discover, develop, and commercialize small molecules that modulate novel G protein-coupled receptor (GPCR) targets linked to neurological disease. Sosei Heptares' StaR technology and structure-based drug design (SBDD) platform will be used in the new agreement.
During the second quarter ended June 30, 2021, ABBV’s worldwide net revenue increased 4.5% year-over-year to $14.58 billion. Its adjusted EPS increased 11.2% year-over-year to $3.37. In addition, its gross margin came in at 71.4%.
ABBV’s revenue is expected to increase 5.2% year-over-year to $59.03 billion. In addition, its EPS is expected to grow 17.3% in the current year and 26.9% in the current quarter ending September 2022. The stock has gained 22.9% over the past year.
ABBV's POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ABBV has an A grade for Quality and a B for Growth and Value. Within the Medical – Pharmaceuticals industry, it is ranked #9 of 173 stocks. To see additional POWR Ratings for Momentum, Stability, and Sentiment for ABBV, click here.
Merck & Co. Inc. (MRK)
MRK, Inc. is a global healthcare company. It operates in two segments: Pharmaceutical and Animal Health. The company has collaborations with AstraZeneca PLC (AZN), Bayer AG (BAYRY), Eisai Co. Ltd. (ESALY), Ridgeback Biotherapeutics, and Gilead Sciences, Inc. (GILD) to develop and commercialize long-acting HIV treatments.
This month, AstraZeneca and MRK announced that the European Commission (EC) had approved LYNPARZA as monotherapy or in combination with endocrine therapy for the adjuvant treatment of adult patients with germline BRCA1/2 mutations (gBRCAm) and HER2-negative high-risk early breast cancer who have previously received neoadjuvant or adjuvant chemotherapy.
The European Commission approved LYNPARZA in this setting based on the results of the Phase 3 OlympiA trial and follows the European Medicines Agency's Committee for Medicinal Products for Human Use's recommendation.
MRK sales increased 27.9% year-over-year to $14.59 billion in the second quarter ended June 30, 2021. Its net income grew 155.3% year-over-year to $3.94 billion. Its EPS increased 154.1% from the prior-year quarter to $1.55.
The stock has gained 18.9% over the past year and 16.8% year-to-date.
Analysts expect MRK revenue to increase 20.5% year-over-year to $58.7 billion in fiscal 2022. Its EPS is expected to increase 22.4% from the prior-year quarter to $7.37. Over the past year, the stock has gained 155.8%. In addition, the stock has returned 124.5% so far this year.
MRK's strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system. MRK also has a B grade for Value and Quality. The stock is ranked #8 in the Medical – Pharmaceuticals industry.
Beyond the POWR Ratings grades I have just highlighted, you can see MRK ratings for Stability, Momentum, Sentiment, and Growth.
Commvault System Inc. (CVLT)
CVLT provides data protection and information management software applications, as well as related services, in the United States and internationally. It serves customers in various industries, including banking, insurance, financial services, government, healthcare, pharmaceuticals, medical services, technology, legal, manufacturing, utilities, and energy.
In June, CVLT expanded its strategic partnership with Oracle to include Metallic DMaaS on Oracle Cloud. Metallic's industry-leading services will be available on Oracle Cloud Infrastructure (OCI) in all commercial OCI regions worldwide as part of Commvault's multi-cloud strategy.
For the first quarter ended June 30, 2022, CVLT’s total revenue increased 7.9% year-over-year to $197.98 million. Its operating income came in at $7.44 million. The company’s net income came in at $3.51 million, while its EPS amounted to $0.08.
CVLT’s EPS is expected to increase 3.2% year-over-year to $2.59 in fiscal 2023. In addition, analysts expect its revenue to grow 5% to $807.87 million in the current fiscal year.
CVLT's POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. JILL also has an A grade for Quality and a B for Growth and Value.
Within the Software Application industry, it is ranked #4 of 153 stocks. Click here to see additional POWR Ratings for Momentum, Sentiment, and Stability for CVLT.
The Hackett Group Inc. (HCKT)
The Hackett Group, Inc. is an intellectual property-based strategic consulting firm. Benchmarking, executive advisory, business transformation, and cloud enterprise application implementation are among the services offered by the company.
HCKT’s total revenue increased 3.7% year-over-year to $75.92 million in the second quarter ended July 1, 2022. Its cash and cash equivalents surged 34.7% for the three months ended July 1 to $61.68 million. Its adjusted EPS amounted to $0.38.
Its shares have gained 6.3% over the past month and 22.2% over the past year.
It is no surprise that HCKT has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Quality and a B for Value and Stability. In the A-rated Outsourcing – Tech Services industry, it is ranked #1 of 10 stocks.
In addition to the POWR Ratings grades I have just highlighted, you can see HCKT ratings for Momentum, Growth, and Sentiment.
ABBV shares were trading at $140.94 per share on Wednesday afternoon, up $0.69 (+0.49%). Year-to-date, ABBV has gained 7.06%, versus a -10.97% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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