The recent jobs data released by the Labor Department revealed that the unemployment rate rose marginally to 3.7% last month from 3.5% in September, showing initial signs of a cooldown. Employers added 261,000 workers in October, adjusted for seasonality.
While indicating an otherwise welcoming economic resilience, the recent employment data could influence the Federal Reserve to continue with interest rate hikes, as indicated by the statement issued by the Fed Chair earlier this week.
With a reversal in the hawkish stance by the Fed nowhere in sight and the businesses losing their momentum rapidly, the economy seems to have braced itself for a hard landing. Amid ongoing macroeconomic headwinds, stocks with fundamental strength, healthy cash flows, and solid growth prospects are getting massive investor attention.
Hence, we suggest investing in quality stocks Abbott Laboratories (ABT) and Stellantis N.V.(STLA), given their significant wealth creation potential.
Abbott Laboratories (ABT)
ABT discovers, develops, manufactures, and sells diversified healthcare products. The company operates through four segments: Established Pharmaceutical Products; Diagnostic Products; Nutritional Products; and Medical Devices.
On October 12, ABT and The Home Edit, a global organizational company and lifestyle brand, announced their partnership to redesign the medicine cabinet for today's health needs. Both companies will provide organization tips and advice on healthcare essentials to have on hand to feel more prepared and in control this season.
On September 15, ABT declared its quarterly common dividend of $0.47 per share to be paid on November 15, marking the 395th consecutive quarterly dividend to be paid by the company since 1924. The company pays $1.88 annually as a dividend. This translates to a yield of 1.95% at the current price, better than the 4-year average dividend yield of 1.49%.
ABT’s dividend payouts have grown at a CAGR of 12.1% over the past five years. The company has raised its dividend over the past nine years.
On September 7, ABT announced the European launch of its Amplatzer™ Talisman™ PFO Occlusion System to treat people with a hole in the heart that doesn't close following birth and who have experienced a stroke and are at risk of having another. These come pre-attached to the delivery cable, designed to reduce doctors' preparation time and make the system easier to use.
For nine months of the fiscal year that ended September 30, 2022, ABT’s net sales increased 6.2% year-over-year to $33.56 billion. During the same period, the company’s operating earnings grew 16.7% year-over-year to $7.06 billion, while its net earnings increased 16.1% year-over-year to $5.9 billion, up 17.3% year-over-year.
Analysts expect ABT to report revenue and EPS of $43.21 billion and $5.22 for the current fiscal year, indicating a marginal year-over-year increase. The company has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past month, the stock has dipped 1.9% to close the last trading session at $96.45.
ABT’s POWR Ratings reflect its fundamental strength. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ABT also has a grade B for Value, Stability, Sentiment, and Quality.
It is ranked #5 of 140 stocks in the Medical – Devices & Equipment industry.
Click here to see ABT’s ratings for Growth and Momentum.
Stellantis N.V.(STLA)
Headquartered in the Netherlands, STLA is engaged in designing, engineering, manufacturing, distributing, and selling vehicles, components and production systems. The company’s portfolio of brands includes Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Fiat Professional, Jeep, Lancia, Ram, Peugeot, Citroen, DS Automobiles, Opel and Vauxhall, and Maserati.
On November 3, STLA announced that for the third quarter of the fiscal year 2022 ended September 30, its net revenue increased 29.1% year-over-year to €42.1 billion ($41.16 billion), driven by higher volumes, net solid pricing, and favorable foreign exchange effects.
Due to improvements in semiconductor order fulfillment, its consolidated shipments and global BEV sales were up 13% and 41% year-over-year, respectively, during the same period.
On October 27, STLA announced that its Hordain facility would be the first to mass produce Peugeot, Citroën, and Opel light commercial vehicles in a hydrogen-powered version equipped with a fuel cell. This demonstrates the company’s commitment to supporting low-carbon mobility by investing in the latest technologies to attract a new generation of automobile owners.
On October 13, STLA announced the signing of the Framework Agreement between the Fiat Brand and the Algerian Authorities aimed at the local production of vehicles and the development of the automotive sector in Algeria.
On October 12, STLA inaugurated a new software center in Bengaluru, India. The new center will focus on developing software and technological innovations crucial to the advancement of automobiles and mobility, in line with the long-term Dare Forward 2030 strategic plan. The new site is the Company’s second global innovation center in the country.
STLA’s net revenues rose 21.2% year-over-year to €88 billion ($86.03 billion) for the first half-year ended June 30, 2022. The company’s adjusted operating income increased 46.6% year-over-year to €12.37 billion ($12.09 billion), while its net profit increased 37.2% year-over-year to €7.96 billion ($7.78 billion).
STLA’s revenue is expected to come in at $178.42 billion for the fiscal year ending December 2023, indicating a 4.6% year-over-year increase. The stock has gained 7.2% over the past month to close the last trading session at $12.91.
STLA's positive outlook and stellar prospects have earned it an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It also has an A grade for Value and a B in Stability, Sentiment, and Quality.
STLA is ranked #2 of 64 stocks in the Auto & Vehicle Manufacturers industry.
In addition to the POWR Ratings stated above, we have also given STLA grades for Growth and Momentum. Get all STLA ratings here.
ABT shares were trading at $97.42 per share on Friday afternoon, up $0.97 (+1.01%). Year-to-date, ABT has declined -29.62%, versus a -20.29% rise in the benchmark S&P 500 index during the same period.
About the Author: Santanu Roy
Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.
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