Wild swings in the stock markets are expected to continue, with the Fed staying focused on bringing inflation under control. Aggressive rate hikes have also led to fears of an economic slowdown, like a sword of Damocles, haunting investors, and consumers alike. Moreover, the GDP has unexpectedly contracted for two consecutive quarters, indicating that the economy is on the cusp of a recession.
Despite the payroll gains in August, analysts expect the Fed to put more weight on the upcoming CPI data. Amid a volatile market backdrop and an uncertain outlook, investing in high-quality stocks can help your portfolio stay resilient.
With higher-than-industry profitability, AbbVie Inc. (ABBV), Crane Holdings, Co. (CR), and Mannatech, Incorporated (MTEX) could be wise investments now.
AbbVie Inc. (ABBV)
ABBV is a biopharmaceutical company engaged in the research, development, manufacturing, commercialization, and sale of medicines and therapies worldwide. The company’s products are segmented into seven categories: Immunology; Oncology; Anaesthetics; Neuroscience; Eyecare; Women’s Health; and Others.
On August 25, 2022, AABV and Johnson & Johnson (JNJ) announced that Imbruvica, their blockbuster BTK inhibitor (BTKi) drug, had received label expansion approval from the FDA to treat chronic graft versus host disease (cGVHD) in pediatric patients. With this approval, Imbruvica has become the first and currently the only approved treatment for children under 12 years of age suffering from cGVHD.
On July 26, the European Commission approved the company’s RINVOQ for treating adults with moderate to severe ulcerative colitis who have had an inadequate response and lost response or were intolerant to either conventional therapy or a biologic agent. This approval should strengthen ABBV’s ability to treat patients with ulcerative colitis.
ABBV’s net revenues increased 4.5% year-over-year to $14.58 billion in the second quarter that ended June 30, 2022. The company’s adjusted net earnings increased 10.7% from the year-ago value to $6.01 billion, while its adjusted EPS rose 11.2% from the prior-year quarter to $3.37.
ABBV's trailing-12-month EBITDA margin of 47.38% is significantly higher than the industry average of 3.74%. Its trailing-12-month net income margin is 22.04%, compared to the industry average of negative 2.62%. Furthermore, its trailing-12-month ROTC of 12.98% compares to the industry average of negative 21.27%.
Analysts expect ABBV’s revenue and EPS to increase 5.3% and 9.2% year-over-year to $59.08 billion and $13.86, respectively, in the current fiscal. Moreover, the company’s impressive earnings surprise history has seen it beat Street EPS estimates in each of the trailing four quarters.
ABBV has gained 23.3% over the past year to close the last trading session at $138.45.
ABBV’s strong fundamentals are reflected in its POWR Ratings. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It also has an A grade for Quality and a B for Growth, Value, and Sentiment. Also, it is ranked #4 of 167 stocks in the Medical – Pharmaceuticals industry.
Click here to see the additional POWR Ratings of ABBV for Momentum and Stability.
Crane Holdings, Co. (CR)
CR is a diversified manufacturer of engineered industrial products. The company operates through three segments: Aerospace & Electronics; Process Flow Technologies; and Payment & Merchandising Technologies.
On August 15, CR announced the sale of a subsidiary holding all asbestos liabilities and related insurance assets. This divestiture is expected to increase the strength of the balance sheet and free cash flows due to the removal of asbestos-related liabilities and the elimination of related payment obligations.
On June 1, CR announced the completion of the previously announced divestiture of Crane Supply. This is expected to free up capital to be deployed for greater focus on and value creation through core businesses.
For the fiscal 2022 second quarter ended June 30, 2022, CR’s net sales increased 1% year-over-year to $864.30 million. The company’s net income attributable to common shareholders grew 102.8% from the year-ago value to $280.50 million, while its earnings per share came in at $4.93, up 111.6% year-over-year.
CR's trailing-12-month EBITDA margin of 17.85% is 37.9% higher than the industry average of 12.94%. Its trailing-12-month net income margin of 17.10% is 154.1% higher than the industry average of 6.73 %. Furthermore, its trailing-12-month ROTC of 10.49% compares with the industry average of 6.72%.
CR’s revenues for fiscal 2022 and 2023 are expected to increase 6.8% and 3.1% year-over-year to $3.4 billion and $3.5 billion, respectively. The company’s EPS for fiscal 2022 and 2023 is expected to increase 17.5% and 7% year-over-year to $7.70 and $8.24, respectively. It has surpassed Street EPS estimates in each of the trailing four quarters.
CR’s stock has declined 4% over the past six months to close the last trading session at $93.33.
CR strength and promising outlook are reflected in an overall rating of A, equating to a Strong Buy in our POWR Ratings system. It also has an A grade for Quality and a B for Value, Stability, and Sentiment.
CR tops the list of 80 stocks in the B-rated Industrial – Machinery industry. Click here to access CR’s ratings for Growth and Momentum.
Mannatech, Incorporated (MTEX)
MTEX operates globally as a health and wellness solutions provider. The company's product categories include integrative health, targeted health, height and fitness, skincare, essentials, and home living. The company sells its products directly and through e-commerce and network marketing channels.
As of June 30, 2022, MTEX’s cash and cash equivalents stood at $20.57. Also, the company’s total current assets and total assets came in at $41.96 million and $58.68 million, respectively.
MTEX's trailing-12-month gross profit margin of 28.20% is 140.8% higher than the industry average of 32.5%. Likewise, its trailing-12-month ROCE, ROTC, and ROTA of 28.20%, 10.9%, and 10.82% compare with the industry averages of 12.21%, 6.21%, and 4.67%.
The stock has gained 42.7% over the previous month to close the last trading session at $25.58.
MTEX’s strong fundamentals have earned it an overall rating of A, which equates to a Strong Buy in our POWR Rating system. The stock also has an A grade for Quality, Growth, and Value and a B for Sentiment. It is ranked #1 among 70 stocks within the Consumer Goods industry.
Beyond what we’ve stated above, we have also given MTEX grades for Momentum and Stability. Get all MTEX ratings here.
ABBV shares were unchanged in after-hours trading Friday. Year-to-date, ABBV has gained 3.52%, versus a -16.80% 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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