The stock market has been turbulent lately due to growing concerns about surging inflation, the possibility of aggressive interest rate increases by the Federal Reserve, increasing economic and trade sanctions on Russia, and rising COVID-19 cases. Although impressive corporate earnings could provide some relief, the negatives are not expected to ease anytime soon.
Given this backdrop, it could be wise to bet on value stocks in prominent industries to generate solid returns over the long run. Investors’ interest in value stocks is evident in the Vanguard Value ETF’s (VTV) 4% returns over the past three months versus the SPDR S&P 500 Trust ETF’s (SPY) marginal returns.
We think the shares of fundamentally sound companies Gilead Sciences, Inc. (GILD), Arrow Electronics, Inc. (ARW), Pfizer Inc. (PFE), Eastman Chemical Company (EMN), and Jabil Inc. (JBL) look undervalued at their current price levels. These stocks are well-positioned to rebound significantly in the long run. So, it could be wise to add these stocks to one’s portfolio now.
Gilead Sciences, Inc. (GILD)
GILD is a research-based biopharmaceutical company that discovers, develops, and commercializes medicines in areas of unmet medical need. The company’s primary focus areas include treatments for HIV/AIDS, liver diseases, cancer, inflammatory and respiratory diseases, and cardiovascular conditions.
On April 19, 2022, the U.S. Food and Drug Administration (FDA) approved commercial production at GILD’s Kite Pharma company’s new CAR T-cell therapy facility in Frederick, Maryland. The site will produce Kite’s FDA-approved CAR T-cell therapy used to treat blood cancer and estimate network capacity to increase 50%. CAR T-cell therapies are individually manufactured for each patient using their own T-cells extracted from their white blood cells and are modified with a Chimeric Antigen Receptor (CAR) and are later infused back into the patient to recognize, attack, and destroy their cancer cells. This should allow Kite to witness high demand in the coming months.
GILD had cash and cash equivalents of $5.34 billion as of December 31, 2021. The stock’s 9.81x non-GAAP forward P/E is 53.3% lower than the 20.98x industry average. In terms of forward Price/Sales, GILD is currently trading at 3.27x, which is 34.5% lower than the 4.99x industry average. It has gained 3.1% over the past week and closed yesterday’s trading session at $63.75.
GILD’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Value and a B grade for Quality. Click here to see the additional ratings for GILD’s Sentiment, Stability, Growth, Value, and Momentum.
GILD is ranked #20 of 403 stocks in the Biotech industry.
Click here to checkout our Healthcare Sector Report for 2022
Arrow Electronics, Inc. (ARW)
ARW provides products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions worldwide. The company serves OEMs and value-added resellers, managed service providers, contract manufacturers, and other commercial customers.
On March 16, 2022, ARW announced an EMEA distribution agreement with Australia-based Network as a Service (NaaS) provider Megaport, enabling Megaport’s private Software Defined Network platform to companies in EMEA. Megaport offers agile networking capabilities that help improve network performance by offering reduced jitter and latency, reducing operating costs, and increasing market speed compared to traditional networking solutions. This should help both companies provide enhanced network experience to their international customer base.
For its fiscal year 2021 fourth quarter ended December 25, 2021, ARW’s sales increased 6.7% year-over-year to $9.02 billion. The company’s non-GAAP gross profit came in at $1.20 billion, up 29.5% from the prior-year period. Its non-GAAP operating income came in at $524.77 million for the quarter, up 56.2% from the prior-year period. ARW’s non-GAAP net income came in at $379.16 million, indicating a 56.3% year-over-year improvement. Its non-GAAP EPS increased 69.4% year-over-year to $5.37. The company had $222.19 million in cash and cash equivalents as of December 31, 2021.
Analysts expect ARW’s EPS to grow 23.2% year-over-year to $19.09 for its fiscal 2022, ending December 31, 2022. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. The consensus revenue estimate of $36.17 billion for the same fiscal year represents a 4.9% rise from the prior-year period.
The stock’s 6.06x non-GAAP forward P/E is 68.3% lower than the 19.09x industry average. In terms of forward Price/Sales, ARW is currently trading at 0.21x, 93.2% lower than the 3.17x industry average. Over the past week, the stock has gained 6.2% and ended yesterday’s trading session at $115.79.
ARW’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has an A grade for Value and a B grade for Growth. Click here to see the additional ratings for ARW (Stability, Quality, Sentiment, and Momentum).
ARW is ranked #2 of 48 stocks in the Technology - Electronics industry.
Pfizer Inc. (PFE)
PFE is a pharmaceutical company that offers medicines, vaccines, medical devices, and consumer healthcare products worldwide for oncology, inflammation, cardiovascular, and other therapeutic areas. It serves wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, individual provider offices, and disease control and prevention centers.
On April 14, 2022, PFE and BioNTech SE (BNTX), a Germany-based clinical-stage biotechnology company, announced positive results from a Phase 2/3 clinical trial evaluating the safety, tolerability, and immunogenicity of a 10-µg booster (third) dose of the Pfizer-BioNTech COVID-19 vaccine in healthy children 5 through 11 years of age. These data reinforce the potential function of a third dose of the vaccine in maintaining high levels of protection against the virus in this age group. PFE and BNTX plan to submit a request for Emergency Use Authorization (EUA) for a booster dose for the same age group in the U.S. in the coming days. If received, this vaccine will gain widespread recognition across various countries.
For its fiscal 2021 fourth quarter ended December 31, 2021, PFE’s revenues increased 1049% year-over-year to $23.84 billion. The company’s income from continuing operations came in at $3.58 billion for the quarter, indicating a 464.4% year-over-year improvement. PFE’s non-GAAP net income was $6.24 billion, representing a 156.3% rise from the prior-year period. Its non-GAAP EPS increased 151.2% year-over-year to $1.08. As of December 31, 2021, the company had $1.94 billion in cash and cash equivalents.
Analysts expect the stock’s EPS to hit $7.21 for fiscal 2022 ending December 31, 2022, representing a 63.1% rise from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $108.67 billion indicates a 33.7% year-over-year improvement.
The stock’s 6.88x non-GAAP forward P/E is 67.2% lower than the 20.98x industry average. In terms of forward Price/Sales, PFE is currently trading at 2.61x, 47.8% lower than the 4.99x industry average. It has lost 7.6% over the past week and closed yesterday’s trading session at $44.79.
PFE’s POWR Ratings reflect its solid prospects. It has an overall rating of A, which equates to Strong Buy in our proprietary rating system.
The stock has a B grade for Growth, Value, and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for PFE’s Sentiment, Stability, and Momentum here.
PFE is ranked #10 of 172 stocks in the Medical - Pharmaceuticals industry.
Click here to checkout our Healthcare Sector Report for 2022
Eastman Chemical Company (EMN)
EMN operations include coatings, adhesives, specialty polymers, inks, fibers, performance chemicals and intermediates, and polymers. The company operates through four segments ─ Additives & Functional Products; Advanced Materials; Chemical Intermediates; and Fibers.
On March 30, 2022, MYKITA GmbH, a Germany-based high-end eyewear design manufacturer, announced to exclusively source the sustainable Acetate Renew, produced by EMN’s innovative molecular recycling technology, and together accelerate the transition to sustainable materials in the eyewear industry. Acetate Renew reduces harmful greenhouse gases by up to 50% compared to traditional manufacturing. The decision marks an important milestone for both partners in their ongoing strategies to lessen their environmental impact continually.
EMN’s sales for its fiscal 2021 fourth quarter ended December 31, 2021, increased 23.2% year-over-year to $2.69 billion. The company’s gross profit came in at $559 million, indicating a 6.3% rise from the year-ago period. Its adjusted EBIT came in at $336 million, representing a 2.1% year-over-year improvement. EMN’s non-GAAP net earnings came in at $243 million for the quarter, up 4.7% from the prior-year period. Its non-GAAP EPS increased 7.1% year-over-year to $1.81. As of December 31, 2021, the company had $459 million in cash and cash equivalents.
Analysts expect the company’s EPS to reach $307.68 billion for fiscal 2022 ending December 31, 2022, representing an 8.9% rise from the prior-year period. EMN surpassed the consensus EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $10.47 billion for the same fiscal year indicates no change from the prior-year period.
EMN’s 11.44x non-GAAP forward P/E is 11% lower than the 12.85x industry average. In terms of forward Price/Sales, EMN is currently trading at 1.36x, which is 3.4% lower than the 1.41x industry average. Over the past week, the stock has gained 2.4% and ended yesterday’s trading session at $110.46.
EMN’s strong fundamentals are reflected in its POWR Ratings. The stock has a B grade for Value and Quality. Click here to see the additional ratings for EMN (Growth, Stability, Sentiment, and Momentum).
EMN is ranked #39 of 91 stocks in the A-rated Chemicals industry.
Jabil Inc. (JBL)
JBL provides electronic design and manufacturing services and solutions worldwide. The company provides systems assembly, regulatory compliance, reliability tests, direct-order fulfillment, and configure-to-order services. It serves 5G, wireless and cloud, digital print and retail, industrial and semi-cap, networking and storage, automotive and transportation, connected devices, healthcare and packaging, and mobility industries.
On April 12, 2022, JBL announced the formation of the Jabil Payment Solutions business unit to speed the development and delivery of leading-edge payment and point-of-sale (POS) platforms. Accelerated by the recent acquisition of YouTransactor SAS, a leading technology provider for mobile payment terminals, Jabil Payment Solutions will be able to meet the unprecedented demand for cashless, contactless transactions and in-store, custom solutions for small and midsize businesses.
For its fiscal 2022 second quarter ended February 28, 2022, JBL’s net revenue increased 10.6% year-over-year to $7.55 billion. The company’s gross profit came in at $609 million, up 7% from its year-ago period. Its non-GAAP operating income came in at $344 million for the quarter, indicating a 20.7% year-over-year improvement. JBL’s non-GAAP net income came in at $246 million, representing a 26.8% rise from the prior-year period. Its non-GAAP EPS increased 32.3% year-over-year to $1.68. The company had $1.09 billion in cash and equivalents as of February 28, 2022.
Analysts expect the company’s EPS to improve 11.7% year-over-year to $7.26 in fiscal 2022, ending August 31, 2022. It surpassed Street EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $32.70 billion for the same fiscal year represents an 11.7% rise from the prior-year period. Over the past week, the stock has gained 3.9% to end yesterday’s trading session at $59.16.
The stock’s 8.17x non-GAAP forward P/E is 57.2% lower than the 19.09x industry average. In terms of forward Price/Sales, JBL is currently trading at 0.26x, which is 92% lower than the 3.17x industry average. It has gained 3.9% over the past week and closed yesterday’s trading session at $59.20.
JBL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has an A grade for Sentiment, and a B grade for Growth, Value, and Quality. Click here to see the additional ratings for JBL (Stability and Momentum).
The stock is ranked #4 of 81 stocks in the Technology - Services industry.
What To Do Next?
If you would like to see more top value stocks, then you should check out our free special report:
What makes these stocks great additions to any portfolio?
First, because they are all undervalued companies with exciting upside potential.
But even more important, is that they are all top Buy rated stocks according to our coveted POWR Ratings system. Yes, that same system where top-rated stocks have averaged a +37.99% annual return.
Click below now to see these 7 stellar value stocks with the right stuff to outperform in the coming months.
GILD shares were trading at $62.39 per share on Friday afternoon, down $1.36 (-2.13%). Year-to-date, GILD has declined -12.98%, versus a -9.77% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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