The U.S. labor market is showing signs of cooling following the Federal Reserve’s aggressive interest-rate increases to combat high inflation. October’s job report was strong by historical standards, as the unemployment rate rose marginally to 3.7% last month from 3.5% in September.
On top of it, Regional Fed presidents Thomas Barkin and Susan Collins recently indicated that they see the possibility for slower rate hikes. “I think the implication for that is probably a slower pace of increases, a longer pace of increases and a potentially higher point,” Barkin told CNBC.
Furthermore, investors are focused on Tuesday’s midterm elections, which will determine control of Congress and could spur moves in the stock market. Historically, midterm elections have ushered in positive market sentiment.
Given this backdrop, fundamentally strong stocks Amgen Inc. (AMGN), Fortinet Inc. (FTNT), and BJ’s Wholesale Club Holdings, Inc. (BJ) might be solid additions to your watchlist right now.
Amgen Inc. (AMGN)
AMGN discovers, develops, manufactures, and delivers human therapeutics worldwide. It focuses on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology, and neuroscience. It distributes its products through pharmaceutical wholesale distributors and direct-to-consumer channels.
On October 20, AMGN announced that it had completed its acquisition of ChemoCentryx, Inc. (CCXI), a biopharmaceutical company, for $52 per share in cash, representing aggregate merger consideration of approximately $3.7 billion. The acquisition enhances AMGN’s inflammation and nephrology portfolio.
Moreover, on October 6, AMGN announced the opening of a new research and development site in San Francisco's Oyster Point. The new site is expected to constitute the company's second-largest research and development facility.
On October 28, AMGN declared a $1.94 per share dividend for the fourth quarter of 2022, payable on December 8, 2022. This reflects the shareholder return ability of the company.
AMGN’s non-GAAP operating income rose 7.4% year-over-year and came in at $3.28 billion for the third quarter that ended September 30, 2022. Its non-GAAP net income increased 8.9% year-over-year to $2.53 billion, while its non-GAAP EPS grew 15.2% year-over-year to $4.70.
AMGN’s revenue is expected to increase 4% year-over-year to $6.49 billion in the fiscal first quarter ending March 2023. Its EPS is expected to increase 5.5% year-over-year to $4.49 in the same quarter. Additionally, it surpassed EPS estimates in all four trailing quarters, which is impressive.
Over the past year, the stock has gained 25.9% to close the last trading session at $269.04. It has gained 19.6% year-to-date.
AMGN’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. AMGN has an A grade for Quality. Within the Biotech industry, it is ranked #10 out of 386 stocks.
Beyond what is stated above, we’ve also rated AMGN for Sentiment, Growth, Momentum, Value, and Stability. Get all AMGN ratings here.
Fortinet Inc. (FTNT)
FTNT offers comprehensive, integrated, and automated cybersecurity solutions worldwide. It provides FortiGate hardware and software licenses for various security and networking services.
On November 2, FTNT announced its Latest Next-Gen Firewall, the FortiGate 1000F series, to deliver higher performance. The latest version continues FTNT’s legacy of delivering NGFWs that provide the scale, performance, and power savings to meet the security requirements of today's enterprise data centers.
On September 27, FTNT announced enhanced AIOps capabilities across its entire networking portfolio. Combined with the latest AIOps enhancements to Fortinet’s Secure SD-WAN and Wired/Wireless LAN portfolio, network operations teams have access to even more dynamic insights and event correlation across their entire network.
During the third quarter ended September 30, 2022, FTNT’s total revenue increased 32.6% year-over-year to $1.15 billion. Its gross profit grew 32.1% year-over-year to $866.50 million, while its operating income improved 59.6% from the year-ago value to $265.50 million. The company’s non-GAAP EPS grew 65% from the prior-year quarter to $0.33.
The consensus EPS estimate of $0.39 for the fourth quarter ending December 2022 represents a 59.8% improvement year-over-year. The consensus revenue estimate of $1.30 billion for the same quarter represents a 34.5% increase from its prior-year quarter. The company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in each of the trailing four quarters.
The company has an overall rating of B, which translates to a Buy in our proprietary rating system. FTNT has an A grade for Sentiment and Quality and a B for Growth. Within the Software – Security industry, it is ranked #1 of 24 stocks.
To see additional POWR Ratings for Momentum, Value, and Stability for FTNT, click here.
BJ’s Wholesale Club Holdings, Inc. (BJ)
BJ operates warehouse clubs on the east coast of the United States. It provides perishable, general merchandise, gasoline, and other ancillary services. The company sells its products through websites as well as through mobile apps.
In late October, BJ announced that its newest clubs in Greenburgh, New York, and New Albany, Ohio, were expected to open on Friday, October 28, and Friday, November 4, 2022, respectively. These new stores might add to the company’s revenue stream and expand its customer base.
On October 12, BJ and Capital One Financial (COF), a leading bank and credit card company, announced that they had entered into a strategic program agreement for COF to become the exclusive issuing partner for BJ's co-brand Mastercard program. Expected to launch in early 2023, this should help BJ deliver customer rewards and benefits.
BJ’s total revenues increased 22.2% year-over-year to $5.10 billion in the second quarter that ended July 30, 2022. Its operating income rose 23.9% from the prior-year quarter to $202.91 million. The company’s adjusted net income and adjusted EPS increased 27.3% and 29.3% from their year-ago values to $144.29 million and $1.06, respectively.
Street expects BJ’s EPS for the current fiscal year (ending January 2023) to increase 10.6% year-over-year to $3.59. Its revenue is expected to increase 14.6% year-over-year to $19.09 billion. The company has surpassed the EPS estimates in each of the trailing four quarters.
The stock has gained 24.3% over the past six months to close the last trading session at $76.69.
BJ’s POWR Ratings reflect its solid prospects. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.
It has a B grade for Growth and Sentiment. It is ranked #25 out of 38 stocks in the A-rated Grocery/Big Box Retailers industry.
Click here to see the other ratings of BJ for Value, Momentum, Stability, and Quality.
AMGN shares rose $0.93 (+0.35%) in premarket trading Monday. Year-to-date, AMGN has gained 22.96%, versus a -19.60% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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