Multi-decade high inflation and the Fed’s aggressive interest rate hikes have kept the stock market under pressure lately. The Consumer Price Index (CPI) soared 9.1% from a year ago, surpassing the 8.8% Dow Jones estimate. In response to this, Fed officials have indicated that the central bank will likely raise interest rates by 75 basis points in its meeting later this month.
Mike Wilson, the chief U.S. equity strategist at Morgan Stanley, said, "Counter-trend rally may continue, but make no mistake, we don't believe this bear market is over, even if we avoid a recession, the odds of which are increasing." He also predicted a 36% chance of the U.S. economy tipping into recession in the next 12 months.
Citi’s Scott Chronert said, “We anticipate volatility to remain elevated as the market toggles between pricing recession risk and soft landing probabilities with each piece of data.” Also, Bank of America analysts expect GDP to decline by 1.4% year-over-year in the fourth quarter of 2022, followed by a 1.0% increase in 2023.
Amid the current market volatility, if you want to retire early by investing in equities, relatively stable stocks Philip Morris International Inc. (PM), Flowers Foods, Inc. (FLO), and AbbVie Inc. (ABBV) could be solid additions to your portfolio, given their robust financials and consistent dividend payout history.
Philip Morris International Inc. (PM)
PM, through its subsidiaries, manufactures and sells cigarettes, other nicotine-based products, smoke-free products, and related electronic devices and accessories. It also offers IQOS smoke-free products, including heated tobacco and nicotine-containing vapor products under brands like HEETS, HEETS Creations, HEETS Dimensions, and other licensed brands.
PM paid a quarterly dividend of $1.25 on July 15, 2022. PM’s $5.00 annual dividend yields 5.59% at the current share price. Also, it has a four-year average dividend yield of 5.5%. Its dividend payouts have increased at a 3.8% CAGR over the past five years.
In the first quarter ended March 31, 2022, PM’s net revenue increased 2.1% year-over-year to $7.75 billion. Its operating income amounted to $3.30 billion, while its net earnings came in at $2.33 billion over the period. The company’s EPS stood at $1.50 over the period.
The consensus EPS estimate of $5.97 for fiscal 2023 represents a 9.9% improvement year-over-year. Analysts expect revenue to increase 5.1% year-over-year to $30.56 billion for fiscal 2023. Moreover, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters.
PM’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.
The stock also has an A grade for Quality and a B for Stability. Within the B-rated Tobacco industry, it is ranked #4 of 10 stocks.
Click here to see additional POWR Ratings for Growth, Value, Sentiment, and Momentum for PM.
Flowers Foods, Inc. (FLO)
Headquartered in Thomasville, Georgia, FLO produces and markets packaged bakery products in the United States. It offers fresh breads, buns, rolls, snack cakes, tortillas, frozen breads, and rolls under the Nature's Own, Dave's Killer Bread, Wonder, Canyon Bakehouse, Mrs. Freshley's, and Tastykake brand names.
FLO paid a quarterly dividend of $0.22 on June 23, 2022. FLO’s $0.88 annual dividend yields 3.31% at the current share price. Also, it has a four-year average dividend yield of 3.36%. Its dividend payouts have increased at a 5.5% CAGR over the past five years.
FLO's sales increased 10.3% year-over-year to $1.44 billion for the first quarter ending April 23, 2022. The income from operations came in at $111.98 million, while its adjusted net income improved 6.3% from its prior-year quarter to $93.13 million. The company's adjusted EPS rose 7.3% year-over-year to $0.44.
Analysts expect FLO's revenue to increase 10.4% year-over-year to $1.12 billion for the second quarter ending June 2022. The consensus EPS estimate of $0.24 for the second quarter ending June 2022 represents a 21.5% improvement year-over-year.
Moreover, FLO has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters.
It is no surprise that FLO has an overall B rating, which equates to Buy in our POWR Ratings system. FLO also has a B grade for Quality and Growth. Within the B-rated Food Makers industry, it is ranked #15 of 186 stocks.
Click here to see the additional POWR Ratings for FLO (Momentum, Stability, Value, and Sentiment).
AbbVie Inc. (ABBV)
Headquartered in North Chicago, Illinois, ABBV discovers, develops, manufactures, and sells pharmaceuticals internationally. The company renders HUMIRA, a therapy used as an injection for autoimmune and intestinal Behçet's diseases; SKYRIZI to cure moderate to severe plaque psoriasis in adults; RINVOQ, a JAK inhibitor for the treatment of moderate to severely active rheumatoid arthritis in adult patients.
ABBV declared a quarterly dividend of $1.41 on June 23, 2022, payable on August 15, 2022. ABBV’s $5.64 annual dividend yields 3.77% at the current share price. Also, it has a four-year average dividend yield of 4.63%. Its dividend payouts have increased at a 17.5% CAGR over the past five years.
Recently, ABBV announced that it had submitted a marketing authorization application (MAA) to the European Medicines Agency (EMA) for atogepant for the prophylaxis of migraine in adult patients who have at least four migraine days per month.
The application is supported by the pivotal Phase 3 ADVANCE and PROGRESS studies examining the safety, efficiency, and tolerability of atogepant in adult patients with episodic migraine and chronic migraine, respectively.
Last month, ABBV announced that the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) recommended the authorization of upadacitinib to cure active non-radiographic axial spondyloarthritis in adult patients with objective signs of inflammation as indicated by elevated C-reactive protein (CRP) and/or magnetic resonance imaging (MRI).
Also, last month, ABBV announced that Health Canada approved a change in the marketing authorization for MAVIRET(glecaprevir/pibrentasvir) to include its use for the treatment in pediatric patients 3 to 12 years old, weighing at least 12kg to less than 45kg.
For the first quarter ending March 31, 2022, ABBV's net revenues increased 4.06% year-over-year to $13.54 billion. Its operating earnings improved 15% from its year-ago value to $4.72 billion, while its non-GAAP net income grew 9.3% from its prior-year quarter to $5.64 billion. The company's non-GAAP EPS increased 9.3% year-over-year to $3.16.
The consensus EPS estimate of $3.31 for the second quarter ending June 2022 represents a 6.5% year-over-year growth. Analysts expect revenue to increase 4.9% year-over-year to $14.65 billion for the same period.
In addition, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters. The stock has gained 27.3% over the past year and 39.2% over the past nine months.
ABBV's strong fundamentals are reflected in its POWR Ratings. The stock 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 Growth. Within the F-rated Medical - Pharmaceuticals industry, it is ranked #8 of 168 stocks.
In total, we rate ABBV on eight different levels. Beyond what we've stated above, we have also given ABBV grades for Stability, Sentiment, and Momentum. Get all the ABBV ratings here.
PM shares were unchanged in after-hours trading Wednesday. Year-to-date, PM has declined -2.96%, versus a -16.27% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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