The Fed chairman recently indicated a slower pace of rate hikes. However, many analysts still believe the economy will face a mild recession next year. Therefore, it may be wise to invest in quality stocks with solid growth prospects, such as AbbVie (ABBV), Bristol-Myers Squibb (BMY) and Lifeway Foods (LWAY). Read more….
The Federal Reserve’s aggressive interest rate hikes to curb persistently high inflation and geopolitical concerns have led to a decline in the stock market this year. However, the latest CPI data showed signs of slowing inflation. Therefore, Fed Chairman Jerome Powell recently indicated that the central bank would raise interest rates at a slower pace.
Analysts expect a rate hike of 50 basis points at the Fed’s monetary policy meeting in December. Powell said: “It makes sense to moderate the pace of our rate hikes as we approach the level of restraint that will be sufficient to bring down inflation.”
US stocks rose after Powell’s speech, with the S&P 500 index moving above its 200-day moving average for the first time since April 2022. Also, the Dow Jones Industrial Average pulled out of bear market territory.
David Russell, VP of Market Intelligence at TradeStation Group, said: “Powell will have to keep talking tough, but he gave Wall Street reason for hope.” “Everyone knows that interest rate hikes take time to work, and we’re seeing their effects as the labor market cools,” he added.
According to Goldman Sachs Research, The US economy is predicted to narrowly avoid a recession as inflation cools and unemployment rises slightly. The investment bank’s economists believe there is a 35% probability that the US will tip into a recession during the next year. That estimate is below the median of 65% among forecasters in a Wall Street Journal survey.
Amid this backdrop, investors may consider buying fundamentally strong stocks with solid growth prospects, such as AbbVie Inc. (ABBV), Bristol-Myers Squibb Company (BMY), and Lifeway Foods, Inc. (LAY).
AbbVie Inc. (ABBV)
Biopharmaceutical company ABBV is engaged in research, development, production, commercialization and sale of medicines and therapies. The company is present in various therapeutic categories such as immunology, oncology, aesthetics, neuroscience and women’s health products.
On October 22, 2022, ABBV acquired DJS Antibodies Ltd., a privately held UK-based biotechnology company involved in discovering and developing antibody drugs that target difficult-to-drug disease-causing proteins, such as G protein-coupled receptors (GPCRs).
“This acquisition will provide new opportunities to enhance our current antibody research activities, an opportunity to strengthen our immunology portfolio, and provide a strong foothold for expanded research efforts in the dynamic life sciences center in Oxford, UK,” said Jonathan Sedgwick, Ph.D. ., ABBV’s VP and global head of discovery research.
ABBV’s net revenue rose 3.3% year over year to $14.81 billion in the third quarter ended September 30, 2022. The company’s operating income rose 6.9% year over year to $4.60 billion. Its adjusted profit after tax rose 29.1% year-on-year to $6.53 billion. Its adjusted EPS also came in at $3.66, representing a 29.3% year-over-year increase.
Analysts expect ABBV’s EPS and revenue for the quarter ending December 31, 2022 to increase 10.8% and 3.1% year-over-year to $3.67 billion and $15.35 billion, respectively. It has beaten Street EPS estimates in each of the four trailing quarters. Over the past year, the stock has rallied 39.8% to close at a recent trade of $161.18.
ABBV’s POWR Ratings reflects solid outlook. The company has an overall rating of A, which means a strong buy in our proprietary rating system. POWR Ratings evaluates stocks based on 118 different factors, each with its own weighting.
It has an A grade for quality and a B for growth and value. It is ranked number 5 out of 160 shares in Medical – Pharmacy industry. click here to see the additional ratings of ABBV for Momentum, Stability and Stability.
Bristol-Myers Squibb Company (BMY)
BMY develops, licenses, manufactures and markets biopharmaceutical products worldwide. It offers products for hematology, oncology, cardiovascular, immunology, fibrotics, neuroscience and COVID-19.
On August 17, 2022, BMY announced the completion of the acquisition of Turning Point Therapeutics, Inc. BMY’s Executive Director of Strategy and Business Development, Elizabeth Mily, said, “Turning Point has excelled in precision oncology, and this acquisition will further strengthen our leading oncology franchise.”
BMY’s total revenue for in-line products and new product portfolios increased 8% year-over-year to $8.62 billion for the third quarter ended September 30, 2022. The company’s non-GAAP income before income taxes increased 0.9% year over year to $5.13 billion. Its non-GAAP EPS attributable to BMY increased 3.1% year-over-year to $1.99. Total spending also increased 4.8% year over year to $9 billion.
For fiscal 2022, BMY’s EPS is expected to increase 1.4% year-over-year to $7.62. Revenue for the quarter ending June 30, 2023, is expected to increase 1% year-over-year to $12 billion. It beat consensus EPS estimates in each of the last four quarters. Over the past year, the stock has rallied 49.7% to close last trade at $80.28.
BMY’s strong fundamentals are reflected in the POWR ratings. The stock has an overall rating of A, which means a strong buy in our proprietary rating system.
It is ranked number 4 in the same industry. It has an A grade for value and a B for stability, sentiment and quality. To see the other reviews of BMY for Growth and Momentum, click here.
Lifeway Foods, Inc. (LAY)
LWAY produces, markets and sells probiotic-based products internationally. The company’s primary product is drinkable kefir, a cultured dairy product. The company also offers European-style soft cheeses. The company sells its products under the brand names Lifeway and Fresh Made and under private labels.
Julie Smolyansky, LWAY’s President and CEO, stated, “We have recently gained traction in the convenience channel and see this as an opportunity to build brand awareness and introduce new consumers to our single-serve products. We look forward to finishing the year strong. and preparing on a healthy 2023.”
LWAY’s net sales increased 29.1% year-over-year to $38.14 million in the third quarter ended September 30, 2022. The company’s gross profit increased 8.5% year-over-year to $7.58 million. Net income increased 104.8% year over year to $983,000. EPS also came in at $0.06, representing a 100% year-over-year increase.
Analysts expect LWAY’s fiscal 2023 EPS and revenue to grow 375% and 5% year-over-year to $0.38 million and $152 million, respectively. The stock has risen 45.2% year-to-date to end the last trade at $6.68.
It’s no surprise that LWAY has an overall rating of A, which equates to a strong buy in our POWR rating system. It has an A grade for growth and a B for value, stability, sentiment and quality. It is ranked number 4 out of 49 stocks in Food producers industry. click here to see LWAY’s rating for Momentum as well.
ABBV shares traded at $161.01 per share on Thursday morning, down $0.17 (-0.11%). So far this year, ABBV has risen 23.55%, against a -12.85% rise in the benchmark S&P 500 in the same period.
About the Author: Dipanjan Banchur
Since he was in primary school, Dipanjan was interested in the stock market. This led to him taking a master’s degree in finance and accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing new trends in the financial markets.
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