Multi-decade high inflation, the war in Ukraine, China’s strict COVID-19 policy, and rapid interest rate hikes have raised global recessionary fears and led to a massive sell-off in the equity market.
However, thwarting downturn fears, the U.S. economy grew substantially in the third quarter. Real gross domestic product (GDP) increased at an annual rate of 2.9% in the third quarter of 2022 versus a decrease of 0.6% in the second quarter, based on the increases in exports and consumer spending.
Moreover, Sam Stovall, chief investment strategist for CFRA Research, said, “At this point, the stock market is assuming that we won’t go into a recession or, if we do, that it will be mild and that the Fed will likely cut interest rates in the second half of 2023.”
As the so-called “Santa Rally” might create a bull market shortly, investors could consider adding fundamentally strong stocks Amgen Inc. (AMGN), Cognizant Technology Solutions Corporation (CTSH), and Dole plc (DOLE) to their portfolio to garner good returns in the near term.
Amgen Inc. (AMGN)
AMGN discovers, develops, manufactures, and delivers human therapeutics globally. The company primarily focuses on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology, and neuroscience.
On October 28, AMGN declared a $1.94 per share dividend for the fourth quarter of 2022, payable to shareholders on December 8, 2022. This reflects the shareholder return ability of the company.
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 should enhance AMGN’s inflammation and nephrology portfolio.
For the third quarter of 2022, AMGN’s non-GAAP operating income rose 7.4% year-over-year to $3.28 billion. 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 3.7% year-over-year to $6.47 billion in the fiscal first quarter ending March 2023. Its EPS is expected to increase 7% year-over-year to $4.55 in the same quarter. Additionally, it surpassed EPS estimates in all four trailing quarters, which is impressive.
The stock has gained 27.1% year-to-date to close the last trading session at $285.94. Over the past month, the stock has gained 5.1%.
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 and a B for Stability. Within the Biotech industry, it is ranked #11 out of 379 stocks.
Beyond what is stated above, one can see the additional AMGN grades for Momentum, Growth, Value, and Sentiment here.
Cognizant Technology Solutions Corporation (CTSH)
CTSH is a professional services company providing consulting, technology, and outsourcing services globally. The company has four operating segments: Financial Services; Healthcare; Products and Resources; and Communications, Media, and Technology.
On November 29, CTSH announced it had entered into an agreement to acquire AustinCSI, a digital transformation consultancy specializing in enterprise cloud and data analytics advisory services. This acquisition is expected to bolster the company’s advisory capabilities.
On November 1, CTSH announced that it had agreed to acquire the professional services and application management practices of OneSource Virtual. The acquisition is expected to complement its existing finance and HR advisory implementation services.
During the fiscal third quarter that ended September 30, CTSH’s revenue increased 2.4% year-over-year to $4.86 billion. Its adjusted income from operations grew 6.5% from its year-ago value to $798 million, while the net income increased 15.6% from its prior period to $629 million. The company’s adjusted earnings per share increased 10.4% year-over-year to $1.17.
Analysts expect CTSH’s revenue to increase 1.3% year-over-year to $4.89 billion for the fiscal first quarter ending March 2023. The company’s EPS is expected to grow 2% year-over-year to $1.10 in the same quarter. Also, it has an impressive earnings surprise history as it surpassed the consensus EPS estimates in each of the trailing four quarters.
The company’s shares have increased 2.5% over the past five days and marginally intraday to close its last trading session at $62.62.
The company’s promising prospect is reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system. CTSH also has an A grade for Quality and a B for Value. Within the A-rated Outsourcing – Tech Services industry, it is ranked #2 of 10 stocks.
To see additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for CTSH, click here.
Dole plc (DOLE)
DOLE, headquartered in Dublin, Ireland, engages in sourcing, processing, marketing, and distributing fresh fruit and vegetables. The company operates through four segments: Fresh Fruit; Diversified Fresh Produce - EMEA; Diversified Fresh Produce - Americas and ROW; and Fresh Vegetables.
On November 15, Dole Fresh Vegetables, a division of DOLE, announced the implementation and activation of two General Electric 2.8-Megawatt wind turbines at its salad processing plant in Soledad, CA.
Timothy Escamilla, President of Dole Fresh Vegetables, said, "The turbines are projected to produce over 19 million kilowatt hours of clean electricity per year, which will result in a 70% offset to our overall energy consumption at this site."
For the third quarter that ended September 30, DOLE’s revenue rose 16.8% year-over-year to $2.27 billion. Its adjusted EBITDA rose 32.8% year-over-year to $72.98 million. Its adjusted net income increased 127% year-over-year to $13.53 million, while its adjusted EPS grew 100% year-over-year to $0.14.
DOLE’s revenue is expected to increase 2.6% year-over-year to $9.30 billion in the fiscal year ending December 2023. Its EPS is expected to increase 21% year-over-year to $1.19 in the same year. Additionally, it surpassed EPS estimates in all four trailing quarters, which is impressive.
The stock has gained 14.8% over the past three months to close the last trading session at $10.46. Over the past month, the stock has gained 21.9%.
DOLE has an overall rating of B, which translates to Buy in our proprietary rating system. It also has a B grade for Growth and Value. Within the Agriculture industry, it is ranked #12 out of 28 stocks.
Beyond what is stated above, we’ve also rated DOLE for Momentum, Stability, Sentiment, and Quality. Get all DOLE ratings here.
AMGN shares were trading at $284.81 per share on Friday morning, down $1.13 (-0.40%). Year-to-date, AMGN has gained 30.60%, versus a -13.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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