Investors grappled with the Fed’s third consecutive rate hike of 75 basis points as all the major averages suffered deep cuts to register their fifth negative week. “The market has been transitioning clearly and quickly from worries over inflation to concerns over the aggressive Federal Reserve campaign,” said Quincy Krosby of LPL Financial.
Bond yields soared, hitting highs not seen in over a decade as the stock market weighed the threat of a recession. The 2-year Treasury yield was up to 4.3%, while the 10-year Treasury rose 3.8%. Fed officials now predict that the key rate will end this year at a range of 4.25% to 4.5%, up from the previously estimated 3.25% to 3.5%.
This is expected to have a detrimental effect on economic activity, with economic growth weakening substantially. Economists believe the economy will be in a recession by the end of this year. Therefore, the stock market is expected to remain under pressure.
Given the uptick in market uncertainty, it could be wise to invest in shares of fundamentally strong stocks Bristol-Myers Squibb Company (BMY), Centene Corporation (CNC), and Ryerson Holding Corporation (RYI) at their current low-price levels. These stocks have a Strong Buy rating in our proprietary POWR Ratings system.
Bristol-Myers Squibb Company (BMY)
BMY is a biopharmaceutical company offering pharmaceutical products for treating hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and Covid-19 diseases.
On September 16, 2022, the company received European Commission’s (EC) approval for the LAG-3-blocking antibody combination Opdualag (nivolumab and relatlimab) for treating unresectable or metastatic melanoma patients.
With this approval, Opdualag became the first approved treatment for adults and adolescents of 12 years and above with advanced melanoma in the European Union. In addition, nivolumab and relatlimab diversify BMY’s portfolio and reinforce its leadership in delivering innovative melanoma treatments.
For the second quarter that ended June 30, 2022, BMY’s total revenues increased marginally year-over-year to $11.89 billion. Its non-GAAP EBIT grew 12.4% year-over-year to $5 billion, while its non-GAAP net earnings rose 13.2% from the year-ago value to $4.15 billion. The company’s non-GAAP EPS increased 18.4% from its prior-year quarter to $1.93.
Analysts expect BMY’s EPS and revenue for fiscal 2023 to increase 6.7% and 3.4% year-over-year to $8.02 and $47.70 billion in fiscal 2023 (ending December 31, 2023). BMY surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of BMY have gained 16.6% over the past year to close the last trading session at $70.71.
BMY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Value and a B for Growth and Quality. Out of 164 stocks in the Medical – Pharmaceuticals industry, it is ranked #4. To see the additional POWR Ratings of BMY for Momentum, Stability, and Sentiment, click here.
Centene Corporation (CNC)
CNC is a multinational healthcare company that provides government-sponsored and commercial healthcare programs, focusing on underinsured and uninsured individuals. It also provides education and outreach programs to inform and assist members in accessing appropriate healthcare services. It operates through the Managed Care and Specialty Services segments.
On August 10, 2022, the company’s Mississippi subsidiary, Magnolia Health Plan, was granted the Mississippi Division of Medicaid (DOM) contract, allowing its continued service to the state's Coordinated Care Organization Program, including the Mississippi Coordinated Access Network (MSCAN) and the Mississippi Children's Health Insurance Program (CHIP). This will help CNC expand its reach, deliver member-focused care, and improve health outcomes.
For the fiscal third quarter that ended June 30, 2022, CNC’s total revenues increased 15.8% year-over-year to $35.94 billion. The company’s adjusted net earnings increased 41.4% year-over-year to $1.04 billion. Also, its adjusted EPS increased 41.6% year-over-year to $1.77.
For fiscal 2022, CNC’s EPS is expected to increase 11% year-over-year to $5.72. Its revenue estimate of $35.48 billion for the third quarter ending September 30, 2022, indicates an increase of 9.5% year-over-year.
It has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 25.7% to close the last trading session at $78.71.
CNC’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Value, Sentiment, and Quality. Within the A – rated Medical - Health Insurance industry, it is ranked #3 out of 11 stocks. Click here to see the other ratings of CNC for Momentum and Stability.
Ryerson Holding Corporation (RYI)
RYI is a value-added processor and distributor of industrial metals like carbon, stainless, and alloy steels, aluminum, nickel, and red metals in various shapes and forms. Along with its subsidiaries, the company operates in the United States, Canada, Mexico, and China.
On September 2, 2022, RYI acquired Howard Precision Metals, Inc., the largest aluminum distributor in the Midwest. This strategic acquisition will help RYI expand its non-ferrous franchise in the future. Mike Burbach, Ryerson's Chief Operating Officer, said, "Its processing capabilities complement Ryerson's existing non-ferrous franchise, and we are excited to recognize these synergies."
For the second quarter that ended June 30, 2022, RYI’s net sales increased 22.9% year-over-year to $1.74 billion. Its gross profit grew 81.3% from the prior-year period to $465.90 million.
The company’s adjusted net income and adjusted EPS increased significantly year-over-year to $204.40 million and $5.31, respectively. Also, its adjusted EBITDA came in at $298 million, up 221.8% from the year-ago value.
The consensus EPS estimate of $13.08 for its fiscal 2022 represents a 75.3% improvement year-over-year. The consensus revenue estimate of $6.27 billion for the current year indicates a 10.4% increase from the same period last year.
The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past three months, the stock has gained 12.9% to close the last trading session at $24.18.
RYI’s strong fundamentals are reflected in its POWR Ratings. The company has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Value and a B for Growth, Sentiment, and Quality. It is ranked #2 out of 36 stocks in the B-rated Industrial – Metals industry. Click here to see the other ratings of RYI for Momentum and Stability.
BMY shares were trading at $70.20 per share on Monday afternoon, down $0.51 (-0.72%). Year-to-date, BMY has gained 15.21%, versus a -22.43% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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