The stock market has been under pressure since the beginning of this year, driven by the impending interest rate hikes, rising bond yields, and an increasing conflict between Russia and Ukraine. In response to Russia’s invasion of Ukraine, the U.S. and European nations are isolating Russia through various new sanctions. This has led to increased stock market volatility, as evidenced by the CBOE Volatility Index’s 92.5% rise year-to-date.
Because the Fed plans to hike benchmark interest rates this month, the market is expected to remain volatile in the near term. Furthermore, with initial talks between Russia and Ukraine so far yielding little, the geopolitical uncertainties are expected to mount.
However, investing in fundamentally sound value stocks could hedge market risks substantially. Investing in renowned stocks Bristol-Myers Squibb Company (BMY), Lockheed Martin Corporation (LMT), Becton, Dickinson, and Company (BDX), and Archer-Daniels-Midland Company (ADM) could be profitable. These companies are expected to benefit from the industry tailwinds to deliver substantial returns in the coming months.
Bristol-Myers Squibb Company (BMY)
New York City-based BMY is a biopharmaceutical company. It offers products for oncology, immunology, hematology, cardiovascular, fibrotic, neuroscience, and covid-19 diseases. The company’s products include Revlimid, Eliquis, Opdivo, Pomalyst, Orencia, Sprycel, yervoy, Abraxene, and Reblozyl. BMY sells its products to wholesalers, distributors, pharmacies, retailers, hospitals, and government agencies.
BMY formed a strategic collaboration with Century Therapeutics (IPSC) to develop and commercialize iPSC-derived allogeneic cell therapies for hematologic malignancies and solid tumors in January. The collaboration is expected to expand the company’s customer base and profitability.
In its fiscal 2021 fourth quarter, ended December 31, BMY's total revenues increased 8.3% year-over-year to $11.99 billion. Its earnings before income taxes grew 117.8% year-over-year to $1.86 billion. The company's net earnings rose 123.7% from the same period last year to $2.37 billion, and its earnings per share increased 25.3% year-over-year to $1.83.
BMY is relatively undervalued compared to its peers. In terms of forward non-GAAP P/E, BMY is currently trading at 8.82x, which is 57.5% lower than the 20.74x industry average. Its 3.18 forward Price/Sales multiple is 41.7% lower than the 5.45 industry average Its 8.29 and 8.18 respective forward Price/ Cash Flow and EV/EBITDA ratios compare with 17.35 and 13.47 industry averages.
Analysts expect BMY's revenue for its fiscal year 2022 first quarter, ending March 31, 2022, to be $11.51 billion, representing a 4% rise year-over-year. The Street expects the company's EPS for the current quarter to come in at $1.96, representing a 12.5% increase year-over-year. BMY has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock gained 10.1% in price year-to-date and 11.4% over the past year to close yesterday's trading session at $68.63.
BMY’s POWR Ratings reflect this promising outlook. BMY has an overall A rating, which translates to Strong Buy in our proprietary system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
BMY has a grade of A for Value and a B for Growth and Quality. Within the Medical -Pharmaceuticals industry, it is ranked #5 of 179 stocks.
To see additional POWR Ratings (Momentum, Stability, and Sentiment) for BMY, click here.
Click here to checkout our Healthcare Sector Report for 2022
Lockheed Martin Corporation (LMT)
LMT is a security and aerospace company that is headquartered in North Bethesda, Md. It researches, designs, develops, manufactures, and sustains technology systems, products, and services worldwide. The company operates in four segments: Aeronautics; Missiles and Fire Control; Rotary and Missile Systems; and Space. LMT serves primarily the U.S. government and foreign military sales contracted through the U.S. government.
Today, LMT launched Geostationary Operational Environmental Satellite (GOES-T) for the National Oceanic and Atmospheric Administration (NOAA). “With the impact climate change has on weather patterns around the world, the work of satellites like GOES-T is more crucial than ever before to help keep people safe now and in the future," said Jagdeep Shergill, LMT’s GOES-R chief engineer and program manager.
LMT's net sales increased 4.1% year-over-year to $17.73 billion in its fiscal fourth quarter, ended Dec. 31, 2021. Its gross profit improved 9.4% year-over-year to $2.4 billion. LMT’s operating profit increased 7.3% year-over-year to $2.26 billion. The company’s net income grew 14.3% year-over-year to $2.05 billion, and its earnings per common share rose 17.1% year-over-year to $7.47.
LMT is trading at a discount to its peers. In terms of forward non-GAAP P/E, LMT is currently trading at 16.47x, which is 7.7% lower than the 17.83x industry average. Its 14.01 forward EV/EBIT multiple is 9.5% lower than the 15.47x industry average.
The $6.63 consensus EPS estimate for its fiscal 2022 second quarter, ending June 30, 2022, represents marginal year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
Shares of LMT increased 28.5% in price year-to-date and 36.9% over the past year. It closed yesterday's trading session at $456.61.
LMT's POWR Ratings reflect this strong outlook. LMT has an overall A rating, which translates to Strong Buy in our POWR Ratings system. It has a B grade for Value and Sentiment, Stability, and Quality. It is ranked #3 of 72 stocks in the Air/Defense Services industry.
Click here to see LMT ratings for Momentum and Growth.
Becton, Dickinson, and Company (BDX)
BDX in Franklin Lakes, N.J. is a global medical technology company. The company operates in three segments: BD Medical; BD Life Sciences; and BD Interventional. It develops, manufactures, and sells medical supplies, devices, laboratory equipment, and diagnostic products worldwide. BDX serves healthcare institutions, physicians, life science researchers, the pharmaceutical industry, and the public.
On Feb. 1, 2022, BDX acquired Cytognos, a privately held company that specializes in flow cytometry solutions to diagnose blood cancer and other chronic diseases. With this acquisition, BDX is expected to integrate newly acquired products and businesses into the portfolio and exploit new opportunities.
In its fiscal 2022 first quarter, ended Dec. 31, 2021, BDX’s revenue from BD Medical segment increased 6.5% year-over-year to $1.36 billion. Its revenue from BD Interventional segment grew 4.2% year-over-year to $752 million.
In terms of forward Price/Sales, BDX is currently trading at 3.93x, which is 28% lower than the 5.45x industry average. Its 3.18 forward Price/Book multiple is marginally lower than the 3.19x industry average.
Analysts expect BDX's EPS for its fiscal year 2022 third quarter, ending June 30, 2022, to come in at $3.03, representing a 10.4% rise year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of all the trailing four quarters.
Over the past year, shares of BDX have gained 10.3% in price and have improved 7.9% year-to-date. BDX closed yesterday’s trading session at $271.39.
The company has an overall B rating, which translates to Buy in our proprietary rating system. BDX has a B grade for Stability, Growth, and Sentiment. Among the 166 stocks in the Medical - Devices & Equipment industry, it is ranked #28.
Click here to see the additional POWR Ratings for Momentum, Quality, and Value for BDX.
Click here to checkout our Healthcare Sector Report for 2022
Archer-Daniels-Midland Company (ADM)
Chicago, Ill.-based ADM procures, transports, stores, and merchandises agricultural commodities, products, and ingredients in the U.S., Switzerland, Brazil, Mexico, U.K., and internationally. The company operates in three segments: Ag Services and Oilseeds; Carbohydrate Solutions; and Nutrition.
In January, ADM declared a cash dividend of 40 cents per share, representing an 8.1% increase from last quarter’s 37 cents per share dividend. This reflects the company’s strong financials, and it uses strong cash flows to deliver growth investments and distributions to shareholders.
In its fiscal year 2021 fourth quarter, ended December 31, ADM's revenues increased 28.4% year-over-year to $23.09 billion. Its gross profit increased 22% year-over-year to $1.65 billion. ADM’s earnings before income taxes grew 33.7% year-over-year to $1.01 billion. Its net earnings attributable to ADM rose marginally from the same period last year to $782 million. And the company's earnings per share increased 13.1% from the year-ago value to $1.38.
ADM is relatively undervalued versus its peers. In terms of forward Non-GAAP P/E, ADM is currently trading at 15.11x, which is 16.2% lower than the 18.04x industry average. Its 0.51 forward Price/Sales multiple is 62.1% lower than the 1.35x industry average. ADM's 11.12 forward EV/EBITDA ratio compares with the 12.32 industry average.
The $20.18 billion consensus revenue estimate for its fiscal year 2022 first quarter, ending March 31, 2022, represents 6.8% year-over-year growth. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of all the trailing four quarters.
ADM stock has increased 36.1% in price over the past year and closed yesterday's trading session at $77.99.
Its strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system.
It has a grade of A for Growth and B for Value and Sentiment. Within the Agriculture industry, it is ranked #2 of 29 stocks.
To see additional component grades of POWR Ratings (Stability, Quality, and Momentum) for ADM, click here.
What To Do Next?
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BMY shares were trading at $69.06 per share on Wednesday afternoon, up $0.43 (+0.63%). Year-to-date, BMY has gained 11.73%, versus a -7.86% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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