The stock market indices rose on Wednesday, regaining a little of their lost ground. The S&P 500 surged 0.9%, while the Dow gained 0.6%. The tech-heavy Nasdaq Composite gained 1.5%. Investors hope that inflation is starting to peak and good value can be found at this level. However, the Nasdaq remains in a bear market, down 26.9% year-to-date.
Nasdaq’s correction this year can be attributed to the underperformance of tech stocks. Morgan Stanley (MS) believes that large-cap growth names’ underperformance despite impressive earnings indicates that these stocks are trading at reasonable valuations now. MS expects modest equity returns for 2022.
Given this backdrop, we think the large-cap stocks of fundamentally strong companies Comcast Corporation (CMCSA), Regeneron Pharmaceuticals, Inc. (REGN), Microsoft Corporation (MSFT), PepsiCo, Inc. (PEP), and Sanofi (SNY) might be solid bets amid Nasdaq’s bear market. These stocks have outperformed the tech-heavy index this year.
Comcast Corporation (CMCSA)
CMCSA is a media and technology company operating globally. The Philadelphia, Pa.-based concern functions through the segments of Cable Communications; Media; Studios; Theme Parks; and Sky. It has a market capitalization of $195.78 billion.
On May 10, CMCSA announced a quarterly dividend of $0.27 per share on its common stock, payable to shareholders on July 27. This reflects the company’s ability in cash generation and shareholder returns.
On April 27, CMCSA subsidiary Comcast Business announced that it had expanded its strategic partnership with Cisco Systems, Inc. (CSCO) through the addition of CSCO’s SD-WAN to CMCSA’s managed SD-WAN solutions portfolio. This is expected to benefit the company by allowing it to offer a broader portfolio of secure network solutions.
For its fiscal first quarter, ended March 31, CMCSA’s revenue increased 14% year-over-year to $31.01 billion. Its adjusted net income rose 10.5% from the prior-year quarter to $3.90 billion. And its adjusted EPS improved 13.2% from the same period the prior year to $0.86.
The $3.61 consensus EPS estimate for its fiscal year 2022 indicates an 11.8% year-over-year increase. And the $122.71 billion consensus revenue estimate for the same year reflects a 5.4% improvement from the prior year. Furthermore, CMCSA has an impressive surprise earnings history; it has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 4% in price over the past five days and 1.5% intraday to close yesterday’s trading session at $43.70. It has declined 13.2% year-to-date.
CMCSA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
CMCSA has a Stability and Quality grade of B. In the 9-stock Entertainment – TV & Internet Providers industry, it is ranked #1.
Click here to see the additional POWR Ratings for CMCSA (Growth, Value, Momentum, and Sentiment).
Regeneron Pharmaceuticals, Inc. (REGN)
REGN in Westchester County, N.Y., operates as a biotechnology company that provides medicines for treating myriad diseases, including eye ailments, inflammatory and hematologic conditions, and infectious diseases such as Ebola and COVID-19. It has a market capitalization of $75.89 billion.
On May 20, REGN and SNY announced that the U.S. Food and Drug Administration (FDA) had approved Dupixent (dupilumab) 300 mg weekly for treating patients with eosinophilic esophagitis (EoE) aged 12 years and older and weighing at least 40 kg. This approval might prove to be beneficial for the companies.
On April 19, REGN and clinical-stage biopharmaceutical company Checkmate Pharmaceuticals, Inc. (CMPI) announced an agreement for REGN’s acquisition of CMPI at an all-cash price of $10.50 per share of CMPI’s common stock. This is expected to bolster the company’s portfolio and operational capacity.
REGN’s revenues have increased 17.3% year-over-year to $2.97 billion in its fiscal first quarter, ended March 31. Its non-GAAP net income and non-GAAP net income per share have improved 18.8% and 16.2%, respectively, from the prior-year period to $1.32 billion and $11.49.
The Street’s $44.48 EPS estimate for its fiscal year 2023 indicates a 0.7% year-over-year improvement. And the Street’s $12.32 billion revenue estimate for the same year reflects a 4.6% increase from the prior year. In addition, REGN has topped the consensus EPS estimate in each of the trailing four quarters.
Over the past year, the stock has gained 38.7% in price and 9.4% year-to-date to close yesterday’s trading session at $690.88.
It is no surprise that REGN has an overall B rating, which translates to Buy in our POWR Rating system.
REGN has a B grade for Value, Sentiment, and Quality. It is ranked #22 out of the 393 stocks in the Biotech industry.
To see the additional POWR Ratings for Growth, Momentum, and Stability for REGN, click here.
Click here to checkout our Healthcare Sector Report for 2022
Microsoft Corporation (MSFT)
MSFT is a software behemoth providing software services, solutions, and devices worldwide. The Redmond, Wash-based company sells its products through distributors, OEMs, resellers, or digital marketplaces. MSFT has a market capitalization of $1.96 trillion.
On May 18, American Airlines and MSFT announced that they were partnering to provide a better experience to customers through the enhanced usage of technology. This partnership might benefit the company.
On May 2, MSFT announced the general availability (GA) of its stand-alone version of Microsoft Defender for Business. This might be beneficial for the company by providing enterprise-grade endpoint security to SMBs.
For the fiscal third quarter ended March 31, MSFT’s total revenue increased 18.4% year-over-year to $49.36 billion. Its net income and EPS stood at $16.73 billion and $2.22, respectively, registering an increase of 8.2% and 9.4% from the same period the prior year, respectively.
Analysts expect MSFT’s EPS to improve 7.4% year-over-year to $2.33 for the fiscal quarter ending June 30, 2022, while the Street’s $52.87 billion revenue estimate for the same period indicates a rise of 14.6% from the prior-year period. In addition, MSFT has beaten consensus EPS estimates in each of the trailing four quarters.
MSFT’s stock has gained 4.3% in price over the past year and 3.8% over the past five days to close yesterday’s trading session at $262.52. It has declined 21.9% year-to-date.
This promising prospect is reflected in MSFT’s POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
MSFT has a Stability, Sentiment, and Quality grade of B. In the 57-stock Software – Business industry, it is ranked #13.
Click here to see the additional POWR Ratings for MSFT (Growth, Value, and Momentum).
Note that MSFT is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Click here to check out our Software Industry Report for 2022
PepsiCo, Inc. (PEP)
PEP is a popular food and beverage company operating worldwide. The Harrison, N.Y., company’s portfolio includes Lays, Doritos, Cheetos, Gatorade, Pepsi-Cola, Mountain Dew, Quaker, and SodaStream. It has a $233.63 billion market capitalization.
On May 3, PEP declared a quarterly dividend of $1.15 per share of its common stock, payable to shareholders on June 30. This reflects a 7% increase over the comparable year-ago period and indicates the company’s commitment toward shareholder returns.
On March 23, PEP and Beyond Meat, Inc. (BYND) announced the launch of Beyond Meat Jerky, a plant-based jerky that is the first product from the two companies' joint-venture Planet Partnership, LLC. The new product might add to the company’s revenue stream.
PEP’s net revenue increased 9.3% year-over-year to $16.20 billion in its fiscal first quarter, ended March 19. Its non-GAAP net income attributable to PEP and non-GAAP net income per common share attributable to PEP improved 6.6% from the same period prior year to $1.80 billion and $1.29, respectively.
The $1.74 consensus EPS estimate for the quarter ending June 30, 2022, indicates a 1.2% year-over-year increase. And the $19.48 billion consensus revenue estimate for the same period reflects an improvement of 1.4% from the prior-year quarter. In addition, PEP has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 13.9% in price over the past year and 4.8% over the past five days to close yesterday’s trading session at $168.97. It has declined 2.7% year-to-date.
PEP has an overall B rating, which translates to Buy in our POWR Rating system.
PEP has an A grade for Quality and a B grade for Sentiment. It is ranked #10 out of 35 stocks in the Beverages industry. The industry is rated A.
Click here to see the additional POWR Ratings for PEP (Growth, Value, Momentum, and Stability).
Sanofi (SNY)
SNY, which is headquartered in Paris, researches, develops, manufactures, and sells therapeutic solutions globally. The company operates through the three broad segments of Pharmaceuticals; Vaccines; and Consumer Healthcare. It has a $139.48 billion market capitalization.
On April 26, SNY collaborated with McLaren Racing, an F1 team to accelerate manufacturing efficiency and performance. The collaboration is expected to continue the optimization of SNY’s manufacturing operations and support its portfolio.
On March 29, SNY and IGM Biosciences, Inc. (IGMS) announced that they had signed an exclusive collaboration agreement to develop and commercialize IgM antibody agonists against three oncology targets and three immunology/inflammation targets. This might benefit the company.
For its fiscal first quarter of 2022, SNY’s net sales increased 12.6% year-over-year to €9.67 billion ($10.34 billion). Its net income and IFRS EPS rose 27.8% and 28.8%, respectively, from the prior-year quarter to €2.02 billion ($2.15 billion) and €1.61.
The Street $4.47 EPS estimate for its fiscal year 2023 indicates a 5.9% year-over-year improvement. Likewise, the Street’s $44.82 billion revenue estimate for the same year reflects an increase of 4.4% from the prior year. SNY has topped the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 11.5% year-to-date and 2.4% over the past month to close yesterday’s trading session at $55.85.
SNY has a Value, Stability, and Sentiment grade of B. It is ranked #34 out of 165 stocks in the Medical – Pharmaceuticals industry.
In addition to the POWR Rating grades we have stated above, one can see SNY ratings for Growth, Momentum, and Quality here.
Click here to checkout our Semiconductor Industry Report for 2022
CMCSA shares were trading at $44.24 per share on Thursday afternoon, up $0.54 (+1.24%). Year-to-date, CMCSA has declined -11.17%, versus a -14.27% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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