The benchmark indices ended last week down more than 3% as the Federal Reserve Chair Jerome Powell’s statement about aggressive rate hikes weighed down investor sentiments.
On the other hand, recent Commerce Department data indicated a modest rise in personal income. Moreover, U.S. consumer spending barely rose in July, but monthly inflation slowed sharply, which might reduce the need for another 75 basis points interest rate hike next month.
“With gasoline prices on track for an even larger fall than in July, and mounting signs that core goods inflation is stepping down, we suspect that could clear the way for a smaller 50 basis points hike in September,” said Michael Pearce, a senior U.S. economist at Capital Economics in New York.
Despite the uptick in market uncertainty, staying invested might be beneficial for the long term. Fundamentally strong stocks Novo Nordisk A/S (NVO), Centene Corporation (CNC), McKesson Corporation (MCK), Universal Logistics Holdings, Inc. (ULH), and Sisecam Resources LP (SIRE) might be ideal buys now. These stocks are rated Strong Buy in our proprietary POWR Ratings system.
Novo Nordisk A/S (NVO)
NVO is a healthcare company that engages in the research, development, manufacture, and marketing of pharmaceutical products. The company operates in two broad segments: Diabetes and Obesity care; and Biopharm. The company is headquartered in Bagsvaerd, Denmark.
On June 22, Echosens and NVO announced a partnership to advance the early diagnosis of non-alcoholic steatohepatitis (NASH) and increase awareness of the disease among patients, healthcare providers, and other stakeholders. The companies expressed a shared ambition of doubling diagnostic rates for people living with advanced to severe NASH by 2025.
In May, NVO and Flagship Pioneering announced their collaboration to create a portfolio of novel research programs to develop transformational medicines. The partnership, with the combination of Flagship Pioneering bioplatforms and NVO’s cardiometabolic and rare disease expertise, should benefit the company.
NVO’s net sales came in at DKK 41.27 billion ($5.53 billion) for the second quarter of 2022, ended June 30, representing a 24.9% year-over-year growth. Its operating profit grew 24.4% from the prior-year quarter to DKK 18.39 billion ($2.46 billion), while its net profit rose 9.9% from the same period last year to DKK 13.32 billion ($1.78 billion). EPS increased 11.4% from the prior-year period to DKK 5.86.
Analysts expect NVO’s revenue for the fiscal third quarter ending September 2022 to be $5.95 billion, indicating a 7% year-over-year growth. The company’s EPS for the same quarter is expected to increase 6.6% from the prior-year quarter to $0.88. Additionally, NVO has topped consensus EPS estimates in three of the trailing four quarters, which is impressive.
NVO has gained 5.6% over the six months and 1% over the past five days to close its last trading session at $108.69.
NVO’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
NVO has an A grade for Quality and a B for Value and Stability. It is ranked #7 out of 167 stocks in the Medical - Pharmaceuticals industry.
Beyond what we’ve stated above, we have also given NVO grades for Growth, Momentum, and Sentiment. Get all NVO ratings here.
Centene Corporation (CNC)
CNC is a multinational healthcare enterprise that offers programs and services to underinsured and uninsured individuals. The company operates through the Managed Care and Specialty Services segments.
On August 10, CNC announced its Mississippi subsidiary, Magnolia Health Plan, has been awarded the Mississippi Division of Medicaid contract. Under the new contract, Magnolia would continue serving the state’s Coordinated Care Organization Program, consisting of the Mississippi Coordinated Access Network (MSCAN) and the Mississippi Children’s Health Insurance Program (CHIP). The new contract term is four years and includes the option for two one-year renewals.
In May, CNC announced that it had signed agreements to sell Magellan Rx to Prime Therapeutics LLC and PANTHERx Rare to a consortium of The Vistria Group, General Atlantic, and Nautic Partners. In July, CNC announced the closing of the PANTHERx divestiture. These are expected to be milestones in the company’s value creation plan.
CNC’s total revenues came in at $35.94 billion for the second quarter ended June 30, representing a 15.8% year-over-year growth. Its adjusted net earnings rose 41.4% from the same period last year to $1.04 billion. The adjusted EPS increased 41.6% from the prior-year period to $1.77.
Analysts expect CNC’s revenue for the fiscal year ending December 2022 to be $143.70 billion, indicating a 14.1% year-over-year growth. The company’s EPS for the same period is expected to increase 11% from the prior-year period to $5.72. Additionally, CNC has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
CNC has gained 40.6% over the past year and 9.2% year-to-date to close its last trading session at $89.94.
It is no surprise that CNC has an overall A rating, which translates to Strong Buy in our POWR Ratings system. CNC has a B grade for Growth, Value, Sentiment, and Quality. In the A-rated Medical - Health Insurance industry, it is ranked #3 out of 11 stocks.
Beyond what we’ve stated above, we have also given CNC grades for Momentum and Stability. Get all CNC ratings here.
McKesson Corporation (MCK)
MCK is an international healthcare services provider. It operates through four segments: U.S. Pharmaceutical; International; Medical-Surgical Solutions; and Prescription Technology Solutions (RxTS).
In July, MCK declared a regular dividend of $0.54 per share of common stock, payable to shareholders on October 3, 2022. This represents a 15% increase from $0.47 per share in the prior quarter and reflects the well-established liquidity position of the company.
On June 23, MCK and HCA Healthcare, Inc. (HCA) announced an agreement to form a joint venture combining MCK’s U.S. Oncology Research and HCA’s Sarah Cannon Research Institute. Brian Tyler, chief executive officer of MCK, said, “This new joint venture is an important step forward in increasing access to clinical trials, particularly within the community setting, where the majority of all cancer patients are initially treated.”
MCK’s revenue increased 7.1% year-over-year to $67.15 billion in the first quarter ended June 30. Its operating income grew 82.4% from the year-ago value to $1.04 billion, while its net income attributable to MCK improved 58% year-over-year to $768 million. The company’s net earnings per common share increased 4.9% from its year-ago value to $5.83.
The consensus revenue estimate of $70.10 billion for the second fiscal quarter ending September indicates an improvement of 5.3% year-over-year. The consensus EPS is expected to be $6.05 for the same period. Additionally, MCK has topped consensus EPS estimates in three out of the trailing four quarters, which is impressive.
The stock has gained 77.4% over the past year and 43.5% year-to-date to close its last trading session at $356.79.
According to the POWR Ratings, MCK is rated an A in Growth and a B in Value, Stability, and Sentiment. Within the Medical - Services industry, it is ranked #1 out of 82 stocks.
To see additional POWR Ratings for Momentum and Quality for MCK, click here.
Universal Logistics Holdings, Inc. (ULH)
ULH provides transportation and logistics solutions in the United States, Mexico, Canada, and Colombia. It offers truckload services, which include dry van, flatbed, heavy-haul and refrigerated operations, domestic and international freight forwarding and customs brokerage services, and final mile and ground expedite services.
In July, ULH declared a cash dividend of $0.105 per share of common stock. The dividend is payable to shareholders on October 3, 2022. This reflects the cash generation ability of the company.
ULH’s total operating revenues came in at $527.18 million for the second quarter of 2022, ended July 2, representing a 24.7% year-over-year growth. Its income from operations grew 106.5% from the prior-year quarter to $64.65 million, while its non-GAAP EBITDA rose 69.2% from the same period last year to $90.89 million. EPS increased 77.9% from the prior-year period to $1.69.
Analysts expect ULH’s revenue for the third quarter ending September 2022 to be $494.30 million, indicating a 10.9% year-over-year growth. The company’s EPS for the same quarter is expected to increase 81.6% from the prior-year quarter to $1.35. Additionally, ULH has topped consensus EPS estimates in each of the trailing four quarters.
ULH has gained 99.3% year-to-date and 96.5% over the past six months to close its last trading session at $37.58.
It is no surprise that ULH has an overall A rating, which translates to Strong Buy in our POWR Ratings system. ULH has an A grade for Growth and Sentiment and a B for Value, Momentum, and Stability. It is ranked #1 in the A-rated Air Freight & Shipping Services industry.
Beyond what we’ve stated above, we have also given ULH a grade for Quality. Get all ULH ratings here.
Sisecam Resources LP (SIRE)
SIRE engages in the trona ore mining and soda ash production businesses in the United States and internationally. It processes trona ore into soda ash, which is a raw material in flat glass, container glass, detergents, chemicals, paper, and other consumer and industrial products.
On July 30, SIRE declared its quarterly distribution of $0.50 for the second quarter of 2022, which was payable on August 23, 2022. This reflects the shareholder return ability of the company.
For the second quarter of 2022 ended June 30, SIRE’s net sales increased 56.7% year-over-year to $189.10 million. Its operating income grew 292.8% from the prior-year period to $32.60 million. Adjusted EBITDA attributable to SIRE rose 152.5% year-over-year to 20.20 million, while net earnings per unit came in at $0.76, up 406.7% from the prior-year period.
Street revenue estimate for the fiscal year ending December 2022 of $2.44 billion reflects a rise of 352.3% year-over-year.
Over the past year, SIRE’s stock has gained 78.8% to close its last trading session at $22.57. It has gained 36.8% year-to-date.
This promising prospect is reflected in SIRE’s POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
SIRE has an A grade for Growth and a B grade for Value, Stability, Sentiment, and Quality. It is ranked #1 out of the 82 stocks in the A-rated Chemicals industry. Click here to see the additional POWR Ratings for SIRE (Momentum).
NVO shares were trading at $107.44 per share on Monday afternoon, down $1.25 (-1.15%). Year-to-date, NVO has declined -3.05%, versus a -14.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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