The stock market has been under great pressure of late due to investors’ concerns about surging inflation, the Russia-Ukraine war, rising energy prices, supply disruptions, and the possibility of aggressive interest rate hikes by the Federal Reserve this year to tame inflation. Furthermore, market volatility is expected to continue because the EU has decided to impose further sanctions on Russia, affecting crude oil supply. Crude oil prices have remained consistently above $100 per barrel since Russia’s invasion of Ukraine. Historically, high crude oil prices have led to recession. Moreover, inflation has been at its highest since December 1981, with the March CPI data revealing an increase of 8.5% year-over-year. In addition, the March jobs data suggested a tight labor market.
Stocks with more than $200 billion in market capitalization are considered mega-cap stocks. These companies are generally characterized by strong brand recognition and extensive market reach. These companies usually possess solid financials and cash balances, which allow them to remain stable even during an economic downturn.
Given current market conditions, we think investors could look to add quality mega-cap stocks Novo Nordisk A/S (NVO), Shell plc (SHEL), Eli Lilly and Company (LLY), Novartis AG (NVS), and Costco Wholesale Corporation (COST) to their watchlists. These businesses are well known for their pricing power, and their stocks could offer safety amid current market volatility.
Novo Nordisk A/S (NVO)
With a market capitalization of $268.69 billion, Bagsvaerd, Denmark-based NVO is a global healthcare company that is engaged in diabetes care. It is the world’s biggest producer of diabetes drugs and operates in diabetes and obesity care and biopharmaceutical segments. Also, it discovers, develops, manufactures, and markets pharmaceutical products.
NVO’s net sales for its fiscal year ended Dec. 31, 2021, increased 10.9% year-over-year to Kr.140.80 billion ($20.45 billion). The company’s net profit increased 13.3% year-over-year to Kr.47.75 billion ($6.93 billion). Also, its EPS came in at Kr.20.74, representing an increase of 15.1% year-over-year.
Analysts expect NVO’s EPS for its fiscal year 2023 to increase 12.3% year-over-year to $3.64. Its revenue for the quarter ending March 31, 2022, is expected to increase 12.1% year-over-year to $5.83 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 67.5% in price to close the last trading session at $118.20.
NVO’s POWR Ratings reflect solid prospects. The company has an overall A rating, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has an A grade for Quality and a B grade for Value, Stability, and Sentiment. It is ranked #5 out of 171 stocks in the Medical – Pharmaceuticals industry. Click here to see the other ratings of NVO for Growth and Momentum.
Click here to checkout our Healthcare Sector Report for 2022
Shell plc (SHEL)
Headquartered in London, SHEL is an international energy and petrochemical company. The company explores for, produces, refines, and markets oil and natural gas. Its businesses include Upstream, Integrated Gas, Renewables and Energy Solutions, and Downstream. It has a market capitalization of $215.37 billion.
On March 31, 2022, SHEL announced that Shell Trinidad and Tobago had started production on Block 22 and NCMA-4 in Trinidad and Tobago's North Coast Marine Area. Wael Sawan, SHEL’s Director of Integrated Gas, Renewable and Energy Solutions, said, “Colibri, along with other development projects, will see natural gas going into both the domestic petrochemical markets and into LNG exports, in line with energy ambitions of Trinidad and Tobago.”
For its fiscal fourth quarter, ended Dec.31, 2021, SHEL’s revenue increased 93.8% year-over-year to $85.28 billion. The company’s adjusted earnings increased 1,526.2% year-over-year to $6.39 billion. Also, its adjusted EBITDA increased 95.2% year-over-year to $16.34 billion. In addition, its adjusted EPS came in at $0.83, representing an increase of 1,560% year-over-year.
For the quarter ending March 31, 2022, SHEL’s EPS is expected to increase 125.6% year-over-year to $1.85. Its revenue for the quarter ending June 30, 2022, is expected to increase 75.6% year-over-year to $89.89 billion. It surpassed consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 42.9% to close the last trading session at $57.11.
SHEL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which translates to a Buy in our proprietary rating system.
It has an A grade for Momentum and a B grade for Sentiment. Within the B-rated Energy – Oil & Gas industry, it is ranked #20 out of 96 stocks. To see the other ratings of SHEL for Growth, Value, Stability, and Quality, click here.
Eli Lilly and Company (LLY)
Indianapolis, Indiana-based drug manufacturing company LLY discovers , develops, manufactures, markets, and sells pharmaceutical products worldwide. Its subsidiaries include Acanthas Pharma, Inc., Alnara Pharmaceuticals, Inc., ARMO Biosciences, Inc., and Avid Radiopharmaceuticals, Inc. It has a market capitalization of $287.47 billion.
On Feb. 10, 2022, LLY announced that it had agreed with the U.S. government to supply up to 600,000 doses of its developmental COVID-19 antibody drug bebtelovimab, which treats mild to moderate COVID-19 in some high-risk patients. It has also filed a request for the authorization of the drug with the U.S. FDA.
LLY’s revenue for its fiscal fourth quarter, ended Dec. 31, 2021, increased 7.5% year-over-year to $7.99 billion. The company’s non-GAAP net income increased 7.5% year-over-year to $2.26 billion. And its non-GAAP EPS came in at $2.49, representing a 7.7% increase year-over-year.
Analysts expect LLY’s EPS for the quarter ending June 30, 2022, to increase 19.3% year-over-year to $1.92. Its revenue for its fiscal year 2023 is expected to increase 8.1% year-over-year to $28.18 billion. Over the past year, the stock has gained 64.9% in price to close the last trading session at $301.86.
LLY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
It has a B grade for Growth, Stability, Sentiment, and Quality. It is ranked #14 out of 171 stocks in the Medical – Pharmaceuticals industry. To see the other ratings of LLY for Value and Momentum, click here.
Click here to checkout our Healthcare Sector Report for 2022
Novartis AG (NVS)
With a market capitalization of $206.77 billion, Basel, Switzerland-based NVS develops, manufactures, and markets branded and generic prescription drugs, active pharmaceutical ingredients, biosimilars, and ophthalmic products. The company’s business activities are divided into two segments: Innovative Medicines, which include innovative patent-protected prescription medicines for blood pressure, cancer, and other ailments, and Sandoz, which provides generic pharmaceuticals and biosimilars.
On April 6, 2022, NVS announced that the U.S. FDA had granted accelerated approval to Vijoice (alpelisib) for treating adults and pediatric patients over the age of two years with severe manifestations of PIK3CA-Related Overgrowth Spectrum (PROS) who require systemic therapy. NVS’ President of Innovative Medicines, U.S. Victor Bulto, said: “The approval of Vijoice marks a turning point for patients who, until now, have not had an approved therapy to specifically address their disease.”
For its fiscal fourth quarter, ended Dec. 31, 2021, NVS’ net sales increased 3.5% year-over-year to $13.22 billion. The company’s net income increased 676.8% year-over-year to $16.30 billion. Also, its EPS came in at $7.24, representing a 686.9% increase year-over-year.
For its fiscal 2023, NVS’ EPS is expected to increase 9.1% year-over-year to $6.93. The company’s revenue for its fiscal year 2022 is expected to increase 3.6% year-over-year to $53.49 billion. Over the past six months, the stock has gained 12% in price to close the last trading session at $92.52.
NVS’ POWR Ratings reflect solid prospects. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Stability and a B grade for Growth, Value, Sentiment, and Quality. It is ranked first in the Medical – Pharmaceuticals industry. To see the rating of NVS for Momentum, click here.
Click here to checkout our Healthcare Sector Report for 2022
Costco Wholesale Corporation (COST)
Famous membership warehouse operator COST in Issaquah, Wash., offers branded and private-label products throughout a range of merchandise categories. It operates across the U.S., Canada, United Kingdom, Japan, and China. In addition, its broad product portfolio includes almost everything from dry groceries to automotive care products. It currently operates 824 warehouses. It has a $261.67 billion market capitalization.
COST’s total revenue increased 15.9% year-over-year to $51.90 billion for the second quarter, ended Feb. 13, 2022. The company’s attributable net income increased 36.5% year-over-year to $1.29 billion. Also, its EPS came in at $2.92, representing a 36.4% increase year-over-year.
Analysts expect COST’s EPS and revenue for its fiscal year 2022 to increase 18.1% and 13% year-over-year to $13.10 and $221.35 billion, respectively. It surpassed consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 62.5% in price to close the last trading session at $590.39.
COST’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
It has an A grade for Sentiment and a B grade for Stability. It is ranked #21 out of 39 stocks in the A-rated Grocery/Big Box Retailers industry. Click here to see the additional ratings of COST for Growth, Value, Momentum, and Quality.
Click here to checkout our Retail Industry Report for 2022
NVO shares were trading at $117.97 per share on Monday morning, down $0.23 (-0.19%). Year-to-date, NVO has gained 6.05%, versus a -7.37% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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