The recent macroeconomic headwinds, which include skyrocketing inflation, looming interest rate hikes, increasing supply chain disruptions, soaring oil prices, and rising economic sanctions imposed on Russia in response to its invasion of Ukraine, drove the stock market into correction territory earlier this year. With the heightened market volatility, investors have been drawn toward financially solid large-cap companies that are trading at a discount. This is evidenced by the Vanguard Large-Cap ETF’s (VV) 11.7% gains over the past year.
Large-cap companies tend to have strong financial records, robust cash flows, and impressive growth prospects. Their stock tends to deliver stable returns despite market downturns. Since large-cap companies can withstand the current market fluctuations, it could be profitable for investors to buy fundamentally solid large-cap stocks on their price dip.
Given the current market uncertainty, we think it could be wise to buy quality large-cap stocks Takeda Pharmaceutical Company Limited (TAK), Biogen Inc. (BIIB), Fujitsu Limited (FJTSY), Nissan Motor Co., Ltd. (NSANY), and Cardinal Health, Inc. (CAH) on the dip.
Takeda Pharmaceutical Company Limited (TAK)
TAK researches, develops, manufactures, markets, and out-licenses pharmaceutical products worldwide. It is headquartered in Tokyo, Japan. The company offers pharmaceutical products in the areas of gastroenterology, oncology, neuroscience, and rare diseases. It provides its products under the Elaprase, Vpriv, Natpara, Alofisel, Hyqvia, Ninlaro, and Alunbrig brands. It has a market capitalization of $46.94 billion.
In January, TAK acquired Adaptate Biotherapeutics, a company that is focused on developing antibody-based therapeutics. Through this acquisition, TAK will adopt Adaptate's antibody-based γδ T cell engager platform, which includes pre-clinical candidate and discovery pipeline programs. The acquisition is expected to expand the company’s portfolio and boost its profitability.
In its fiscal third quarter, ended Dec. 31, 2021, TAK's revenue increased 11% year-over-year to ¥2.70 trillion ($22.27 billion). The company's operating profit grew 28.9% year-over-year to ¥462.46 billion ($3.82 billion). TAK’s profit before tax increased 51.5% from the prior-year period to ¥356.62 billion ($2.95 billion). Its net profit for the period rose 34.9% year-over-year to ¥241.54 billion ($1.99 billion). And TAK's earnings per share grew 34.6% from its year-ago value to ¥153.03.
In terms of forward EV/Sales, TAK is currently trading at 2.60x, which is 44.3% lower than the 4.67x industry average. Its 7.83 forward EV/EBITDA multiple is 43.3% lower than the 13.8x industry average. And its 1.58 forward Price/ Sales ratio compares with the 5.45 industry average.
The $7.54 billion consensus revenue estimate for its fiscal year 2022 fourth-quarter, ending March 31, 2022, represents 6.3% year-over-year growth.
Shares of TAK have increased 9.9% in price year-to-date and 8.8% over the past three months. It closed yesterday's trading session at $14.98.
TAK's POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to Buy in our proprietary system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
TAK has an A grade for Value and a B grade for Stability. Within the Biotech industry, it is ranked #22 of 423 stocks.
To see additional POWR Ratings (Sentiment, Momentum, Growth, and Quality) for TAK, click here.
Click here to checkout our Healthcare Sector Report for 2022
Biogen Inc. (BIIB)
BIIB in Cambridge, Mass., discovers, develops, manufactures, and delivers therapies to treat neurological and neurodegenerative diseases. The company provides TECFIDERA, VUMERITY, and FAMPYARA for multiple sclerosis (MS), SPINRAZA for spinal muscular atrophy, FUMADERM for plaque psoriasis. In addition, it offers RITUXAM for treating non-Hodgkin’s lymphoma, GAZYVA to treat CLL and follicular lymphoma, and other anti-CD 20 therapies. BIIB has a market capitalization of $30.81 billion.
Last February, BIIB and Xbrane Biopharma AB entered a commercialization and license agreement to develop, manufacture, and commercialize Xcimzane™, a preclinical monoclonal antibody. “We aim to bring more biosimilars products to more patients and more geographies and we are excited to bring this additional asset to our Biosimilars pipeline,” said Ian Henshaw, Head of Global Biosimilars at BIIB.
BIIB's operating income increased 377.4% year-over-year to $649 million in its fiscal 2021 fourth quarter, ended Dec. 31, 2021. BIIB's profit before taxes and JV equity increased 304.2% year-over-year to $582 million. Its net income improved 414.9% year-over-year to $507 million. Its net income attributable to BIIB grew 410.6% year-over-year to $500 million. And the company’s EPS rose 422.9% year-over-year to $3.39.
BIIB is trading at a discount to its peers. In terms of forward Non-GAAP P/E, BIIB is currently trading at 13.46x, which is 36.2% lower than the 21.09x industry average. Its 9.66 forward EV/EBITDA multiple is 30% lower than the 13.79 industry average. And BIIB’s 3.12 forward Price/Sales ratio compares with the 5.45 industry average.
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 month, BIIB gained marginally and closed yesterday’s trading session at $209.62.
BIIB's POWR Ratings reflect this strong outlook. It has an overall B rating, which translates to Buy in our POWR Ratings system.
BIIB has an A grade for Value. It has a B grade for Growth and Quality. It is ranked #9 of 423 stocks in the Biotech industry.
Click here to see BIIB ratings for Stability, Momentum, and Sentiment.
Click here to checkout our Healthcare Sector Report for 2022
Fujitsu Limited (FJTSY)
FJTSY is an information and communication technology (ICT) company that operates in Japan and internationally. It is headquartered in Tokyo, Japan. The company operates through three segments: Technology Solutions; Ubiquitous Solutions; and Device Solutions. It serves automotive, manufacturing, retail, transport, telecommunications, and healthcare industries. FJTSY has a market capitalization of 29.56 billion.
Last November, FJTSY and BGN Technologies signed a three-year joint research agreement to develop technologies and solutions at a new center in Israel to contribute to the real-world applications of AI and machine learning technologies. This partnership with Ben-Gurion University is expected to boost development capabilities in the security field with the establishment of Fujitsu CCoE IL.
In its fiscal year 2022 third quarter, ended Dec. 31, 2021, FJTSY's total comprehensive income for the period increased 7.5% year-over-year to ¥104.64 billion ($864.52 million). The company's profit for the period grew 12.6% year-over-year to ¥80.21 billion ($662.68 million). And FJTSY’s earnings per share increased 7.6% from the prior-year period to ¥361.26.
In terms of forward Non-GAAP P/E, CRFFY is currently trading at 9.82x, which is 46.6% lower than the 18.39x industry average. Its 0.37 forward EV/Sales multiple of is 81% lower than the 1.93x industry average. And its 5.69 forward EV/EBITDA ratio compares with the 11.87 industry average.
The $30.91 billion consensus revenue estimate for its fiscal year 2022, ending March 31, 2022, represents 70.3% year-over-year growth.
The stock increased 8.9% in price over the past month and closed yesterday’s trading session at $30.02.
FJTSY's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
FJTSY has an A grade for Value and a B for Stability and Quality. Within the Technology - Services industry, it is ranked #11 of 78 stocks.
To see additional component grades of POWR Ratings (Sentiment, Growth, and Momentum) for FJTSY, click here.
Nissan Motor Co., Ltd. (NSANY)
NSANY manufactures and sells vehicles and automotive parts worldwide. It is headquartered in Yokohama, Japan. The company provides vehicle and vehicle parts, engines, manual transmissions, automotive parts, and specially equipped vehicles. In addition, it provides financial services, card business, inventory finance, and car leasing. NSANY provides travel, environment, engineering, vehicle management, and information logistics services . It has a market capitalization of $16.91 billion.
NSANY's gross profit increased 5.1% year-over-year to ¥344.34 billion ($2.84 billion) in its fiscal year 2022 third quarter, ended Dec. 31, 2021. NSANY's operating income increased 92.3% year-over-year to ¥52.16 billion ($430.94 million). The company’s income before income taxes rose 1,650.2% year-over-year to ¥65.92 billion ($544.62 million). Its net income improved 215.1% year-over-year to ¥37.32 billion ($308.33 million). And its net income attributable to owners of the parent grew 186.6% year-over-year to ¥32.69 billion (270.08 million).
In terms of forward EV/Sales, NSANY is currently trading at 0.89x, which is 26.6% lower than the 1.22x industry average. Its 0.23 forward Price/Sales multiple is 76.5% lower than the 0.99x industry average. Its 2.06 forward Price/ Cash Flow ratio compares with the 11.17 industry average.
Analysts expect NSANY's revenue for its fiscal 2023 first quarter, ending June 31, 2022, to come in at $20.22 billion, representing a 10.6% rise year-over-year.
NSANY stock gained marginally over the past five days. The stock closed yesterday's trading session at $8.67.
NSANY's POWR Ratings reflect this strong outlook. It has an overall rating of B, which translates to Buy in our POWR Ratings system.
It has a grade of A for Value and a B grade for Growth. It is ranked #11 of 68 stocks in the Auto & Vehicle Manufacturers industry.
Click here to see NSANY ratings for Stability, Momentum, Quality, and Sentiment.
Click here to check out our Automotive Industry Report for 2022
Cardinal Health, Inc. (CAH)
CAH is an integrated healthcare service and products company that operates in the U.S., Canada, Europe, Asia, and internationally. The Dublin, Ohio, company operates in two segments: Pharmaceutical and Medical. It provides branded and generic pharmaceutical and over-the-counter healthcare and consumer products, customized solutions for hospitals, pharmacies, clinical laboratories, and home patients. CAH has a market capitalization of $15.73 billion.
On Feb. 9, 2022, CAH partnered with Kinaxis to increase medical product visibility and supply chain agility. With this partnership, CAH might standardize medical planning within one platform and improve supplier management, risk management, and inventory capabilities.
In its fiscal year 2022 second quarter, ended Dec. 31, 2021, CAH's revenue increased 9.6% year-over-year to $45.50 billion. The company's profit from the pharmaceutical segment grew 3.1% year-over-year to $426 million. FJTSY’s total current assets increased marginally over the six-month period ended Dec. 31, 2021, to come at $43.68 billion.
In terms of forward Non-GAAP P/E, CAH is currently trading at 10.90x, which is 48.3% lower than the 21.09x industry average. Its 0.09 forward Price/Sales multiple is 98.4% lower than the 5.45x industry average. Its 7.47 forward EV/EBITDA compares with the 13.79 industry average.
The $43.21 billion consensus revenue estimate for its fiscal year 2022 third-quarter, ending March 31, 2022, represents 10% year-over-year growth.
Shares of CAH increased 10.2% in price year-to-date and 13.1% over the past three months. It closed yesterday's trading session at $56.76.
CAH's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
CAH has an A grade for Value and Growth. It is ranked #5 of 84 stocks within the Medical - Services industry.
To see additional component grades of POWR Ratings (Quality, Stability, Sentiment, and Momentum) for CAH, click here.
Click here to checkout our Healthcare Sector Report for 2022
TAK shares were trading at $14.99 per share on Thursday afternoon, up $0.01 (+0.07%). Year-to-date, TAK has gained 9.98%, versus a -5.27% 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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