Investors have been debating about the possibility of a recession for weeks now, and many thought an economic slowdown would give the Fed reason to ease up on its rate hiking plan. However, Jerome Powell’s speech last week indicated the Central Bank’s commitment to maintaining its aggressive stance on inflation.
The stock market had started August strong but ended in the red, fueled by Fed Chair Jerome Powell’s Jackson Hole speech.
Moreover, September is considered to be seasonally weak for stocks. Jim Cramer believes investors should avoid money-losing companies and invest in companies that have good balance sheets and cash positions.
We believe fundamentally strong dividend-paying stocks Pfizer Inc.(PFE) and Costco Wholesale Corporation (COST) might be ideal investments for people planning their retirement investments in their 30s.
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, distributes, and sells biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas. The company serves wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, as well as disease control and prevention centers.
On August 31, PFE and BioNTech SE (BNTX) announced that the U.S. Food and Drug Administration (FDA) had granted Emergency Use Authorization (EUA) for a booster dose of the Pfizer-BioNTech COVID-19 Vaccine for individuals ages 12 years and older. The companies are expected to supply the original and bivalent vaccines under their existing supply agreement with the U.S. government. This might benefit PFE.
On August 8, PFE and Global Blood Therapeutics, Inc. (GBT) announced that both companies had entered into a definitive agreement under which PFE would acquire GBT. The acquisition is expected to complement and further enhance the company’s expertise in rare hematology.
On June 23, PFE declared a quarterly dividend of $0.40 per share on its common stock, payable to shareholders on September 6. Its annual dividend of $1.60 yields 3.54%. The company’s dividend payouts have increased at a 5.7% CAGR over the past three years and a 5.9% CAGR over the past five years. The company has a record of 11 years of consecutive dividend growth.
PFE’s revenue increased 46.8% year-over-year to $27.74 billion in the second quarter ended July 3. Its income from continuing operations grew 69.6% from the year-ago value to $9.88 billion, while its adjusted income improved 93.5% year-over-year to $11.66 billion. The company’s adjusted earnings per common share increased 92.5% from its year-ago value to $2.04.
The consensus EPS estimate of $1.35 for the fourth fiscal quarter ending December indicates a 25.1% improvement year-over-year. The consensus revenue is expected to rise 3.4% year-over-year to $24.64 billion for the same period. Additionally, PFE has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has declined 1.4% intraday to close its last trading session at $45.23.
PFE’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.
PFE is rated an A in Value and a B in Sentiment and Quality. Within the Medical - Pharmaceuticals industry, it is ranked #7 out of 167 stocks. To see additional POWR Ratings for Growth, Momentum, and Stability for PFE, click here.
Costco Wholesale Corporation (COST)
COST operates an international chain of membership warehouses that carry quality, brand-name merchandise. The company offers branded and private-label products in a range of merchandise categories.
On June 30, COST announced the completion of a purchase for $1.05 billion by a wholly-owned subsidiary of the 45% minority interest in Costco Taiwan. COST estimated the purchase would be approximately 1%-1.5% accretive to earnings per share.
On July 13, COST declared a quarterly dividend of $0.90 per share on its common stock, which was payable to shareholders on August 12. Its annual dividend of $3.60 yields 0.69% on prevailing prices. The company’s dividend payouts have increased at a 12.7% CAGR over the past three years and a 12.8% CAGR over the past five years. The company has a record of 17 years of consecutive dividend growth.
COST’s total revenue came in at $52.60 billion for the third quarter ended May 8, representing a 16.2% year-over-year growth. Its operating income grew 7.7% from the prior-year quarter to $1.79 billion, while net income attributable to COST rose 10.9% from the same period last year to $1.35 billion. The EPS increased 10.5% from the prior-year period to $3.04.
Analysts expect COST’s revenue for the fourth quarter ended August 2022 to be $71.65 billion, indicating a 14.3% year-over-year growth. The company’s EPS for the same quarter is expected to increase 6.6% from the prior-year quarter to $4.16. Additionally, COST has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
COST has gained 14.6% over the past year and 12% over the past three months to close its last trading session at $522.10.
It is no surprise that COST has an overall B rating, which translates to Buy in our POWR Rating system. The stock also has a B grade for Growth and Sentiment. It is ranked #25 out of the 38 stocks in the A-rated Grocery/Big Box Retailers industry.
Beyond what we’ve stated above, we also have graded COST for Value, Momentum, Stability, and Quality. Get all COST ratings here.
PFE shares rose $0.03 (+0.06%) in after-hours trading Thursday. Year-to-date, PFE has declined -19.16%, versus a -15.92% 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.
Everyone in Their 30s Should Own These 2 Stocks StockNews.com
