Wall Street ended 2022 with the biggest annual decline since 2008. Following last year's dismal performance, stocks have had an encouraging start to 2023, with the Nasdaq Composite and S&P 500 gaining about 11% and 6%, respectively, in the past month. Moreover, January turned out to be Nasdaq’s best month since July.
Stocks rallied after the Federal Reserve raised interest rates by a quarter point at the year's first Federal Open Market Committee (FOMC) meeting, marking the smallest hike since March last year. While Fed Chair Jerome Powell hinted at a couple more increases, he also said, "The disinflationary process has begun. It has begun in the goods sector, which is about 25% of the economy."
In light of better-than-anticipated domestic developments in the United States and Europe, the International Monetary Fund (IMF) updated its growth prediction for the year. It now forecasts the U.S. GDP to grow 1.4% this year.
“We think the U.S. will be able to go through the year narrowly avoiding falling into recession,” said IMF managing director Kristalina Georgieva, indicating the possibility of a soft landing for the United States.
Given the improving economic outlook, fundamentally sound stocks Bristol-Myers Squibb Company (BMY) and General Motors Company (GM) could make ideal investments to commence this year right.
Bristol-Myers Squibb Company (BMY)
BMY is involved in the discovery, development, licensing, production, and marketing of biopharmaceutical products. It provides products for various therapeutic areas, including oncology, immunology, cardiovascular disease, and fibrosis.
On January 27, 2023, BMY announced that the European Medicines Agency’s Committee for Medicinal Products for Human Use (CHMP) had recommended approval of Reblozyl® as a therapy for adult patients with anemia caused by non-transfusion-dependent (NTD) beta-thalassemia.
The prospective approval of Reblozyl for patients with NTD beta thalassemia marks a significant step forward for the European Union. BMY could benefit from this initiative by improving patient care.
Furthermore, on January 3, BMY concluded the sale of its Syracuse, New York manufacturing facility to LOTTE BIOLOGICS. The transaction is a part of BMY's ongoing efforts to strengthen its production infrastructure to support its product portfolio.
The company’s total U.S. revenues increased 5.4% year-over-year to $7.93 billion in the fiscal fourth quarter that ended December 31, 2022. The company’s EBIT rose marginally from the year-ago value to $1.86 billion. Moreover, as of December 31, 2022, BMY’s long-term debt stood at $35.06 billion, down 11.5% year-over-year.
Analysts expect BMY’s revenue to increase 1.7% year-over-year to $46.96 billion for the fiscal year ending December 2023. The company’s EPS for the ongoing year is expected to rise 3.9% from the previous year to $8. Moreover, BMY surpassed its consensus EPS estimates in all four trailing quarters, which is impressive.
Shares of BMY have gained 12.6% over the past year to close the last trading session at $74.52.
BMY’s POWR Ratings reflect its strong outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has an A grade for Value and a B for Stability and Quality. Within the 172-stock Medical - Pharmaceuticals industry, it ranks #3.
To see additional POWR Ratings for Sentiment, Growth, and Momentum for BMY, click here.
General Motors Company (GM)
GM designs, manufactures, and markets trucks, crossovers, cars, and auto parts, alongside providing software-enabled services and subscriptions. Its segments include GM North America; GM International; Cruise; and GM Financial. The company also offers a range of after-sale services.
On January 31, 2023, GM and Lithium Americas Corp. (LAC) announced a joint investment to develop the Thacker Pass mine in Nevada, the largest known lithium deposit in the United States and the third largest in the world.
According to the agreement, GM would spend $650 million in LAC as equity, which is the largest investment ever made by an automaker in producing battery raw materials. This investment seems to have a lot of potential for GM.
Additionally, on January 20, the company announced plans to invest $918 million in four U.S. manufacturing facilities, of which $854 million would be used to prepare the facilities to produce the company's sixth generation Small Block V-8 engine and the remaining $64 million would be spent on castings and other components.
With these investments, the company should be able to support its expanding line of EV products while also bolstering its full-size truck and SUV business, which is the best in the market.
For the fiscal fourth quarter that ended December 31, 2022, GM’s revenue increased 28.4% year-over-year to $43.11 billion, while its adjusted EBIT grew 33.8% from the year-ago value to $3.80 billion. Also, the company’s net income attributable to stockholders increased 14.8% year-over-year to $2 billion, while its adjusted EPS came in at $2.12, up 57% year-over-year.
The consensus revenue estimate of $164.64 billion for the fiscal year ending December 2024 reflects a growth of 2% from the previous year. Likewise, the consensus EPS estimate of $6.23 for the same year indicates a 1% year-over-year improvement. Also, GM surpassed the consensus EPS in all four trailing quarters.
The stock has gained 14% over the past month to close the last trading session at $41.40.
GM’s solid prospects are apparent in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our proprietary rating system.
GM also has a B grade for Growth, Value, and Sentiment. Within the Auto & Vehicle Manufacturers industry, it ranks #19 of 61 stocks.
Beyond what we stated above, we also have GM’s ratings for Stability, Quality, and Momentum. Get all GM ratings here.
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BMY shares were trading at $73.25 per share on Wednesday morning, down $1.27 (-1.70%). Year-to-date, BMY has gained 2.61%, versus a 7.28% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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