The stock market has been experiencing tough times of late due to raging inflation, a war between Russia and Ukraine, aggressive monetary tightening by the Fed, rising energy prices, and extended COVID-19 lockdowns in China. The near-term market outlook remains highly uncertain because investor sentiment has taken a beating due to rising recession concerns.
Although stocks rallied post the Fed’s 50 basis points hike in its benchmark rate on Wednesday, the Dow Jones Industrial Average retreated 1,063 points yesterday, marking its biggest single day fall since 2020, while the Nasdaq Composite declined 4.9% to mark its lowest closing since November 2020. The S&P 500 marked its second-worst day this year, closing at 4,146.87, falling 3.5%. And, with the Fed’s hawkish stance, there is little sign of relief in the near term.
Investors worried about a market meltdown could consider betting on Coca-Cola FEMSA, S.A.B. de C.V. (KOF), CGI Inc. (GIB), Novartis AG (NVS), PLDT Inc. (PHI), and Fresenius Medical Care AG & Co. KGaA (FMS). Due to their fundamental strength and favorable industry trends, these companies are well-positioned to perform steadily even during a market meltdown. According to our proprietary POWR Ratings system, these stocks have an A grade for Stability.
Coca-Cola FEMSA, S.A.B. de C.V. (KOF)
KOF is based in Mexico City, Mexico. The company is the largest franchise bottler of Coca-Cola trademark beverages globally by sales volume. It is engaged in producing, distributing, and marketing certain Coca-Cola beverages. Its segments include its Mexico and Central America division, its South America division, and its Asian division.
On April 19, 2022, KOF announced that it had reached an agreement to distribute Campari Group products in Brazil. Well known for alcoholic drinks that include Aperol, SKYY vodka, and Wild Turkey, Campari’s products will be distributed through a KOF subsidiary. KOF’s Chief Executive John Santa Maria said, “We hope to leverage the strength of our distribution network and execution capabilities to increase Campari’s presence in our territories.”
KOF’s total revenue increased 14.5% year-over-year to Mex$51.19 billion ($2.52 billion) for the first quarter ended March 31, 2022. The company’s gross profit increased 13.5% year-over-year to Mex$22.60 billion ($1.11 billion). Also, its operating cash flow increased 11.6% year-over-year to Mex$9.82 billion ($0.48 billion).
Analysts expect KOF’s EPS for its fiscal 2023 to increase 10.1% year-over-year to $3.73. Its revenue for its fiscal year 2022 is expected to increase 7.9% year-over-year to $10.37 billion. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 17.9% in price to close the last trading session at $54.99.
KOF’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Stability and a B grade for Value and Quality. Within the B-rated Beverages industry, it is ranked #2 out of 37 stocks. Click here to see the other ratings of KOF for Growth, Momentum, and Sentiment.
CGI Inc. (GIB)
Headquartered in Montreal, Canada, GIB provides information technology and business processes. Its services include the management of IT and business outsourcing, systems integration and consulting, and software solutions selling activities. The company also offers application development, integration and maintenance, testing, portfolio management and modernization services; business consulting; and a suite of business process services.
On April 27, 2022, GIB announced that it had agreed to acquire Harwell Management holding and its subsidiaries through its subsidiary CGI France SAS. The acquisition enables GIB’s CGI Business Consulting business capabilities throughout the vital financial services sectors like retail banking, corporate and investment banking, capital markets, insurance, and other specialized banking services.
For its fiscal second quarter, ended March 31, 2022, GIB’s total revenue increased 6.2% year-over-year to CAD3.26 billion ($2.55 billion). The company’s adjusted EBIT increased 7.6% year-over-year to CAD523.60 million ($409.57 million). Also, its net earnings increased 9% year-over-year to CAD372 million ($290.99 million).
For the quarter ending June 30, 2022, GIB’s EPS is expected to increase 12% year-over-year to $1.21. Its revenue for the quarter ending September 30, 2022, is expected to increase 4.8% year-over-year to $2.49 billion. It surpassed consensus EPS estimates in each of the trailing four quarters. Over the past month, the stock has declined 4.1% to close the last trading session at $79.39.
GIB’s POWR Ratings reflect solid prospects. The company has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has an A grade for Stability and a B grade for Sentiment. Within the A-rated Outsourcing – Tech Services industry, it is ranked #5 out of 10 stocks. To see the other ratings of GIB for Growth, Value, Momentum, and Quality, click here.
Novartis AG (NVS)
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 includes 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 FDA had granted accelerated approval to Vijoice (alpelisib) for treating adults and pediatric patients two years of age and older 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.”
NVS’ net sales increased 0.9% year-over-year to $12.53 billion for the first quarter ended March 31, 2022. The company’s net income increased 23% year-over-year to $2.21 billion. Also, its EPS came in at $1, representing an increase of 25% year-over-year.
Analysts expect NVS’ EPS and revenue for fiscal 2023 to increase 9.1% and 3.1% year-over-year to $6.83 and $54.83 billion, respectively. Over the past six months, the stock has gained 3% in price to close the last trading session at $86.21.
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 Value and Quality. It is ranked #3 among 167 stocks in the Medical - Pharmaceuticals industry. Click here to see NVS ratings for Growth, Momentum, and Sentiment.
Click here to checkout our Healthcare Sector Report for 2022
PLDT Inc. (PHI)
Headquartered in Makati City, Philippines, PHI provides telecommunications and digital services. It operates through three segments: Wireless, Fixed Line, and Others. The company offers cellular mobile, Internet broadband distribution, operations support, software development, and satellite information and messaging services and sells Wi-Fi access equipment.
On April 20, 2022, PHI’s announced that its subsidiaries Smart Communications, Inc. and Digitel Mobile Philippines, Inc. had signed a sale and purchase agreement in connection with the sale of 5,907 telecom towers and related passion telecom infrastructure for PHP77 billion. PHI’s Chairman Manuel V. Pangilinan said, “This partnership with experienced international tower companies represents another milestone in PLDT’s strategic transformation. We expect to reap benefits in terms of a valuation uplift and capital reallocation with PLDT applying the proceeds to deleverage, further invest in the network, and return cash to shareholders via a special dividend.”
For its fiscal first quarter, ended March 31, 2022, PHI’s total revenues increased 4.6% year-over-year to ₱50.14 billion ($0.95 billion). The company’s EBITDA margin came in at 53%, compared to 51% in the year-ago period. Also, its net income attributable to equity shareholders increased 56.4% year-over-year to ₱9.07 billion ($0.17 billion). In addition, its total current assets increased 3.1% to ₱76.25 billion ($1.45 billion), compared to ₱73.93 billion ($1.40 billion) for the fiscal year ended December 31, 2021.
For fiscal 2023, PHI’s revenue is expected to increase 4.8% year-over-year to $4.10 billion. Over the past nine months, the stock has gained 51.7% to close the last trading session at $37.25.
PHI’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It has an A grade for Stability and a B grade for Sentiment and Quality. Within the A-rated Telecom – Foreign industry, it is ranked #9 out of 47 stocks. To see the other ratings of PHI for Growth, Value, and Momentum, click here.
Fresenius Medical Care AG & Co. KGaA (FMS)
Headquartered in Bad Homburg, Germany, FMS provides dialysis care and related services in Germany, North America, and internationally. It offers treatment and related laboratory and diagnostic services through outpatient dialysis clinics, materials, training, and patient support services. The company also develops, manufactures, and distributes dialysis and non-dialysis products.
On April 21, 2022, FMS announced that the FDA had awarded 510(k) clearance to the next-generation portable automated peritoneal dialysis system named Versi PD Cycler System, which happens to be the lightest, smallest, and quietest dialysis cycler in the U.S. The Versi PD Cycler system seeks to make home dialysis therapy a more feasible option for the broader population requiring dialysis.
FMS’ revenue increased 8% year-over-year to €4.54 billion ($4.80 billion) for the first quarter, ended March 31, 2022. Its health care services revenue increased 8.5% year-over-year to €3.60 billion ($3.81 billion). Also, its gross profit increased 4.3% year-over-year to €1.25 billion ($1.32 billion).
Analysts expect FMS’ EPS and revenue for its fiscal year 2022 to increase 42.7% and 6.5% year-over-year to $2.64 and $19.94 billion, respectively. It surpassed the Street’s EPS estimates in three of the trailing four quarters. The stock has lost 4.8% year-to-date to close the last trading session at $30.90.
FMS’ POWR Ratings reflect solid prospects. The company has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has an A grade for Stability and a B grade for Value. It is ranked #15 out of 83 stocks in the Medical – Services industry. Click here to see the other ratings of FMS for Growth, Momentum, Sentiment, and Quality.
Click here to checkout our Healthcare Sector Report for 2022
KOF shares were trading at $54.83 per share on Friday morning, down $0.16 (-0.29%). Year-to-date, KOF has gained 2.56%, versus a -14.16% 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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