The stock market has been turbulent of late due to multi-decade high inflation, continued Russia-Ukraine war, extended lockdowns in China, and worries over the increasing odds of the economy slipping into a recession due to aggressive interest rate hikes. The CBOE Volatility Index (VIX) has gained 69.7% year-to-date, reflecting significant market volatility.
As these factors will likely persist in the near term, analysts expect the market to witness wild swings. While this is an opportune time for investors to scope up quality stocks at low prices, many analysts believe that the market hasn’t hit bottom yet.
If the market continues its downtrend, and even worse, crashes, Novartis AG (NVS), Micron Technology, Inc. (MU), Waste Management, Inc. (WM), Oracle Corporation (ORCL), Amgen Inc. (AMGN) are no-brainer picks to scoop up due to the underlying strength of their business models.
Novartis AG (NVS)
With a $201.90 billion market capitalization, NVS is a Switzerland-based pharmaceutical company that researches, develops, manufactures, and markets branded and generic prescription drugs, active pharmaceutical ingredients, biosimilars, and ophthalmic products worldwide. The company uses science and digital technologies for treatments in the disease areas of immunology, dermatology, cancer, ophthalmology, neuroscience, respiratory, cardiovascular, renal, and metabolism.
On May 20, 2022, European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion for NVS’ Cosentyx, used alone or in combination with methotrexate, in reducing flare risk in pediatric enthesitis-related arthritis (ERA) and psoriatic arthritis (PsA) patients. As juvenile psoriatic arthritis (JPsA) is being seen as the most common childhood rheumatic disease, this approval should enable NVS to witness high demand and expanding market reach in the coming months.
For its fiscal 2022 first quarter ended March 31, 2022, NVS’ total revenues increased marginally year-over-year to $12.53 billion. The company’s gross profit came in at $8.96 billion, up 3.5% from the prior-year period. Its operating income came in at $2.85 billion for the quarter, representing an 18.1% year-over-year improvement. While its net income increased 7.8% year-over-year to $2.22 billion, its EPS grew 8.8% to $0.99. It had $13.85 billion in cash and cash equivalents as of March 31, 2022.
The consensus revenue estimate of $53.07 billion for fiscal 2022 ending December 31, 2022, represents a 2.8% rise from the year-ago period. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. The company’s EPS is expected to grow at a rate of 4.8% per annum over the next five years.
The company’s gross profit margin and EBITDA margin have been 71.4% and 33.9%, respectively, in the trailing 12 months. The stock’s 14.95x non-GAAP forward P/E is 22.2% lower than the 19.21x industry average. In terms of forward EV/EBIT, NVS is currently trading at 12.39x, 26.9% lower than the 16.94x industry average. Over the past week, the stock has gained 2.1% to close yesterday’s trading session at $91.25.
NVS’ POWR Ratings reflect its solid prospects. The stock has an overall A rating, which equates to 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. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for NVS’ Momentum, Sentiment, and Growth here.
NVS is ranked #3 of 165 stocks in the Medical - Pharmaceuticals industry.
Micron Technology, Inc. (MU)
With a $75.79 billion market cap, MU designs, manufactures, and sells memory and storage products worldwide. The Boise, Idaho-based company operates through computer and networking, mobile, storage, and embedded business units. It sells dynamic random access memory chips (DRAMs), static random access memory chips (SRAMs), flash memory, semiconductor components, and memory modules to various end markets.
On March 22, 2022, regulated electrical power utility Idaho Power partnered with MU to facilitate the construction of a new 40-megawatt (MW) solar project. Idaho Power has asked the Idaho Public Utilities Commission (IPUC) to approve a power purchase agreement with oil & gas exploration and production company Black Mesa Energy, LLC, to develop a dedicated solar facility for MU’s renewable energy use. This project supports MU’s goal to source 100% renewable energy for its U.S. operations by the end of 2025.
For its fiscal year 2022 second quarter, ended March 3, 2022, MU’s revenue increased 24.9% year-over-year to $7.79 billion. The company’s non-GAAP gross profit came in at $3.62 billion, up 81.3% from its year-ago period. Its non-GAAP operating income came in at $2.75 billion, indicating a 118.8% rise from the prior-year period. MU’s non-GAAP net income has increased 116.7% year-over-year to $2.44 billion. Its non-GAAP EPS came in at $2.14, representing a 118.4% year-over-year improvement. As of March 3, 2022, the company had $9.12 billion in cash and equivalents.
Analysts expect the company’s EPS to improve 46.8% year-over-year to $9.56 for fiscal 2022, ending August 31, 2022. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. The consensus revenue estimate of $33.67 billion for the same fiscal year represents a 21.5% rise from the prior-year period. The company’s EPS is expected to grow at a 29.7% rate per annum over the next five years.
MU’s gross profit margin and EBITDA margin have been 46% and 54.8%, respectively, in the trailing 12 months. The stock’s 6.92x non-GAAP forward P/E is 61.2% lower than the 17.83x industry average. In terms of forward EV/EBIT, MU is currently trading at 6x, which is 61% lower than the 15.38x industry average. Over the past week, the stock has lost 1.5% to close yesterday’s trading session at $67.87.
MU’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has an A grade for Value and a B grade for Growth, Quality, and Sentiment. Click here to see the additional ratings for MU’s Stability and Momentum.
MU is ranked #9 of 95 stocks in the B-rated Semiconductor & Wireless Chip industry.
Waste Management, Inc. (WM)
WM provides waste management environmental services to residential, commercial, industrial, and municipal customers in North America. The company offers collection, transfer, and disposal services of waste and recyclable materials, recycling brokerage services, owns, develops, operates landfill gas-to-energy facilities, and operates transfer stations. It has a $64.78 billion market capitalization.
On January 13, 2022, WM’s WM Organic Growth subsidiary and Tailwater Capital LLC, a private equity firm focused on midstream and upstream oil and gas companies, announced a joint venture that enables Continuus Materials, a leading waste diversion and circular economy solutions provider, to develop additional facilities at WM sites and launch its first full-scale production plant that upcycles plastic and fiber materials from municipal solid waste into Everboard, a proprietary, high-performance, low-slope roof cover board. Continuus Materials’ process reduces landfill waste and generates significantly lower life-cycle greenhouse gas emissions than competing products made from traditional materials. This will enable the companies to use impactful, sustainable solutions to reduce waste.
WM’s revenue for its fiscal 2022 first quarter ended March 31, 2022, increased 13.4% year-over-year to $4.66 billion. The company’s adjusted income from operations came in at $803 million, representing a 16.5% year-over-year improvement. Its adjusted net income came in at $540 million for the quarter, indicating a 20% rise from the prior-year period. WM’s adjusted EPS increased 21.7% year-over-year to $1.29. The company had $155 million in cash and cash equivalents as of March 31, 2022.
The consensus EPS estimate of $5.60 for fiscal 2022 ending December 31, 2022, represents a 15.7% year-over-year improvement. Analysts expect its revenue to grow 8.1% year-over-year to $19.39 billion for the same fiscal year. The company’s EPS is expected to grow at an 11.7% rate per annum over the next five years.
WM’s gross profit margin and EBITDA margin have been 37.8% and 27.5%, respectively, in the trailing 12 months. The stock’s 14.62x trailing-12-month is 11.3% lower than the industry average of 16.47x. Over the past week, it has gained 1% to close yesterday’s session at $156.01.
WM’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to Strong Buy in our proprietary rating system.
The stock has a B grade for Growth, Quality, Stability, and Sentiment. Click here to see the additional ratings for WM (Momentum and Value).
The stock is ranked #1 of 15 stocks in the B-rated Waste Disposal industry.
Oracle Corporation (ORCL)
With a market capitalization of $186.32 billion, ORCL provides products and services that address all aspects of corporate IT environments, including application, platform, and infrastructure worldwide. The company operates through four segments — cloud services and license support; cloud license and on-premises license; hardware; and services. It markets and sells its solutions directly to businesses in various industries, government agencies, educational institutions, and indirect channels.
On May 24, 2022, ORCL expanded the built-in security services and capabilities of Oracle Cloud Infrastructure (OCI) with the addition of a new built-in and cloud-native firewall service and enhancements to Oracle Cloud Guard and Oracle Security Zones to help customers protect their cloud applications and data against emerging threats. These innovations will help organizations easily secure their cloud deployments and applications with simple, prescriptive, and integrated services.
ORCL’s revenues for its fiscal 2022 third quarter ended February 28, 2022, increased 4.2% year-over-year to $10.51 billion. The company’s non-GAAP operating income came in at $4.81 billion, indicating a marginal rise from the prior-year period. While its non-GAAP net income decreased 11% year-over-year to $3.38 billion, its non-GAAP EPS decreased 2.6% to $1.21. As of February 28, 2022, the company had $22.68 billion in cash and cash equivalents.
Analysts expect the company’s EPS to hit $4.75 for its fiscal 2022 ending May 31, 2022, representing a 1.7% rise from the prior-year period. It surpassed Street EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $42.28 billion for the same fiscal year represents a 4.4% year-over-year improvement. Its EPS is expected to grow at a rate of 10.2% per annum over the next five years.
ORCL’s gross profit margin and EBITDA margin have been 79.4% and 44%, respectively, in the trailing-12-months. The stock’s 14.51x non-GAAP forward P/E is 19.7% lower than the 18.07x industry average. In terms of forward EV/EBIT, ORCL is currently trading at 12.51x, which is 17.2% lower than the 15.11x industry average. Over the past week, the stock has gained 1.8% to close yesterday’s trading session at $69.83.
ORCL’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.
It has a B grade for Value, Quality, and Stability. Click here to see the additional ratings for ORCL (Momentum, Sentiment, and Stability).
ORCL is ranked #18 of 156 stocks in the Software - Application industry.
Amgen Inc. (AMGN)
AMGN is a biotechnology company that discovers, develops, manufactures, and delivers human therapeutics focused on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology, and neuroscience areas worldwide. The company distributes its products through pharmaceutical wholesale distributors and direct-to-consumer channels. It has a market capitalization of $135.16 billion.
On April 27, 2022, AMGN announced positive results from two Repatha open-label extension (OLE) studies to the Phase 3 FOURIER cardiovascular outcomes trial that assessed the long-term safety and tolerability of Repatha over five years in adults with clinically evident atherosclerotic cardiovascular disease. Moreover, a medically significant and sustained reduction in low-density lipoprotein cholesterol (LDL-C) levels were observed during the OLE period. This safety profile of Repatha should enable it to gain widespread recognition in the future.
For its fiscal year 2022 first quarter ended March 31, 2022, AMGN’s total revenues increased 5.7% year-over-year to $6.24 billion. The company’s non-GAAP operating income came in at $3.14 billion, up 9.6% from the year-ago period. AMGN’s non-GAAP net income came in at $2.34 billion, representing a 9% rise from the prior-year period. Its non-GAAP EPS came in at $4.25, indicating a 14.9% year-over-year improvement. As of March 31, 2022, the company had $6.53 billion in cash and cash equivalents.
Analysts expect AMGN’s EPS to grow 2.1% year-over-year to $17.46 for its fiscal 2022 ending December 31, 2022. It surpassed the consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $26.23 billion for the same fiscal year indicates a 1% year-over-year improvement. The company’s EPS is expected to grow at a 7.1% rate per annum over the next five years.
AMGN’s gross profit margin and EBITDA margin have been 75.2% and 49%, respectively, in the trailing 12 months. The stock’s 14.48x non-GAAP forward P/E is 25.5% lower than the 19.44x industry average. In terms of forward EV/EBIT, AMGN is currently trading at 13.21x, 22.6% lower than the 17.06x industry average. Over the past week, the stock has gained 2.2% to close yesterday’s trading session at $253.01.
AMGN’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Growth and Stability. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for AMGN’s Value, Sentiment, and Momentum here.
AMGN is ranked #4 of 393 stocks in the Biotech industry.
NVS shares were trading at $91.23 per share on Thursday afternoon, down $0.02 (-0.02%). Year-to-date, NVS has gained 7.07%, versus a -14.24% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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