Regardless of the Fed’s repeated interest rate increases this year, inflation has shown no signs of slowing down. August’s CPI came in hotter than expected, cementing the view that the Fed will raise interest rates aggressively. Therefore, recession fears are rising.
As the United States, China, and the Eurozone have been experiencing an economic slowdown, the World Bank anticipates that the world might be edging toward a global recession. World Bank’s President David Malpass worries that the persisting market trends could lead to devastating consequences for emerging markets and developing economies. He said, "Global growth is slowing sharply, with further slowing likely as more countries fall into recession."
Despite the expected market volatility, staying invested in quality stocks might help generate solid returns in the long run. Therefore, it could be wise to buy stocks of The Coca-Cola Company (KO), AbbVie Inc. (ABBV), and Merck & Co., Inc. (MRK). Strong fundamentals and solid growth prospects of these stocks could keep bullish traders engaged in them.
The Coca-Cola Company (KO)
KO is a beverage company that manufactures, markets, and sells various non-alcoholic beverages globally. It sells its products under brands: Coca-Cola, Sprite, Fanta, Diet Coke, Coca-Cola Zero Sugar, Thumbs Up, Aquarius, fairlife, Minute Maid Pulpy, and Simply, among others.
On June 13, 2022, the company announced a global relationship with Brown-Forman Corporation to debut the iconic Jack & Coke cocktail as a branded, ready-to-drink (RTD) pre-mixed cocktail option. This should be widely in demand, given its brand popularity.
KO’s net operating revenue increased 11.8% year-over-year to $11.33 billion in the second quarter that ended July 1, 2022. Its gross profit grew 2.4% from the year-ago value to $6.49 billion, while its non-GAAP net income improved 4.4% year-over-year to $3.06 billion. The company’s non-GAAP EPS increased 2.9% from its year-ago value to $0.70.
Analysts expect KO’s EPS and revenue to increase 6.3% and 4.9% year-over-year to $0.48 and $9.94 billion, respectively, in its fiscal fourth quarter (ending December 2022). It surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 10.2% to close the last trading session at $59.99.
KO’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. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Stability, Sentiment, and Quality. The stock is ranked #22 of 36 stocks in the A-rated Beverages industry. Click here to see the other ratings of KO for Growth, Value, and Momentum.
AbbVie Inc. (ABBV)
ABBV is engaged in developing, manufacturing, and selling pharmaceuticals globally. It offers its products in various categories: immunology, oncology, neuroscience, eye care, and women's healthcare. The company markets its products to wholesalers, distributors, government agencies, health care facilities, and independent retailers.
On September 19, 2022, the company received a positive CMHP opinion for Risankizumab (SKYRIZI®) for treating adults with moderate to severe Crohn’s disease who have had an inadequate response and lost response or were intolerant to either conventional therapy or a biologic agent. This approval should strengthen ABBV’s ability to treat patients with Crohn's disease.
ABBV’s net revenues increased 4.5% year-over-year to $14.58 billion in the second quarter ended June 30, 2022. The company’s non-GAAP net earnings increased 10.7% from the year-ago value to $6 billion, while its adjusted EPS rose 11.2% from the prior-year quarter to $3.37.
Analysts expect ABBV’s EPS and revenue to increase 8.1% and 4.5% year-over-year to $3.60 and $14.99 billion, respectively, in the fiscal third quarter ending September 30, 2022. ABBV has gained 32.4% over the past year to close the last trading session at $142.66.
ABBV’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B for Growth, Value, and Sentiment. Within the Medical - Pharmaceuticals industry, it is ranked #5 out of 166 stocks. To see the other ratings of ABBV for Momentum and Stability, click here.
Merck & Co., Inc. (MRK)
MRK is a global provider of health solutions through its prescription medicines, vaccines, biological therapies, and animal health products. The company operates through two segments: Pharmaceutical and Animal Health. It offers its products to drug wholesalers, retailers, hospitals, government agencies, and other health care providers.
On September 16, 2022, MRK received a positive opinion from CHMP for VAXNEUVANCE™ (Pneumococcal 15-valent Conjugate Vaccine) for active immunization to prevent invasive disease, pneumonia, and acute otitis media caused by Streptococcus pneumoniae in infants and children.
On July 13, 2022, MRK and Orion Corporation collaborated on the development and commercialization of ODM-208, an investigational steroid synthesis inhibitor for the treatment of metastatic castration-resistant prostate cancer. This collaboration strengthens and complements the company’s oncology pipeline.
During the second quarter ended June 30, 2022, MRK’s net sales increased 27.9% year-over-year to $14.59 billion. The company’s non-GAAP net income increased 204.2% year-over-year to $4.74 billion, while its non-GAAP EPS grew 206.6% from the prior-year quarter to $1.87.
Analysts expect MRK’s revenues to increase 7.1% year-over-year to $14.08 billion in the fiscal third quarter (ending September 2022). Its EPS is expected to increase 1.1% to $1.77 in the current quarter. MRK has surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of MRK have gained 20.9% over the past year to close the last trading session at $86.64.
MRK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system. MRK has a B grade for Growth, Value, Sentiment, and Quality. The stock is ranked #2 in the same industry.
In addition to the POWR Ratings I have just highlighted, click here to see MRK’s ratings for Momentum and Stability.
KO shares were trading at $59.59 per share on Tuesday morning, down $0.40 (-0.67%). Year-to-date, KO has gained 2.89%, versus a -18.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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