The stock market has witnessed significant volatility of late on concerns over the prospect of rate hikes and macro uncertainties. However, I present quality stocks AbbVie Inc. (ABBV) and Salesforce, Inc. (CRM), which have demonstrated resiliency during challenging times and are trading at a discount to their industry peers. These top stocks should be on your radar this spring.
According to the U.S. Bureau of Labor Statistics report, Consumer Price Index (CPI) rose by 6% from a year earlier in February. Although inflation is slowing, it is way above the Fed’s target level.
On the other hand, nonfarm payrolls rose by 311,000 in February, above the 225,000 Dow Jones estimate. As the job market remains tight despite the Federal Reserve’s efforts to slow the economy, interest rate hikes are expected to continue.
Consequently, the banking crisis, which started two weeks ago with the collapse of major banks and global lenders, has dampened investors’ sentiments. The failures of the high-profile banks are raising fears of a “hard landing.”
Furthermore, the World Bank has predicted a global recession this year, anticipating a 1.7% GDP growth, the slowest pace outside the 2009 and 2020 recessions since 1993.
Take a look at the stocks mentioned above:
AbbVie Inc. (ABBV)
ABBV is a diverse research-based biopharmaceutical enterprise. It researches, develops, and commercializes medications and therapies. The company provides products across various therapeutic fields, including eye care, neuroscience, aesthetics, and immunology, among other key categories.
On February 27, ABBV announced the European Medicines Agency’s Committee for Medicinal Products for Human Use recommended the approval of upadacitinib (RINVOQ, 45 mg [induction dose] and 15 mg and 30 mg [maintenance doses]) for the treatment of adult patients with moderately to severely active Crohn’s disease who have had an inadequate response, lost response or were intolerant to either conventional therapy or a biologic agent.
Roopal Thakkar, M.D., senior vice president, development, regulatory affairs and chief medical officer, ABBV, said, “The recent CHMP recommendation to approve upadacitinib for use in Crohn’s disease is a momentous step, bringing us closer to offering a first-of-its-kind, once-daily oral treatment that can make a difference for people living with this disease.”
On February 23, ABBV and Capsida Biotherapeutics Inc. announced an expanded strategic collaboration to develop genetic medicines for eye diseases with high unmet needs.
ABBV’s extensive capabilities will be paired with Capsida’s novel adeno-associated virus engineering platform and manufacturing capabilities, which should help ABBV develop transformative therapies and boost the companies’ topline.
ABBV’s forward non-GAAP P/E of 14.40x is 24.2% lower than the industry average of 18.61x. Its forward EV/EBIT multiple of 13.25 is 18% lower than the industry average of 16.16. Its forward EV/EBITDA multiple of 12.80 is 1.4% lower than the industry average of 12.98.
On February 16, ABBV announced a quarterly dividend of $1.48 per share of common stock, which is payable on May 15, 2023.
ABBV pays $5.92 annually as dividends. This translates to a yield of 3.79% at the current price, compared to the 4-year average dividend yield of 4.57%. Its dividend payments have grown at a CAGR of 9.2% and 17% over the past three and five years, respectively.
ABBV’s net revenues increased 1.6% year-over-year to $15.12 billion in the fourth quarter, which ended December 31, 2022. The company’s operating earnings increased 8.4% year-over-year to $5.50 billion. Its non-GAAP earnings increased 16.5% year-over-year to $6.42 billion, while non-GAAP EPS rose 16.9% year-over-year to $3.60.
Analysts expect ABBV’s revenue for the current fiscal quarter ending March 2023 to be $12.21 billion. The company’s EPS is expected to be $2.56 for the same quarter. Additionally, it has topped consensus revenue estimates in each of the trailing four quarters, which is impressive.
The stock has gained 12.9% over the past nine months to close the last trading session at $156.12.
ABBV’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ABBV also has an A grade for Quality and a B for Stability. It is ranked #12 of 166 stocks in the Medical – Pharmaceuticals industry.
To access additional ratings for ABBV’s Growth, Value, Sentiment, and Momentum, click here.
Salesforce, Inc. (CRM)
CRM provides customer relationship management technology that brings companies and customers together worldwide. The company’s service offerings include Sales to store data, monitor leads and progress, forecast opportunities, gain insights through analytics and relationship intelligence, and deliver quotes, contracts, and invoices; and Service that enables companies to deliver trusted and highly personalized customer service and support at scale.
On March 7, CRM introduced Einstein GPT, the first-ever generative AI CRM technology in the world. It offers AI-generated content to enhance interactions across various areas, such as sales, service, marketing, commerce, and IT, at an immense scale. By implementing Einstein GPT, Salesforce aims to revolutionize every customer experience using generative AI.
On January 12, CRM unveiled several novel advancements to assist retailers in expanding and streamlining their advertising sales, obtaining a unified view of transactions across both online and offline stores, and extracting value from their customer data.
ABBV’s forward non-GAAP PEG of 1.08x is 32.5% lower than the industry average of 1.60x. Its forward Price/Book multiple of 2.87 is 20.2% lower than the industry average of 3.59.
CRM’s total revenues increased 14.4% year-over-year to $8.38 billion in the fiscal fourth quarter, which ended January 31, 2023. Its gross profit increased 18.3% year-over-year to $6.28 billion. Also, income from operations came in at $357 million, compared to a loss from operations of $176 million in the previous-year quarter.
The company’s non-GAAP net income increased 96.4% year-over-year to $1.66 billion. Its non-GAAP net income per share increased 100% year-over-year to $1.68.
CRM’s revenue is expected to rise 10.2% year-over-year to $8.17 billion for the fiscal first quarter ending April 2023. The company’s EPS for the same quarter is expected to increase 64.5% year-over-year to $1.61. Additionally, the stock has topped consensus EPS and revenue estimates in each of the trailing four quarters.
The stock has gained 44.2% over the past three months to close the last trading session at $185.25.
CRM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
CRM also has an A grade for Growth and Sentiment and a B for Quality. It is ranked #21 out of 134 stocks in the Software – Application industry.
To access additional ratings for CRM’s Value, Stability, and Momentum, click here.
What To Do Next?
Get your hands on this special report:
The best part of the recent bear market is that there are thriving companies trading at tremendous discounts to fair value.
This combination of stellar earnings growth and low price provides a great catalyst for investor success.
And this report focuses on the 7 best of these stocks primed to soar in the weeks ahead. Click below to claim your copy now.
Want More Great Investing Ideas?
REVISED: 2023 Stock Market Outlook (includes top 7 picks)
ABBV shares were trading at $155.16 per share on Tuesday afternoon, down $0.96 (-0.61%). Year-to-date, ABBV has declined -3.08%, versus a 3.63% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|ABBV||Get Rating||Get Rating||Get Rating|
|CRM||Get Rating||Get Rating||Get Rating|