The Federal Reserve hiked interest rates by another three-quarter of a percentage point last week, serving as the key dampener for investor sentiment. While the Nasdaq composite dropped more than 5% last week, the S&P 500 and the Dow Jones were down 4.7% and 4%, respectively.

Furthermore, the central bank said it could raise rates to as much as 4.6% in 2023. Also, the market expects the Fed to raise rates to 4.4% by the end of 2022.

Analysts are concerned that the Fed’s actions could eventually push the economy into a recession. Consequently, the stock market is expected to remain under pressure.

Despite the anticipated market volatility, investing in quality stocks with solid growth attributes may help generate substantial long-term gains. So, it could be wise to invest in AbbVie Inc. (ABBV), J. Jill Inc. (JILL), and Bassett Furniture Industries Incorporated (BSET), which have delivered stable returns over the past few months. These stocks are rated Strong Buy in our proprietary POWR Ratings system.

AbbVie Inc. (ABBV)

ABBV is a biopharmaceutical research company. The company is involved in the research, development, manufacturing, commercialization, and sale of medicines and therapies. In addition, it has a research collaboration with Dragonfly Therapeutics, Inc.

Recently, ABBV reported that the U.S. Food and Drug Administration (FDA) authorized Skyrizi (risankizumab), the first and only specific interleukin-23 inhibitor, for the treatment of adults with moderately to severely active Crohn’s disease (CD). The approval is backed up by three pivotal Phase 3 studies in which Skyrizi significantly outperformed placebo as both an induction and maintenance therapy for clinical remission and endoscopic response.

Also, ABBV announced that the FDA had approved Rinvoq (upadacitinib, 15 mg once daily) for the treatment of adults with active ankylosing spondylitis (AS) who have had an inadequate response or intolerance to one or more tumor necrosis factor (TNF) blockers.

The approval is based on data from two pivotal clinical trials in which Rinvoq provided rapid and meaningful disease control. This is the fifth FDA-approved indication for Rinvoq in chronic immune-mediated diseases.

During the second quarter ended June 30, 2022, ABBV’s net revenue increased 4.5% year-over-year to $14.58 billion. Its operating earnings came in at $3.29 billion. The company’s net earnings grew 20.6% from the year-ago value to $924 million, while its adjusted EPS grew 11.3% from the prior-year quarter to $3.37.

Street expects ABBV’s revenues and EPS to rise 5.2% and 17.2% year-over-year to $59.01 billion and $13.87, respectively, in fiscal 2022. The stock has gained 33.3% over the past year and 5.7% year-to-date.

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. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

ABBV also has an A grade for Quality and a B for Growth and Value. Within the D-rated Medical – Pharmaceuticals industry, it is ranked #9 of 164 stocks.

To see additional POWR Ratings for Sentiment, Momentum, and Stability for ABBV, click here.

Jill Inc. (JILL)

JILL operates as an omnichannel retailer of women’s apparel under the J.Jill brand in the United States. The company sells its products through retail stores, a website, and catalogs. It operated 253 stores as of March 22, 2022.

For the second quarter ended June 30, 2022, JILL’s net sales increased marginally from the year-ago value to $160.34 million. Its operating income grew 19.9% year-over-year to $28.19 million. The company reported a net income and total comprehensive income of $17.81 million, compared to a net loss and total comprehensive loss of $24.65 million in the prior-year quarter. Its EPS amounted to $1.25, compared to a loss per share of $1.98.

JILL’s EPS and revenue are expected to grow 26.8% and 4% year-over-year to $2.7 and $608.8 million in the current year. The consensus revenue estimate of $633.9 million in fiscal 2024 represents a 4.1% increase from the same period last year. The company’s shares have gained 11.3% over the past six months and 3.6% over the past month.

It is no surprise that JILL has an overall A rating, which equates to a Strong Buy in our POWR Ratings system. The stock also has an A grade for Sentiment and Quality and a B for Value. In the C-rated Fashion & Luxury industry, it is ranked #2 of 67 stocks.

Beyond the POWR Ratings grades I have just highlighted, you can view JILL ratings for Growth, Momentum, and Stability. 

Bassett Furniture Industries Incorporated (BSET)

BSET manufactures, markets, and sells home furnishings in the United States and worldwide. It operates in three segments: Wholesale; Retail company-owned Stores; and Logistical Services.

This month, BSET acquired the capital stock of Noa Home Inc., a mid-priced e-commerce furniture retailer based in Montreal, Canada. According to BSET, the acquisition will give it a stronger online presence and allow it to attract more digitally native customers.

During the second quarter ended May 28, 2022, BSET’s net sales of furniture and accessories increased 17% year-over-year to $128.71 million. Its income from operations increased 55.4% year-over-year to $11.01 million. The company’s net income surged 688.7% from the prior-year quarter to $47.12 million, while its EPS grew 723.4% year-over-year to $4.94.

Streets expect BSET’s EPS to grow 254.1% year-over-year to $6.48 in fiscal 2022. Over the past nine months, the stock has gained 7.7%.

BSET’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. BSET also has an A grade for Quality and a B for Growth and Value. The stock is ranked #1 of 62 stocks in the Home Improvement and Goods industry.

In addition to the POWR Ratings grades I have just highlighted, you can see BSET ratings for Momentum, Sentiment, and Stability.

ABBV shares were trading at $141.65 per share on Monday afternoon, down $1.41 (-0.99%). Year-to-date, ABBV has gained 7.60%, versus a -22.27% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...

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