The Fed is expected to launch its seventh interest rate hike this year in its meeting next month. Although inflationary pressure is easing, it is far beyond the Fed’s 2% target level. “We’re going to have more work to do, because we need to see inflation really on a sustainable downward path back to 2%,” said Cleveland Federal Reserve President Loretta Mester.

However, despite continued interest rate hikes, Goldman Sachs Chief Economist Jan Hatzius sees only a 35% chance of a recession next year against the consensus forecast of 65%. Goldman Sachs expects the U.S. GDP to rise by 1% in 2023 and a significant decline in U.S. inflation next year.

Additionally, solid earnings reports for the third quarter of 2022 have instilled optimism among investors. According to FactSet, about 69% of S&P 500 companies beat earnings per share estimates, and 71% of S&P 500 companies beat revenue estimates for the period.

Given the backdrop, fundamentally sound stocks Bristol-Myers Squibb Company (BMY), Lockheed Martin Corporation (LMT), HCA Healthcare, Inc. (HCA), and Murphy USA Inc. (MUSA) could be ideal investments that could fetch you higher returns in 2023.

Bristol-Myers Squibb Company (BMY)

BMY engages in the discovery, development, licensing, manufacture, and sale of biopharmaceutical products globally. The company’s offerings include products for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and COVID-19 diseases.

On November 10, BMY announced that Health Canada approved CAMZYOS™ (mavacamten capsules) for treating adults with Symptomatic Obstructive Hypertrophic Cardiomyopathy (oHCM). 

CAMZYOSTM is the first Canadian-approved allosteric and selective cardiac myosin inhibitor that targets the underlying pathophysiology of oHCM. This should help the company provide a new treatment option to patients and thus expand its revenue stream.

On November 1, BMY paid its quarterly dividend of $0.54 per share. The company pays a $2.16 per share dividend annually, which yields 2.74%. It has a record of six consecutive years of dividend growth.

In the fiscal third quarter ended September 30, BMY’s EBIT increased 2.4% year-over-year to $2.21 billion. The company’s net earnings amounted to $1.61 billion, up 3.6% year-over-year, while the non-GAAP EPS improved 3.1% from the prior-year quarter to $1.99.

Analysts expect BMY’s EPS for the fiscal second quarter ending June 2023 to be $2.07, indicating a 7.4% year-over-year growth. The company’s revenue is expected to increase by 1% from the prior year to $12 billion in the same period. The company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in each of the trailing four quarters.

Over the past year, BMY has gained 36.5% to close its last trading session at $78.96. The stock has gained 26.6% year-to-date.

BMY’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. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree. 

The stock also has an A grade for Value and a B for Stability, Sentiment, and Quality. It is ranked #3 0f 163 stocks in the Medical – Pharmaceuticals industry.

Beyond what we’ve stated above, we have also given BMY grades for Growth and Momentum. Get all BMY ratings here.

Lockheed Martin Corporation (LMT)

LMT is a security and aerospace company engaging in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide. It operates through four segments Aeronautics; Missiles and Fire Control; Rotary and Mission Systems; and Space.

On September 30, LMT declared a quarterly dividend of $3, payable to stockholders on December 30, 2022. The company pays a $12 annual dividend, translating to a yield of 2.5% at its current price. It has increased its dividend for 19 consecutive years. Additionally, LMT’s dividend payouts have grown at an 8.4% CAGR over the last three years and a 9% CAGR over the past five years.

LMT’s total assets for the fiscal third quarter ended September 25, 2022, increased 2.3% to $52.03 billion, compared to $50.87 billion for the fiscal year ended December 31, 2021. Its net sales increased 3.5% year-over-year to $16.58 billion, while its net earnings increased 189.6% year-over-year to $1.78 billion. In addition, its non-GAAP EPS came in at $6.87, representing a 4.1% from the prior-year quarter.

Street expects LMT’s EPS and revenue for the quarter ending December 31, 2022, to increase 1.7% and 3.1% year-over-year to $7.37 and $18.27 billion, respectively. It has a commendable earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters.

The stock has gained 40.9% over the past year and 35.3% year-to-date to close the last trading session at $480.94.

This promising prospect is reflected in LMT’s POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system. It has a B grade for Value and Quality. LMT is ranked #4 out of 74 stocks in the Air/Defense Services industry.

Click here to see the ratings of LMT for Growth, Momentum, Stability, and Sentiment.

HCA Healthcare, Inc. (HCA)

HCA is a healthcare services company that owns and operates general and acute care hospitals offering medical, surgical, emergency, and outpatient services. In addition, the company operates in two geographically organized groups: The National and American Groups.

HCA’s $2.24 annual dividend yields 0.98% at its current price. On October 21, HCA declared a quarterly dividend of $0.56, payable to stockholders on December 28, 2022.

HCA’s revenue totaled $14.97 billion in the third quarter ended on September 30, 2022. Its net income attributable to HCA amounted to $1.134 billion, or $3.91 per diluted share. The company’s adjusted EBITDA came in at $2.90 billion.

The consensus EPS estimate of $4.78 for its fiscal fourth quarter ending December 2022 represents an 8.2% improvement year-over-year. The consensus revenue estimate of $15.59 billion for the same quarter indicates a 3.5% increase from the year-ago period.

The stock has gained 16.4% over the past month to close the last trading session at $231.67.

It is no surprise that HCA has an overall rating of B, which translates to Buy in our proprietary rating system. The stock also has a B grade for Value, Stability, Sentiment, and Quality. HCA is ranked first among the 12 stocks in the Medical – Hospitals industry.

To see the other ratings of HCA for Growth and Momentum, click here.

Murphy USA Inc. (MUSA)

MUSA engages in marketing retail motor fuel products and convenience merchandise. The company operates retail stores under the Murphy USA, Murphy Express, and QuickChek brands.

MUSA’s $1.40 annual dividend yields 0.48% at its current share price. On October 20, MUSA declared a quarterly dividend of $0.35, payable to stockholders on December 1, 2022. It reflects a 9% increase from the prior quarter’s dividend. 

For the fiscal quarter ended September 30, MUSA’s total operating revenues increased 34.7% year-over-year to $6.19 billion. In the same period, the company’s net income and net income per share came in at $219.50 million and $9.28, indicating an increase of 111.1% and 133.2%, respectively.

For the fiscal year ending December 2022, MUSA’s revenue is expected to increase 37% year-over-year to $23.78 billion. In the same period, its EPS is expected to improve by 74.7% year-over-year to $26.63. Moreover, the company also beat the consensus EPS and revenue estimates in each of the trailing four quarters, which is commendable.

The stock has gained 63.3% over the past year and 45.4% year-to-date to close the last trading session at $290.50.

MUSA has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. It has a B grade for Quality, Growth, and Value. Out of the 46 stocks in the Specialty Retailers industry, MUSA is ranked #2.

We have also given MUSA grades for Sentiment, Momentum, and Stability. Get all MUSA ratings here.

BMY shares were trading at $79.20 per share on Tuesday afternoon, up $0.24 (+0.30%). Year-to-date, BMY has gained 30.97%, versus a -15.14% rise in the benchmark S&P 500 index during the same period.

About the Author: Komal Bhattar

Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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