The U.S. economy expanded in the third quarter after contracting for two straight quarters. Stronger exports and consumer spending, backed by a healthy job market, helped restore growth at a time when worries about a possible recession are rising.

Moreover, as the jobs report showed solid gains in payrolls along with a slight surge in the unemployment rate, investors are hoping that the Federal Reserve might soon be able to pull back on the size of its interest rate hikes.

President Biden said the government’s latest jobs report showing the U.S. economy added 261,000 jobs last month was a sign of progress. Although sky-high inflation is still a concern, he believes there are “bright spots.”

Given this backdrop, we think this could be the right time to invest in fundamentally strong stocks, Cisco Systems, Inc. (CSCO), HCA Healthcare, Inc. (HCA), and Cenovus Energy Inc (CVE).

Cisco Systems, Inc. (CSCO)

CSCO designs, manufactures, and sells Internet Protocol-based networking and other products related to the communications and information technology industry globally. It provides infrastructure platforms, collaboration products, and security products.

On November 1, CSCO announced that it had expanded its portfolio of specializations available through the company’s world-class partner program. The six new specializations are tied to Cisco’s customer priorities. The expanded portfolio continues to evolve to increase partner sales opportunities, add flexibility to partner certification requirements, and emphasize the importance of multi-architectural expertise.

On October 12, 2022, CSCO and Microsoft Corporation (MSFT) announced their partnership at Microsoft’s annual Ignite conference, under which MSFT Teams will run natively on CSCO Room and Desk devices Certified for MSFT Teams. Also, CSCO will become a partner in the Certified for MSFT Teams program for the first time. This should be strategically beneficial for the company.

On August 23, CSCO declared a quarterly cash dividend of $0.38 per common share, payable to shareholders on October 26, 2022. This reflects the shareholder return ability of the company.

CSCO’s total revenue came in at $51.56 billion for the fiscal year ended July 30, 2022, representing a 3.5% year-over-year growth. Its operating income grew 8.9% from the prior year to $13.97 billion, while its non-GAAP net income rose 3.4% from last year to $14.09 billion. EPS increased 4.3% from the prior year to $3.36.

Analysts expect CSCO’s revenue for the current fiscal year ending July 2023 to be $54.01 billion, indicating a 4.8% year-over-year growth. The company’s EPS for the current year is expected to increase by 4.9% from the prior year to $3.52. Additionally, CSCO has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.

CSCO has gained 10.8% over the last month to close its last trading session at $44.61.

CSCO’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

CSCO has an A grade for Quality. It is ranked #5 out of the 48 stocks in the Technology – Communication/Networking industry.

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

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.

On October 25, HCA announced that Galen College of Nursing, a private institution owned by the company, is expanding to Houston. This will be Galen’s fourth Texas campus, joining locations in Austin, Richardson, and San Antonio. Kelli Nations, division chief nurse executive at HCA, said, “We look forward to working with Galen to bridge nursing education and practice, not only to expand our workforce but also to enhance new graduate preparedness.”

On August 9, 2022, HCA collaborated with Johnson & Johnson (JNJ) to address key healthcare clinical and industry issues. Both companies will focus on improving health equity and enhancing nursing support and patient care through this initiative.

HCA’s revenue totaled $14.97 billion in the third quarter ended 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 $15.58 billion for the same quarter indicates a 3.4% increase from the year-ago period.

The stock has gained 5.6% over the past month to close the last trading session at $211.67.

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

Click here to see the other ratings of HCA for Growth and Momentum.

Cenovus Energy Inc. (CVE)

CVE develops, produces, and markets crude oil, NGLs, and natural gas. The company operates through the Oil Sands; Conventional; Offshore; Canadian Manufacturing; U.S. Manufacturing; and Retail segments. The company is headquartered in Calgary, Canada.

On November 7, CVE announced the Toronto Stock Exchange approved the renewal of the company’s normal course issuer bid to purchase up to 136,717,741 common shares during the 12-month period commencing November 9, 2022, and ending November 8, 2023. The company believes purchasing common shares represents an attractive investment opportunity and is in the best interest of Cenovus and its shareholders.

On August 8, CVE announced that it had agreed to acquire BP p.l.c.’s (BP) 50% interest in the bp-Husky Toledo Refinery in Ohio. The full ownership of the refinery is expected to further integrate CVE’s heavy oil production and refining capabilities.

CVE’s adjusted funds flow increased 26% year-over-year to CAD2.95 billion ($2.19 billion) in the fiscal third quarter that ended September 30. Its net earnings stood at CAD1.61 billion ($1.19 billion), up 192% from its prior-year quarter, while its cash from operating activities rose 91.3% year-over-year to CAD4.09 billion ($3.03 billion).

Street EPS estimate for the current fiscal year ending December 2022 of $2.64 indicates a 735.6% year-over-year growth. Likewise, Street revenue estimate for the same period of $54.55 billion reflects an increase of 49.5% from the prior-year period.

The stock has gained 73.7% year-to-date to close its last trading session at $21.33. It has gained 114.7% over the past month.

The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. CVE has an A grade for Momentum and a B grade for Value. It is ranked #20 out of the 94-stocks in the B-rated Energy – Oil & Gas industry.

Click here for additional POWR Ratings for CVE (Growth, Stability, Sentiment, and Quality).

CSCO shares were trading at $44.53 per share on Wednesday morning, down $0.08 (-0.18%). Year-to-date, CSCO has declined -27.52%, versus a -19.23% rise in the benchmark S&P 500 index during the same period.

About the Author: Kritika Sarmah

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...

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