The major stock market indexes attempted a comeback yesterday, as Congress appeared to be nearing a deal that would raise the debt ceiling in the short term and avoid a disastrous government default. In addition, promising data for Merck & Co., Inc.’s (MRK) oral treatment for COVID-19 has provided further support to the market.
However, supply chain issues and high inflation continue to worry investors. According to a Bankrate survey, most top experts believe that a stock market correction is likely within the following year. So, it would be wise to scoop up the shares of fundamentally strong large-cap stocks amid this market volatility to ensure stable returns.
Large-cap stocks Cisco Systems, Inc. (CSCO), Novo Nordisk A/S (NVO), HOYA Corporation (HOCPY), and Mettler-Toledo International Inc. (MTD) have immense potential based on their market dominance and fundamental strength. Also, these stocks are rated ‘Strong Buy’ in our POWR Ratings system and have an ‘A’ grade for Quality. So, it could be wise to bet on these stocks now.
Cisco Systems, Inc. (CSCO)
With a market capitalization of $227.50 billion, CSCO designs, manufactures, and sells Internet Protocol-based networking and other communications and information technology products. In addition, it provides infrastructure platforms, including networking technologies of switching, routing, wireless, and data center products.
CSCO acquired Socio Labs, Inc. on July 8. Jeetu Patel, the company’s executive vice president and general manager, said, “The acquisition of Socio Labs is another example of how Cisco is rapidly addressing the evolving needs of our Webex customers and continuing to execute on our vision of providing the most seamless, inclusive, engaging and intelligent platform for meetings and events.”
CSCO’s net revenue increased 8% year-over-year to $13.10 billion for the fiscal fourth quarter that ended July 31, 2021. The company’s non-GAAP operating income grew 10% year-over-year to $4.4 billion, while its cash flow from operating activities increased 18% year-over-year to $4.50 billion. Also, its non-GAAP EPS came in at $0.84, up 5% year-over-year.
In terms of trailing-12-month EBIT margin, CSCO’s 27.63% is 218.1% higher than the industry average of 8.69%. In terms of trailing-12-month net income margin, the stock’s 21.26% is 257.8% higher than the industry average of 5.94%.
CSCO’s EPS is expected to increase 7% year-over-year to $3.67 in fiscal 2023. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. Also, the company’s revenue is expected to increase 6.1% year-over-year to $52.88 billion in fiscal 2022. Over the past year, the stock has gained 39.8% to close yesterday’s trading session at $53.94.
CSCO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of A, which equates to a Strong Buy rating in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. It has an A grade for Quality, and a B grade for Stability.
Novo Nordisk A/S (NVO)
Headquartered in Bagsvaerd, Denmark, NVO is a healthcare company engaged in the research, development, manufacture, and marketing of pharmaceutical products worldwide. It operates in two segments: Diabetes and Obesity care and Biopharm. Also, it has collaboration agreements with Lund University, bluebird bio, Inc. (BLUE), and Lumen Bioscience, Inc. It has a market capitalization of $221.01 billion.
NVO and Prothena Corporation plc (PRTA) announced on July 12, 2021, that the companies have entered into a definitive purchase agreement under which NVO has acquired PRTA’s clinical-stage antibody PRX004 and broader ATTR amyloidosis program. This acquisition could help NVO in advancing new disease-modifying therapies.
The company’s total sales increased 10% year-over-year to DKK 33.04 billion ($5.13 billion) for the second quarter that ended June 30, 2021. NVO’s gross profit came in at DKK 27.49 billion ($4.27 billion), up 9% year-over-year. Its operating profit grew 7% year-over-year to DKK 14.78 billion ($2.30 billion), while its net profit increased 14% year-over-year to DKK 12.12 billion ($1.88 billion).
In terms of trailing-12-month EBIT margin, NVO’s 41.64% is 1,566.7% higher than the industry average of 2.50%. In terms of trailing-12-month levered FCF margin, the stock’s 16.96% is 4,776.1% higher than the industry average of 0.35%.
Analysts expect NVO’s EPS and revenue to increase 12.5% and 11.1% year-over-year to $0.72 and $5.67 billion, respectively, for the quarter ending December 31, 2021. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past six months, the stock has soared 41.9% to close yesterday’s trading session at $96.55.
NVO’s POWR Ratings reflect solid prospects. The company has an overall grade of A, which translates into a Strong Buy rating in our proprietary ratings system. It has an A grade for Quality, and a B grade for Value, Stability, and Sentiment.
HOYA Corporation (HOCPY)
Japan-based med-tech company HOCPY supplies high-tech and medical products worldwide. The company operates through three segments: Life Care; Information Technology; and Other. It offers Eyecity, a chain of specialist contact lens stores, and imaging products that include optical glasses/optical lenses. It has a market capitalization of $55.45 billion.
On March 29, 2021, HOCPY confirmed that the five-year contract announced on July 6, 2020, for technical collaboration and supply of diagnostics ultrasound systems and ultrasound sensors with Hitachi would become effective as of March 31, 2021. Gerald Bottero, Global President of PENTAX Medical, HOCPY, said, “We look forward to working with Hitachi’s world-class research teams to accelerate innovation and wide adoption in this vital space.”
HOCPY’s net revenue increased 44.5% year-over-year to ¥109.33 billion ($980.49 million) for the fiscal first quarter that ended June 30, 2021. The company’s total assets grew 10.1% year-over-year to ¥867.34 billion ($7.78 billion), while its profit increased 61.1% year-over-year to ¥41.30 billion ($370.39 million). Also, its EPS came in at 111.69, up 62% year-over-year.
In terms of trailing-12-month EBIT margin, HOCPY’s 30.15% is 1,106.6% higher than the industry average of 2.50%. In terms of trailing-12-month levered FCF margin, the stock’s 19.41% is 5,480.1% higher than the industry average of 0.35%.
HOCPY’s revenue is expected to increase 203.1% year-over-year to $5.75 billion for the fiscal year ending March 31, 2022. Over the past year, the stock gained 31.3% to close yesterday’s trading session at $148.53.
HOCPY’s POWR Ratings reflect this promising outlook. The company has an overall grade of A, which translates to a Strong Buy rating in our proprietary ratings system.
The stock has an A grade for Quality, and a B grade for Growth and Stability. Within the Medical – Devices & Equipment industry, HOCPY is ranked #3 out of 176 stocks. Click here to see additional grades for HOCPY (Value, Sentiment, and Momentum).
Mettler-Toledo International Inc. (MTD)
With a market capitalization of $32 billion, MTD manufactures and supplies precision instruments and services worldwide. It operates in five segments: U.S. Operations; Swiss Operations; Western European Operations; Chinese Operations; and Other. The company offers weighing instruments for laboratory, industrial, packaging, logistics, and food retailing applications.
MTD announced that it completed the acquisition of PendoTECH on March 24, 2021. Olivier Filliol, MTD’s President and CEO, said, “PendoTECH is an excellent strategic fit as it expands our offering to include various sensors, including pressure, which is an important and common control parameter in downstream and upstream bioprocess applications.”
MTD’s net sales increased 34% year-over-year to $924.35 million for the fiscal second quarter that ended June 30, 2021. The company’s adjusted operating profit grew 45% year-over-year to $255.30 million, while its net earnings increased 46% year-over-year to $184.76 million. Also, its adjusted EPS came in at $8.10, up 53% year-over-year.
In terms of trailing-12-month EBIT margin, MTD’s 27.09% is 984.30% higher than the industry average of 2.50%. In terms of trailing-12-month levered FCF margin, the stock’s 18.72% is 5,280.9% higher than the industry average of 0.35%.
For fiscal 2021, analysts expect MTD’s EPS and revenue to increase 28.1% and 18.9% year-over-year to $32.94 and $3.67 billion, respectively. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. The stock has gained 39.3% over the past year to close yesterday’s trading session at $1,384.50.
It’s no surprise that MTD has an overall grade of A, which equates to a Strong Buy rating in our POWR Ratings system. In addition, the stock has an A grade for Quality, and a B grade for Growth and Stability.
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CSCO shares were trading at $55.09 per share on Thursday afternoon, up $1.15 (+2.13%). Year-to-date, CSCO has gained 26.72%, versus a 18.85% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...
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