Inflation declined again in the last month to 6.5% on an annual basis, down from 7.1% in November and a 9.1% peak in June 2022. Moreover, consumer sentiment has significantly improved recently, which is expected to bode well for the broader markets.
The University of Michigan’s Consumer Sentiment Index increased to 64.6 in the preliminary January survey, up from December’s 59.7. In addition, with the Fed expected to slow down the pace of its rate hikes in 2023, the U.S. might succeed in avoiding a recession.
International Monetary Fund Managing Director Kristalina Georgieva said, “It gives some argumentation of an expectation that the U.S. would avoid falling into recession. And actually, I would say even if it is in technical terms in recession, that will be a very mild recession.”
CVS Health Corporation (CVS)
CVS provides health services in the United States. Its segments are Health Care Benefits; Pharmacy Services; and Retail/LTC.
In terms of forward EV/Sales, CVS’ 0.54x is 87.1% lower than the industry average of 4.20x. Its forward Price/Sales of 0.38x is 92.1% lower than the industry average of 4.78x.
CVS’ trailing-12-month EBITDA margin of 6.08% is 63.1% higher than the industry average of 3.73%. Its trailing-12-month asset turnover ratio of 1.35% is 299.2% higher than the industry average of 0.34%.
Its revenue increased at an 8.9% CAGR over the past three years.
CVS’ total revenues came in at $81.16 billion for the quarter ended September 30, 2022, up 10% year-over-year. Its product revenue came in at $57.64 billion, up 11.2% year-over-year, while its premiums revenue came in at $21 billion, up 10.6% year-over-year.
Analysts expect CVS’ revenue to increase 3.4% year-over-year to $325.54 billion in 2023. Its EPS is expected to increase by 5.4% per annum for the next five years. It surpassed EPS estimates in all four trailing quarters. CVS’ shares have gained marginally intraday to close the last trading session at $89.92.
CVS’ POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CVS has an A grade for Growth and a B for Value, Stability, and Sentiment. CVS is ranked first among the four stocks within the B-rated Medical – Drug Stores industry. Click here for additional CVS ratings (Momentum and Quality).
Archer-Daniels-Midland Company (ADM)
ADM procures, transports, stores, processes, and merchandises agricultural commodities, products, and ingredients in the United States, Switzerland, the Cayman Islands, Brazil, Mexico, the United Kingdom, and internationally. The company has three segments: Ag Services and Oilseeds; Carbohydrate Solutions; and Nutrition.
ADM’s forward EV/Sales of 0.57x is 67.7% lower than the industry average of 1.76x. Its forward Price/Sales of 0.48x is 57.8% lower than the industry average of 1.14x.
ADM’s trailing-12-month ROTC and ROTA of 8.01% and 7.04% are 30% and 94.4% higher than the industry averages of 6.17% and 3.62%, respectively.
Its revenue and EPS have grown at 15.4% and 51.1% CAGRs over the past three years.
ADM’s revenues came in at $24.68 billion for the third quarter that ended September 30, 2022, up 21.4% year-over-year. Its gross profit increased 36.6% year-over-year to $1.81 billion. Also, its adjusted net earnings came in at $1.05 billion, up 91.2% year-over-year, while its adjusted EPS came in at $1.86, up 91.8% year-over-year.
ADM’s revenue is expected to increase 8.7% year-over-year to $25.10 billion for the yet-to-be-reported quarter ending December 2022. Its EPS is expected to increase by 8.5% per annum for the next five years. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 24.7% to close the last trading session at $88.40.
It’s no surprise that ADM has an overall A rating, equating to a Strong Buy in our proprietary rating system. Also, the stock has an A grade for Growth and a B for Sentiment.
Core Molding Technologies, Inc. (CMT)
CMT and its subsidiaries operate as molders of thermoplastic and thermoset structural products. The company offers a range of manufacturing processes.
CMT’s forward EV/Sales of 0.40x is 73.9% lower than the industry average of 1.54x. Its forward Price/Sales of 0.31x is 73.5% lower than the industry average of 1.18x.
The stock’s trailing-12-month asset turnover ratio of 1.91% is 150.9% higher than the industry average of 0.76%.
Its revenue has grown at a 6.5% CAGR over the past three years.
CMT’s net sales came in at $101.61 million for the quarter ended September 30, 2022, up 25.4% year-over-year. Its net income came in at $1.32 million, compared to a loss of $3.31 million in the previous-year period. Moreover, its EPS came in at $0.16, compared to a loss per share of $0.41.
Street expects CMT’s revenue to increase marginally year-over-year to $373.75 million in 2023, while its EPS is expected to rise 31.1% year-over-year to $1.35. Over the past year, the stock has gained 51.2% to close the last trading session at $13.71.
CMT has an overall A rating, which indicates a Strong Buy in our proprietary rating system. It has an A grade for Growth and Sentiment and a B for Value and Quality.
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CVS shares were unchanged in premarket trading Tuesday. Year-to-date, CVS has declined -3.51%, versus a 4.20% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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