The U.S. economy is braced for a fast-paced recovery thanks to the federal recovery spending and a mass COVID-19 inoculation drive. However, concerns about inflation and sudden volatility continue to lurk in the wings. The resurgence of COVID-19 infections worldwide, in particular, could inject volatility into the markets in the coming months.
Against this backdrop, investors must be judicious in picking stocks and protect their portfolios against negative events. The Financial Times recently quoted Senior global macro strategist at State Street, Marvin Loh. He said, “A lot of the good news is built-in . . . but I do see the potential for [investors] to continue to bid up risky assets, just because there is so much liquidity and it remains a supportive environment.”
We believe fundamentally sound large-cap stocks are perfect bets at this point. Historically, behemoths like Intel Corporation (INTC), Sanofi (SNY), and GlaxoSmithKline Plc (GSK) have remained resilient during times of heightened volatility and helped investors to sail through adversities with stable returns. Also, these three stocks are currently trading discounts to their peers, offering solid upside potential.
Intel Corporation (INTC)
INTC is a global chipmaker that develops and markets solutions for the cloud, smart, and connected devices for retail, industrial, and consumer uses. The company operates through DCG, IOTG, Mobileye, NSG, PSG, CCG segments.
INTC plans to spend $20 billion to construct two factories in Arizona, and it will also open its factories to external customers. The chipmaker aims to tackle issues related to manufacturing delays with this initiative. INTC also wants to fight Taiwan’s dominance in global chip manufacturing.
INTC’s revenue for the fourth quarter, ended December 31, 2020, declined 1% year-over-year to $20 billion. Its EPS for the quarter fell to $1.42 from $1.58 posted in the prior year period. INTC’s data-centric business unit’s revenue declined 11% year-over-year, while its PC-centric business revenue rose 9% to $10.9 billion.
Analysts expect INTC’s revenue for the quarter ending March 31, 2021 to be $17.9 billion, representing a 9.8% year-over-year decline. Its EPS is likely to grow at the rate of 5.4% per annum over the next five years.
INTC has gained 30% on a year-to-date basis to close yesterday’s trading session at $66.54. Over the past six months, the stock has gained 24.9%. In terms of forward ev/sales, INTC is currently trading at 3.76x, 12.8% lower than the industry average 4.31x. The stock’s forward price/earnings of 14.97x is also 53.2% lower than the industry average 32x.
INTC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
INTC has an A grade for Value and Quality, and a B grade for Sentiment and Momentum. Of the 98 stocks in the B-rated Semiconductor & Wireless Chip industry, it is ranked #8.
In addition to the POWR Ratings grades we’ve just highlighted, one can see INTC ratings for Growth and Stability, here.
Sanofi – ADR (SNY)
SNY is a French pharmaceutical company that researches, develops, manufactures, and markets various therapeutic solutions. Pharmaceuticals, Vaccines, and Animal Health are the three segments through which the company operates.
SNY plans to build a new flu vaccine center in Canada for nearly $700 million. This facility will be situated in Toronto and will boost the supply of influenza vaccines in Canada, the U.S. and Europe.
During the fourth quarter, ended December 31, 2020, SNY’s revenue declined 2.4% year-over-year to Euro 9.3 billion. However, its Vaccine-related revenue climbed 8% over the year to Euro 2 billion, as distinguished influenza vaccines witnessed strong demand. The company has also revealed its intention to help PFE and BioNTech manufacture 125 million doses of their COVID-19 vaccine. Dupixent was the only product that witnessed good growth during the quarter.
A consensus revenue estimate for the quarter ending March 31, 2021 is $10.2 billion, representing a 3.3% year-over-year growth. Its EPS is expected to grow at the rate of 7.5% per annum over the next five years.
SNY ended yesterday’s trading session at $50.18, gaining 10% over the past year. SNY is an appealing value stock. In terms of forward ev/ebitda, SNY is currently trading at 9.65x, 42.9% lower than the industry average 16.9x. The stock’s forward price/earnings of 12.59x is also 57.1% lower than the industry average of 29.39x.
Due to its bright prospects, SNY has an overall B rating, which translates to a Buy in our POWR Rating system. SNY has a Stability and Value Grade of A. In the Medical – Pharmaceuticals industry, it is ranked #30 of 237 stocks.
Click here to see the additional POWR Ratings for SNY (Growth, Sentiment, Quality, and Momentum).
GlaxoSmithKline Plc (GSK)
GSK is a global healthcare leader that discovers, develops, manufactures, and markets pharmaceutical products, over-the-counter medicines, vaccines, and other consumer health products in the U.S., U.K., and other countries. Pharmaceuticals, pharmaceuticals R&D, vaccines, and consumer healthcare are the four segments through which it operates.
GSK’s board of directors has approved the sale of its manufacturing facility in Vemgal, India to Hetero Labs of India for $25 million. GSK had purchased this facility for $155 million.
During the fourth quarter, ended December 31, 2020, GSK’s turnover climbed 1% year-over-year to GBP34 billion. Its EPS for the quarter rose to 115.5 pence from 93.9 pence posted in the prior year period.
Analysts expect GSK’s revenue for the quarter ending March 31, 2021 to be $11.9 billion, representing a 2% increase year-over-year. Meanwhile, its EPS is likely to increase at the rate of 4.7% per annum for the next five years.
Year-to-date, GSK has declined3.6% to end yesterday’s trading session at $36.08. Over the past six months, the stock has retreated 5%.
GSK is one of the best value stocks in the healthcare space currently . In terms of forward ev/sales, GSK is currently trading at 2.67x, 61.1% lower than the industry average 6.85x. The stock’s forward price/earnings of 9.06x is also 57.1% lower than the industry average 21.12x.
GSK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. GSK has an A Grade for Value, and a B Grade for Quality and Stability. In the Medical – Pharmaceuticals industry, it is ranked #23.
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INTC shares were trading at $65.61 per share on Tuesday afternoon, down $0.93 (-1.40%). Year-to-date, INTC has gained 33.28%, versus a 9.13% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More...
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