October’s core personal consumption expenditures price index report presented inflation at a 6% annual rate, down from 6.3% in September, indicating that inflation is on its way down. Now the question remains whether the Fed can pull off the “soft landing” that would see the economy and inflation slow enough without throwing the economy into a recession.

After hiking the benchmark rate by 75 basis points four times in a row, the Fed will likely increase interest rates by 50 basis points next week. However, the strong jobs report might encourage the central bank to reach a higher rate than expected. As a result, the economy will most likely tip into a recession next year.

Moreover, JPMorgan CEO Jamie Dimon expects the Federal Reserve to hike rates to 5% and hold them there for several months but warned even that might not be enough to bring inflation back under control.

Considering the uncertainties ahead, it could be wise to invest in fundamentally strong stocks, The Coca-Cola Company (KO), Gilead Sciences, Inc. (GILD), and PBF Energy Inc. (PBF), which are trading at a relatively low price now.

The Coca-Cola Company (KO)

KO is a popular beverage company that manufactures, markets, and sells various nonalcoholic beverages worldwide. The company offers sparkling soft drinks, flavored and enhanced water, sports drinks, juice, dairy, plant-based beverages, and energy drinks.

On September 29, KO and Molson Coors Beverage Company (TAP) entered into an exclusive agreement to develop and commercialize Topo Chico Spirited, a line of spirit-based, ready-to-drink cocktails inspired by the bright and refreshing taste of tequila and vodka-based beverages. It will be launched in more than 20 markets across the country in 2023 and might bolster the company’s revenue stream.

On October 20, KO announced its regular quarterly dividend of $0.44 per common share, payable on December 15.

The company pays $1.76 per share dividends annually, which translates to a 2.77% yield at the current price. It has a 4-year average dividend yield of 3.08%. The company has raised its dividend for the past 60 years. Moreover, it has increased its dividend at a CAGR of 3.2% over the past three years and a CAGR of 3.5% over the past five years.

During the fiscal third quarter ended September 30, KO’s non-GAAP net operating revenue came in at $11.05 billion, up 10% year-over-year. The company’s non-GAAP gross profit increased 6.5% year-over-year to $6.54 billion. Moreover, its non-GAAP net income per share increased 6.2% year-over-year to $0.69.

KO’s EPS is estimated to improve by 7.4% year-over-year to $2.49 for the fiscal year ending December 2022. Similarly, its revenue estimate of $42.70 billion represents a 10.5% growth from the prior year. On top of it, KO has surpassed EPS estimates in all of its four trailing quarters.

The stock has gained 7.1% over the past month to close its last trading session at $63.44.

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

KO is rated a B in Stability, Sentiment, and Quality. Within the A–rated Beverages industry, it is ranked #16 out of 34 stocks.

In addition to the ratings stated above, we have also given KO grades for Value, Momentum, and Growth. Get all KO ratings here.

Gilead Sciences, Inc. (GILD)

GILD is a biotech company focused on discovering, developing, and marketing drugs to treat and prevent diseases like cancer, viral hepatitis, and the human immunodeficiency virus (HIV). The company is also working to rebalance the immune system by developing agonists that target immune suppressive receptors.

On November 29, GILD announced that the European Commission (EC) had approved a new low-dose tablet dosage form of Biktarvy and an extension of the indication for Biktarvy to treat HIV infection in virologically suppressed children who are at least two years old and weigh at least 14 kg.

This should boost GILD’s effort to fight the HIV epidemic by expanding the available therapeutic alternatives to assist children’s access to care and their HIV treatment options.

Moreover, on November 28, GILD and Arcus Biosciences (RCUS) announced a positive update from the fourth interim analysis of the randomized, open-label Phase 2 ARC-7 study in patients with first-line metastatic non-small cell lung cancer with PD-L1 tumor proportion score of more than 50% without epidermal growth factor receptor or anaplastic lymphoma kinase mutations.

Bill Grossman, M.D., Ph.D., Senior Vice President, Therapeutic Area Head, Gilead Oncology, said, “These results strengthen our belief in the potential of domvanalimab and the promise of our anti-TIGIT approach to meaningfully impact the outlook for people with metastatic lung cancer.”

On October 27, GILD declared a quarterly dividend of $0.73 per share of common stock, payable on December 29. Its annual dividend of $2.92 yields 3.32% on the current share price. It has a four-year average yield of 4%.

The company’s dividend payouts have increased at a 5.6% CAGR over the past three years and a 7.4% CAGR over the past five years. The company increased its dividend payments for six consecutive years.

For the fiscal 2022 third quarter ended September 30, 2022, GILD’s HIV product sales increased 7% year-over-year to $4.49 billion. The company’s non-GAAP net income attributable to GILD and non-GAAP EPS amounted to $2.39 billion and $1.90, respectively. Its oncology sales grew 79% year-over-year to $578 million.

Analysts expect GILD’s EPS for the fiscal fourth quarter ending December 2022 to increase 115.3% year-over-year to $1.49. GILD has surpassed its consensus EPS estimates in three of the trailing four quarters.

The stock has gained 9.5% over the past month and 41.8% over the past six months to close the last trading session at $87.96.

GILD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.

The stock has a B grade for Value, Sentiment, and Quality. Among the 378-stock Biotech industry, it is ranked #3.

Beyond what we stated above, we also have GILD’s Growth, Stability, and Momentum ratings. Get all GILD ratings here.

PBF Energy Inc. (PBF)

PBF refines and supplies petroleum products. The company operates in two segments, Refining, and Logistics, producing gasoline, ultra-low-sulfur diesel, heating oil, diesel fuel, jet fuel, lubricants, petrochemicals, asphalt, unbranded transportation fuels, and other petroleum products.

On December 1, PBF and PBF Logistics LP (PBFX) announced the completion of the previously announced agreement and plan of merger to acquire all the outstanding common units representing limited partner interests of PBFX for a combination of 0.270 of a share of PBF Energy Class A common stock and $9.25 in cash, without interest, per PBFX Public Common Unit.

This transaction is expected to simplify the company’s corporate structure and eliminate the costs of running a separate public company.

On October 27, PBF announced a quarterly dividend of $0.20 per share of Class A common stock that was payable on November 29, 2022. Its annual dividend of $0.80 translates to a 2.18% yield at the current price. It has a 4-year average dividend yield of 3.42%.

PBF’s revenues came in at $12.76 billion for the third quarter that ended September 30, representing a 77.6% year-over-year growth. Its adjusted EBITDA grew 582.1% from the prior-year quarter to $1.54 billion. Its income from operations rose 1,287.5% from the same quarter last year to $1.40 billion, and its adjusted EPS increased 6,533.3% from the prior-year period to $7.96.

Analysts expect PBF’s revenue for the fourth quarter ending December 2022 to be $10.14 billion, indicating a 23% year-over-year growth. The company’s EPS for the same quarter is expected to increase 357.2% from the prior-year quarter to $5.85.

PBF has gained 159.9% year-to-date, closing its last trading session at $33.71.

It is no surprise that PBF has an overall B rating, which translates to Buy in our POWR Ratings system.

PBF has an A grade for Growth, Value, and Momentum and a B for Quality. It is ranked #7 out of 92 stocks in the B-rated Energy – Oil & Gas industry.

Click here to access additional POWR Rating grades for Stability and Sentiment for PBF.

KO shares were trading at $63.51 per share on Wednesday morning, up $0.07 (+0.11%). Year-to-date, KO has gained 10.44%, versus a -16.06% 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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