The stock market has witnessed significant volatility because of the soaring prices, aggressive federal rate hikes, and rising recession odds. The CBOE Volatility Index has gained 35.4% year-to-date.
However, according to Goldman Sachs, despite diminished growth, the U.S. economy’s ‘soft landing’ probabilities are reasonably valid. Goldman Sachs Chief Economist Jan Hatzius expects U.S. GDP to rise by 1% in 2023.
Moreover, according to FactSet, about 69% of S&P 500 companies beat earnings per share estimates, and 71% of S&P 500 companies beat revenue estimates for the 2022 third quarter. In addition, Jeffrey Roach, Chief Economist for LPL Financial, said, “The air has cleared up a bit, and recession uncertainty isn’t as pressing of an issue.”
Given the backdrop, fundamentally sound stocks Pfizer Inc. (PFE) and Flowers Foods, Inc. (FLO) could be ideal investments this November. They are rated Strong Buy in our proprietary POWR Ratings system.
Pfizer Inc. (PFE)
PFE discovers, develops, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. The company serves wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, individual provider offices, and disease control and prevention centers.
On November 3, 2022, PFE’s investigational cancer immunotherapy, elranatamab, received Breakthrough Therapy Designation from the U.S. Food and Drug Administration (FDA) for treating people with relapsed or refractory multiple myeloma. This marks another significant achievement for PFE in the field of oncology.
Also, on October 20, PFE and Erasca, Inc. (ERAS), a clinical-stage precision oncology company, announced a clinical trial collaboration and supply agreement for the CDK4/6 inhibitor palbociclib (IBRANCE®). The co-developed trial aims to discover advanced treatment alternatives for colorectal cancer.
PFE has paid dividends for 33 consecutive years. Over the last three years, PFE’s dividend payouts have grown at a 5.5% CAGR. While PFE’s four-year average dividend yield is 3.63%, and its current dividend translates to a 3.32% yield.
PFE’s income from continuing operations came in at $8.65 billion for the third quarter that ended October 2, 2022, up 5.8% year-over-year. Its net income came in at $8.61 billion, up 5.7% year-over-year, while its EPS came in at $1.51, up 6.3% year-over-year.
Analysts expect PFE’s revenue to increase 23.5% year-over-year to $100.41 billion in 2022. The stock’s EPS is estimated to grow 46.2% year-over-year to $6.46 in 2022. It surpassed EPS estimates in all four trailing quarters. Over the past month, the stock has gained 9.4% to close the last trading session at $48.23.
PFE’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PFE has an A grade for Value and a B for Growth, Sentiment, and Quality. Within the Medical – Pharmaceuticals industry, it is ranked #2 out of 163 stocks. Click here for the additional POWR Ratings for Momentum and Stability for PFE.
Flowers Foods, Inc. (FLO)
FLO produces and markets packaged bakery products in the United States. It offers fresh bread, buns, rolls, snack cakes, tortillas, frozen bread, and rolls under the Nature’s Own, Dave’s Killer Bread, Wonder, Canyon Bakehouse, Mrs. Freshley’s, and Tastykake brand names.
On November 10, 2022, Ryals McMullian, FLO’s President and CEO, said, “Flowers’ record results in a challenging environment underscore the resiliency of our business and the ongoing effectiveness of our strategy.”
FLO has paid dividends for 18 consecutive years. Over the last three years, FLO’s dividend payouts have grown at a 5.1% CAGR. While FLO’s four-year average dividend yield is 3.33%, its current dividend translates to a 3.06% yield.
FLO’s sales came in at $1.16 billion for the third quarter that ended October 8, 2022, up 12.7% year-over-year. Its net income came in at $40.53 million, up 4.3% year-over-year. Moreover, its EPS came in at $0.19, up 5.6% year-over-year.
FLO’s revenue is expected to increase 11.2% year-over-year to $4.82 billion in 2022. Its EPS is expected to increase by 3.2% year-over-year to $1.28 in 2022. It surpassed EPS estimates in three of four trailing quarters. Over the past year, the stock has gained 7.7% to close the last trading session at $28.75.
FLO’s overall A rating equates to a Strong Buy in our POWR Ratings system. It has a B grade for Growth and Quality. The stock is ranked #8 out of 83 in the B-rated Food Makers industry.
We’ve also rated FLO for Stability, Momentum, Sentiment, and Value. Get all FLO ratings here.
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PFE shares were trading at $48.10 per share on Monday afternoon, down $0.13 (-0.27%). Year-to-date, PFE has declined -15.90%, versus a -15.82% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...
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