The stock market might remain volatile in the near term amid the still-alarmingly high inflation and the anticipated continuation of rate hikes. Therefore, fundamentally strong Eli Lilly (LLY), Novartis (NVS), Comcast (CMCSA), HCA Healthcare (HCA), and Myers Industries (MYE), which pay steady dividends, might be safe buys now. Read more.
Stubborn inflation and lingering fear of continued rate hikes might keep the stock market under pressure in the near term. So, let’s take a look at fundamentally robust stocks Eli Lilly and Company (LLY), Novartis AG (NVS), Comcast Corporation (CMCSA), HCA Healthcare, Inc. (HCA), and Myers Industries, Inc. (MYE), which could help navigate an uncertain macroeconomic backdrop.
The stable dividend-paying record of these stocks makes them safe buys now.
January’s employment growth far exceeded economists’ expectations, and the unemployment rate fell to a level not seen since 1969. Nancy Vanden Houten, lead US economist for Oxford Economics, said that the tight labor market would keep the Fed on the path of raising rates at its March meeting. The inflation growth of 0.5% for the same month to 6.4% is still well above the Fed’s target.
Stock markets continued to be volatile this year, as it pulled back this month after a strong January as investors try to anticipate Federal Reserve’s next monetary tightening step. While economic data pointing to a robust economy is a relief, hawkish moves from policymakers might end the optimism in the stock market.
Furthermore, billionaire investor Cliff Asness, co-founder of AQR Capital Management, cautioned, “The fat tail event probably is macroeconomic, there’s a risk that the macro economy delivers results that markets are still woefully unprepared for.”
Also, Bank of America had recently warned that the market could be hit by rebounding inflation and an incoming recession, causing stocks to be flipped upside down.
Let’s discuss the stocks mentioned above in detail:
Eli Lilly and Company (LLY)
LLY discovers, develops, and markets human pharmaceuticals worldwide. The company provides diabetes, oncology, neuroscience, and other products.
On February 13, 2023, LLY announced that it will provide its active pharmaceutical ingredient (API) for human insulin at a lower price to International Agencies (Bangladesh) Ltd. (IABL) in an effort to improve patient access and affordability for high-quality insulin for almost one million diabetics in Bangladesh by 2030.
On January 24, 2023, LLY announced plans to invest an additional $450 million and create at least 100 new jobs to expand its manufacturing capacity at the company’s Research Triangle Park facility. The expansion includes additional parenteral filling, device assembly, and packaging capacity to support an increased demand for Lilly’s incretin products that treat diabetes.
While LLY’s four-year average dividend yield is 1.63%, its current annual dividend of $4.52 translates to a 1.37% yield. LLY has paid dividends for 33 consecutive years. Over the last three years, LLY’s dividend payouts have grown at a 15% CAGR.
LLY’s Verzenio revenue increased 100% year-over-year to $808 million during the fourth quarter that ended December 31, 2022. Its net income increased 12.3% year-over-year to $1.94 billion, and its EPS rose 12.6% year-over-year to $2.14.
Street expects LLY’s revenue to increase 12.6% year-over-year to $7.30 billion in the fiscal second quarter ending June 2023. Its EPS is expected to increase 51.6% year-over-year to $1.89. It surpassed EPS estimates in three of the four trailing quarters, which is impressive.
The stock has gained 37.4% over the past year to close the last trading session at $327.52. Its 60-month beta is 0.35.
LLY’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates 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.
It has an A grade for Quality and a B for Stability and Sentiment. It is ranked #28 out of 174 stocks in the Medical – Pharmaceuticals industry.
Beyond what is stated above, we’ve also rated LLY for Value, Growth, Momentum, and Sentiment. Get all LLY ratings here.
Novartis AG (NVS)
Headquartered in Basel, Switzerland, NVS researches, manufactures, and markets healthcare products. Its segments include Innovative Medicines and Sandoz. The company develops and sells finished dosage forms of small-molecule pharmaceuticals to third parties and provides prescription medications for patients and physicians.
On January 24, 2023, Sandoz, a division of NVS and the global leader in off-patent medicines, announced that the US Food and Drug Administration (FDA) had accepted its Biologics License Application (BLA) for proposed biosimilar denosumab.
Keren Haruvi, President of Sandoz Inc. and Head of North America, said, “We are proud to be among the first to submit a BLA for a denosumab biosimilar as, if approved, it could increase patient access to an affordable, high-quality, potentially disease-modifying treatment across the US, while also delivering savings for healthcare systems.”
NVS pays a $3.47 dividend annually, translating to a 4% yield on the current price level. Its four-year average yield is 3.58%, and its dividend payments have grown at a 5.5% CAGR over the past three years.
During the fiscal fourth quarter that ended December 31, 2022, NVS’ other revenues increased 35.5% year-over-year to $397 million, while it’s core operating income rose 5.5% from the year-ago value to $4.03 billion. The company’s core net income and EPS grew 3.7% and 8.6% from the prior year’s quarter to $ 3.25 billion and $1.52, respectively.
Analysts expect NVS’ revenue to increase 3.9% year-over-year to $52.51 billion for the fiscal year ending December 2023. The company’s EPS for the current year is expected to rise 7.5% from the prior year to $6.58.
The stock has gained 3.7% over the past six months to close the last trading session at $86.54. It has a 24-month beta of 0.29.
NVS’ solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
NVS has an A grade for Stability and a B for Value, Sentiment, and Quality. It ranks #3 in the Medical – Pharmaceuticals industry.
In addition to the POWR Ratings I’ve just highlighted, you can see NVS ratings for Growth and Momentum here.
Comcast Corporation (CMCSA)
CMCSA is a global media and technology company operating through five segments: Cable Communications; Media; Studios; Theme Parks; and Sky.
On February 20, CMCSA announced that it would significantly expand its next-generation network, the Xfinity 10G Network, in a significant way across several southeast Texas counties in 2023.
The media and technology company said it would invest more than $100 million to install at least one thousand miles of new fiber-rich highways that will reach up to 80,000 homes and businesses by the end of this year, which should benefit the topline.
On January 26, 2023, CMCSA declared a quarterly dividend of $0.29 per share on its common stock, payable to its shareholders on April 26, 2023. The company increased its dividend by $0.08 to $1.16 per share annually.
CMCSA’s four-year average dividend yield is 2.11%, and its annual dividend translates to a 3.05% yield on the current price level. Its dividends have grown at a CAGR of 8.7% over the past three years and an 11.4% CAGR over the past five years.
CMCSA’s revenue came in at $30.55 billion for the fourth quarter that ended December 31, 2022, up marginally year-over-year. Its broadband revenue increased 5.4% year-over-year to $6.18 billion, while its adjusted EPS came in at $0.82, representing a 6.5% year-over-year increase.
CMCSA’s EPS and revenue are expected to increase 11.5% and 2.9% year-over-year to $4.08 and $123.76 billion, respectively, in the fiscal year 2024. The company has surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of CMCSA have gained 7.8% year-to-date to close the last trading session at $37.69. The stock’s 24-month beta is 0.29.
It’s no surprise that CMCSA has an overall B rating, equating to a Buy in our POWR Ratings system.
It also has a B grade for Stability and Quality. CMCSA is ranked first among the nine stocks in the Entertainment – TV & Internet Providers industry.
To see the other ratings of CMCSA for Growth, Value, Momentum, and Sentiment, click here.
HCA Healthcare, Inc. (HCA)
HCA provides health care services in the United States. The company operates general and acute care hospitals offering medical and surgical services and outpatient and physical therapy.
On December 13, 2022, HCA announced its enterprise-wide adoption of the Enhanced Surgical Recovery (ESR) program, a patient-centered, research-based, multidisciplinary approach to surgical recovery.
The ESR program has been implemented at 167 HCA Healthcare facilities. It has shown significant benefits in surgical recovery, including a two-day average reduction in hospital stays and a 44% drop in opioid usage for specific surgeries. The company could strategically benefit by improving patient care with this program.
HCA’s $2.40 forward annual dividend yields 0.94% on prevailing prices. Its dividend payouts have increased at an 11.9% CAGR over the past three years. HCA has a four-year average yield of 0.87%.
HCA’s revenues increased 2.9% year-over-year to $15.50 billion for the fiscal fourth quarter that ended December 31, 2022. Net income attributable to HCA increased 14.7% from the prior-year quarter to $2.08 billion, while its EPS came in at $7.28, representing a 26.6% increase from the year-ago quarter.
HCA’s EPS is expected to increase 1.3% year-over-year to $4.26 for the second quarter ending June 30, 2023. Its revenue is expected to increase 4.5% year-over-year to $15.48 billion in the same quarter.
Over the past nine months, the stock has gained 22.9% to close the last trading session at $251.98.
HCA’s positive outlook is reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
In addition, it has a B grade for Value, Stability, and Quality. It is ranked first in the 12-stock Medical – Hospitals industry.
Click here to see the additional ratings of HCA for Growth, Momentum, and Sentiment.
Myers Industries, Inc. (MYE)
MYE manufactures a wide range of polymer and metal products and distributes tire service supplies. It operates through The Material Handling and Distribution segments. The company sells its products under the Akro-Mils, Jamco, Buckhorn, Ameri-Kart, and Trilogy Plastics brands, among others.
MYE’s forward annual dividend of $0.54 yields 2.25% on the current price level. Its four-year average yield is 3.03%. The company has paid dividends for 14 consecutive years.
In the third quarter that ended September 30, 2022, MYE’s net sales increased 14% year-over-year to $228.07 million. Its adjusted EBITDA grew 57% year-over-year to $27.20 million. Adjusted net income increased 76.9% year-over-year to $15.02 million, while its adjusted earnings per share came in at $0.41, an increase of 78.3% year-over-year.
Street expects MYE’s revenue and EPS for the fiscal year 2022 to increase 19.2% and 70.1% year-over-year to $907.33 million and $1.65, respectively. Also, the company has topped the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 46.1% over the past year, closing the last trading session at $24.43. It has a 60-month beta of 0.72.
MYE has an overall rating of A, translating to a Strong Buy in our POWR Ratings system.
The stock has a B grade for Growth, Stability, and Quality. It is ranked #5 out of 36 stocks in the A-rated Industrial – Manufacturing industry.
Access additional MYE grades for Sentiment, Momentum, and Value here.
What To Do Next?
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First, because they are all low-priced companies with the most upside potential in today’s volatile markets.
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3 Stocks To DOUBLE This Year
LLY shares were unchanged in premarket trading Friday. Year-to-date, LLY has declined -10.18%, versus a 4.77% 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.
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