3 strong buy stocks to hold in 2023

3 strong buy stocks to hold in 2023

As the Fed’s aggressive monetary policy last month resulted in inflation cooling slightly, investors are hoping for smaller rate hikes ahead. However, as the economy is expected to hit a recession next year, we believe that the fundamentally sound stocks of Pfizer (PFE), Flowers Foods (FLO) and Xperi (XPER), which are rated Strong Buy in our proprietary rating system, are the could be worth it. to own. Read more.

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The central bank overnight benchmark is currently in a target range of 3.75%-4.00%. Investors overwhelmingly expect a 50 basis point rate hike at the next Fed policy meeting as inflation showed signs of cooling.

The Fed’s most aggressive monetary tightening campaign since the 1980s has so far had a fairly limited effect on overall demand. However, recent data shows that activity contracted for a fifth month in November and claims for unemployment benefits rose last week to the highest level in three months. This indicates that some more resilient parts of the economy are starting to weaken.

In addition, as debate expanded over the implications of the US central bank’s rapid tightening of monetary policy, a substantial majority of policymakers at the Federal Reserve meeting early this month agreed that it was “probably appropriate soon.” would be at slow the pace of rate hikes.

Given this background, we believe that fundamentally strong shares of Pfizer Inc. (PFE), Flowers Foods, Inc. (FLO), and XPeri Inc. (XPER) might be worth owning as we head into 2023. These stocks are rated Strong Buy in our proprietary rating system.

Pfizer Inc. (PFE)

PFE discovers, develops, manufactures, distributes and markets biopharmaceutical products worldwide. It offers medicines and vaccines in various therapeutic areas. The company serves wholesalers, retailers, hospitals, clinics, government agencies, as well as disease control and prevention centers.

On November 4, PFE and BioNTech SE (BNTX) announced updated data from a Phase 2/3 clinical trial demonstrating a robust neutralizing immune response one month after a 30 µg booster dose of the company’s Omicron BA.4/BA.5 modified bivalent COVID-19 vaccine.

These data highlight the potential benefit of the bivalent vaccine for all populations, regardless of previous SARS-CoV-2 infection. This represents an important achievement for the companies in the development of the Covid-19 vaccines.

On November 3, 2022, PFE’s experimental cancer immunotherapy, elranatamab, received Breakthrough Therapy designation from the U.S. Food and Drug Administration (FDA) for the treatment of people with relapsed or refractory multiple myeloma.

Chris Boshoff, MD, Ph.D., Chief Development Officer, Oncology and Rare Disease, Pfizer Global Product Development, said, “This marks Pfizer’s twelfth FDA Breakthrough Therapy designation in oncology, demonstrating our unwavering commitment to developing transformational anti-cancer drugs in areas of high unmet need.”

On September 22, PFE declared a quarterly dividend of $0.40 per share on its common stock, payable to shareholders on December 5. The annual dividend of $1.60 yields 3.26% at current prices. The company’s dividend payments have increased at a CAGR of 5.5% over the past three years and a CAGR of 5.7% over the past five years. The company has a record 12 years of consecutive dividend growth.

In terms of future EV/EBITDA, PFE is currently trading at 6.11x, which is 54.1% lower than the industry average of 13.31x. Its forward non-GAAP P/E multiple of 7.53 is 57.7% lower than the industry average of 17.79.

During the fiscal third quarter ending September 2022, PFE’s revenue from continuing operations improved 5.8% year over year to $8.65 billion. Non-GAAP net income attributable to common stockholders of Pfizer Inc. increased 39.7% year-over-year to $10.17 billion, while non-GAAP EPS grew 40.2% year-over-year to $1.78.

Street expects PFE’s earnings per share for the current fiscal year ending December 2022 to be $6.46, indicating a 46.2% year-over-year improvement. The company’s revenue is likely to increase 23.2% to $100.15 billion in the same year. In addition, PFE beat consensus estimates of earnings per share in each of the following four quarters.

The stock gained 8.7% over the month and closed the last trading session at $48.8.

PFEs POWR ratings reflect this promising outlook. The stock has an overall rating of A, which translates to a strong buy in our proprietary rating system. The POWR Ratings rate stocks on 118 different factors, each with its own weighting.

PFE has been rated with an A in Value and a B in Growth, Sentiment and Quality. Within the Medical – Pharmaceuticals industry, it ranks number 2 out of 162 stocks. click here to see additional POWR ratings for stability and momentum for PFE.

Floral Food, Inc. (FLO)

FLO is a manufacturer and marketer of packaged bakery products. The company offers fresh bread, buns, rolls, snack cakes, tortillas, frozen breads and sandwiches. The portfolio includes brands such as Nature’s Own, Dave’s Killer Bread (DKB), Wonder, Canyon Bakehouse, Tastykake and Mrs. Freshley’s.

On November 18, FLO announced a quarterly dividend of $0.22 per share, up 4.8% from the same quarter last year. This is the 81st consecutive quarterly dividend paid by the company and is payable December 16, 2022.

The annual dividend of $0.88 yields 2.98% at current prices. The company’s dividend payments have increased at a CAGR of 5.1% over the past three years and a CAGR of 5.4% over the past five years. The company has a record 8 years of consecutive dividend growth.

FLO’s forward EV/Sales multiple of 1.49 is 11.7% lower than the industry average of 1.69.

FLO revenue increased 12.7% year over year, $1.16 billion for the third quarter ended October 8, 2022. Net income improved 4.3% year over year to $40.53 million, while earnings per share grew 5.6% year over year to $0.19.

Analysts expect FLO’s revenue for the fiscal fourth quarter ending December 2022 to grow 12.3% year over year to $1.10 billion, while earnings per share for the current year are expected to grow 18%. grow year-over-year to $0.24.

FLO has gained 9.6% over the past month to close out the last trading session at $29.59.

It’s no surprise that FLO has an overall rating of A, which equates to a strong buy in our POWR rating system. The stock has a B grade for growth and quality. It is number 9 out of 82 stocks in the B rating Food makers industry.

To access the additional assessments for FLO for Value, Momentum, Stability and Sentiment, click here.

Xperi Inc. (XPER)

XPER provides software and services in the United States. It provides consumers with a seamless end-to-end entertainment experience from choice to consumption, at home, in the car and on the go. The company has three business categories: Pay TV, Consumer Electronics; Connected car; and media platform.

On October 10, XPER celebrated its first day of trading as an independent company on the New York Stock Exchange.

Jon Kirchner, CEO of XPER, said: “Today we stand as an independent company with a strong balance sheet, an executive team with significant tenure and an exciting path to significant growth and profitability. The realization of this strategic milestone is the result of years of continuous effort.”

In terms of price/sell forward, XPER is currently trading at 0.88x, which is 64.9% lower than the industry average of 2.50x. Its forward EV/Sales multiple of 0.70 is 73.1% lower than the industry average of 2.59.

XPER revenue increased 3.3% year over year to $121.64 million for the third quarter ended September 30, 2022. For the nine months ended September 30 net cash flow from financing activities increased 115.3% over the same period last year, while cash and cash equivalents grew 68.3% year-over-year at the end of the nine months.

XPER’s revenue is likely to grow 7.7% yoy to $535.32 million in the next fiscal year ending December 2023. Earnings per share are estimated to grow 88% yoy in the next year.

Shares fell marginally during the day to close out the last trading session at $10.32.

XPER’s strong fundamentals are reflected in the POWR ratings. The stock’s overall A rating indicates a strong buy in our proprietary rating system. It has a B grade for growth, sentiment and quality. Within the B rating Semiconductor and wireless chip industry, it ranks number 3 out of 92 stocks.

In addition to the above POWR ratings, XPER is also rated for value, stability, and momentum. Get all XPER reviews here.

PFE shares were unchanged in premarket trading Thursday. Year-to-date, PFE is down -14.59%, versus an increase of -14.29% in the benchmark S&P 500 index over the same period.

About the author: Kritika Sarmah

Her interest in risky instruments and passion for writing turned Kritika into an analyst and financial journalist. She received her bachelor’s degree in commerce and is currently attending the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.


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