Economists are warning that the odds of a recession have increased following the jumbo 75-basis-point interest rate hike announced by the Federal Reserve last week. Since July, the yield curve has been inverted, which means that short-term yields have fallen below long-term yields, signaling investors’ bearish sentiment about the economy.
Although the market uncertainty is concerning, there still might be opportunities left for investors. History suggests that it is less likely to suffer losses over long periods, especially with a diversified portfolio. And, of course, time-tested large-cap stocks help investors survive such market conditions.
Pfizer Inc. (PFE) and Broadcom Inc. (AVGO) are two such stocks worth investing in to survive the current volatile backdrop.
Pfizer Inc. (PFE)
PFE is a well-known developer and distributor of biopharmaceutical products like medicines, vaccines, and other therapies. The company developed the Pfizer-BioNTech COVID-19 vaccine with BioNTech SE (BNTX). It has a market capitalization of $247.39 billion.
On August 31, PFE and BNTX announced that the U.S. Food and Drug Administration (FDA) granted Emergency Use Authorization (EUA) of their 30-µg booster dose of the Pfizer-BioNTech COVID-19 Vaccine for individuals aged 12 years and older.
Albert Bourla, Chairman and Chief Executive Officer, PFE, said, “We are thrilled by today’s news, another important milestone in our ongoing efforts to provide protection against this virus.”
On August 8, PFE and Global Blood Therapeutics, Inc. (GBT) announced that they had entered into a definitive agreement for PFE to acquire GBT for $68.50 per share in cash. The acquisition is expected to complement the PFE rare hematology field.
PFE’s revenues increased 46.8% year-over-year to $27.74 billion in the fiscal second quarter of 2022. Adjusted income and adjusted EPS improved 93.5% and 92.5% from the prior-year period to $11.66 billion and $2.04.
Analysts expect PFE’s EPS for the quarter ending December 2022 to increase 26.9% year-over-year to $1.37. Likewise, Street expects revenue for the same quarter to improve 3.6% from the prior-year period to $24.69 billion. Moreover, PFE has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained marginally over the past year to close its last trading session at $44.08.
PFE’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 POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PFE has a Value grade of A and a Quality grade of B. In the 164-stock Medical – Pharmaceuticals industry, it is ranked #10. Click here to see the additional POWR Ratings for PFE (Growth, Momentum, Stability, and Sentiment).
Broadcom Inc. (AVGO)
AVGO operates as the designer, developer, and supplier of various semiconductor devices, focusing on complex digital, mixed-signal complementary metal oxide semiconductor-based devices and analog III-V-based products globally. It has a $189.82 billion market capitalization.
On September 6, AVGO announced the delivery of the Trident 4C Ethernet switch ASIC, 12.8 terabits/second security switch capable of analyzing all traffic at line rate. The new switch is capable of detecting flow anomalies in real-time. The new product should extend the company’s portfolio.
On August 22, AVGO and Tencent Holdings Ltd. announced a strategic partnership to accelerate the adoption of high bandwidth co-packaged optics (CPO) network switches for cloud infrastructure. This partnership is expected to bolster the company’s market position.
For the fiscal third quarter of 2022, AVGO’s net revenue increased 24.9% year-over-year to $8.46 billion. Non-GAAP net income and non-GAAP earnings per common share rose 35.8% and 39.8% from the prior-year quarter to $4.24 billion and $9.73.
The consensus EPS estimate of $10.29 for the fiscal quarter ending October 2022 indicates a 31.8% year-over-year increase. Likewise, the consensus revenue estimate for the same quarter of $8.91 billion reflects an improvement of 20.2% from the prior-year period. Moreover, AVGO has topped consensus EPS estimates in each of the trailing four quarters.
AVGO’s shares have declined 1.9% intraday to close its last trading session at $468.68.
AVGO’s POWR Ratings reflect its promising outlook. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system. It has an A grade for Quality and a B grade for Growth and Sentiment. It is ranked #4 out of the 93 stocks in the Semiconductor & Wireless Chip industry. The industry is rated B.
In addition to the POWR Rating grades we’ve stated above, one can see AVGO ratings for Value, Momentum, and Stability here.
PFE shares were trading at $43.91 per share on Monday afternoon, down $0.17 (-0.39%). Year-to-date, PFE has declined -23.88%, versus a -22.22% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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