Increasing Western sanctions against Russia could lead to further disruption of industrial supplies. In addition, the price of crude oil has skyrocketed. Therefore, many analysts expect the emergence of a recessionary environment. Against this backdrop, we thought it would be best to bet on defensive stocks Vertex Pharmaceuticals (VRTX), Ambev (ABEV), AmerisourceBergen (ABC), Coca-Cola FEMSA (KOF), and Petco Health (WOOF). These names have a Strong Buy or Buy recommendation in our proprietary ranking system.
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While the economy witnessed a rapid recovery last year, the Russo-Ukrainian war may slow or even halt US economic growth this year. The animosity between the two countries comes amid decades of high inflation and the Fed’s plans to raise interest rates several times this year. Russia’s actions have brought stringent economic sanctions on the country. Furthermore, experts expect new sanctions to be imposed on Russia because it has so far refused to stop its invasion of Ukraine.
Crude oil prices have skyrocketed recently, with benchmarks WTI and Brent hit multi-year highs amid fears of a full embargo on Russian oil. Historically, the US economy has slipped into recession amid high oil prices.
Given this backdrop, we think it’s best to bet on stocks of defensive companies because of the nearly inelastic demand for their products and services. Thus, Vertex Pharmaceuticals Incorporated (VRTX), Ambev SA (ABEV), AmerisourceBergen Corporation (A B C), Coca-Cola FEMSA, SAB de CV (KOF), and Petco Health and Wellness Company, Inc. (FEED) could be a good bet now as the defensive nature of their business can help them survive in uncertain economic conditions. These stocks have an overall Buy or Buy Strong rating in our proprietary rating system.
Vertex Pharmaceuticals Incorporated (VRTX)
Boston-based VRTX is a biotechnology company focused on developing and commercializing therapies to treat cystic fibrosis (CF) and advancing its research and development programs in other areas. The drugs marketed by the company include TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, ORKAMBI, and KALYDECO.
On 11 January 2022, the VRTX announced that the European Commission had approved the extension of the KAFTRIO label (ivacaftor/tezacaftor/elexacaftor) in a combination regimen with ivacaftor to treat patients in the age group 6 – 11 with cystic fibrosis in those who have at least one F508del mutation in the conductance regulatory gene. cystic fibrosis transmembrane.
VRTX product revenues increased 27% year-on-year to $2.07 billion for the fourth quarter, ending December 31, 2021. The company’s non-GAAP operating income increased 27% year over year to $1.12 billion. Also, non-GAAP net income increased 31% year over year to $866 million. Additionally, its non-GAAP EPS stood at $3.37, representing a 34% year-over-year increase.
Analysts expect VRTX EPS and revenue for the quarter ended March 31, 2022, to increase 15.8% and 25.4%, year-over-year, to $3.45 and $2.08 billion, respectively. It topped EPS Street forecasts in each of the last four quarters. And over the past six months, the share price has gained 22.5% to close the last trading session at $235.54.
VRTX’s strong fundamentals are reflected in POWRA Rating. It has an overall A rating, which is equivalent to Strong Buys in our proprietary rating system. The POWR rating is calculated taking into account 118 different factors, with each factor being weighted to an optimal level.
It has an A rating for Quality and a B rating for Growth, Values and Sentiment. It is ranked first among 429 stocks in biotech industry. Click here to see additional VRTX ratings for Momentum and Stability.
Click here to check out our Health Sector Report for 2022
Ambev SA (ABEV)
Headquartered in Sao Paulo, Brazil, ABEV is engaged in the brewing sector. The company manufactures, distributes, and sells beer, carbonated soft drinks, and other non-alcoholic and non-carbonated beverages throughout America. It markets products under Adriatica, Brahma, Leffe, Budweiser, Corona, PepsiCo, and Lipton.
For the fiscal fourth quarter, ending December 31, 2021, ABEV revenue increased 18.6% year-on-year to R$22.01 billion ($4.33 billion). The company’s net profit fell 46.8% year-on-year to R$3.61 billion ($0.71 billion). Also, its EPS stood at R$0.23, representing a 46.5% year-over-year decline.
For fiscal year 2022, ABEV revenues are expected to increase by 7.8% year-on-year to $15.35 billion. Over the past year, the share price has fallen 3.3% to close the last trading session at $2.62.
ABEV’s POWR rating reflects this promising outlook. The stock has an overall B rating, which is equivalent to Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Stability. In rank B Drink industry, it ranks #10 out of 37 stocks. To see other ABEV ratings for Growth, Value, Momentum and Sentiment, Click here.
AmerisourceBergen Corporation (A B C)
ABC sources and distributes pharmaceutical products. The Chesterbrook, Pa., Company segment includes Pharmaceutical Distribution Services and Others. It provides services to healthcare providers and pharmaceutical and biotech manufacturers.
On January 25, 2022, ABC and TrakCel announced an integrated technology platform to accelerate patient access to prescribed cell and gene therapies and provide complete visibility throughout the treatment journey. This offering adds to ABC’s portfolio of services and solutions that support the needs of cell and gene therapy innovators, providers and patients, from pre-clinical to market access and reimbursement consulting and patient support services.
For its fiscal first quarter, ending December 31, 2021, ABC revenue increased 13.5% year-on-year to $59.62 billion. The company’s non-GAAP operating income increased 21.4% year-on-year to $749.14 million. Also, non-GAAP net income increased 21% year over year to $545.38 million. Additionally, its non-GAAP EPS stood at $2.58, representing an 18.3% year-over-year increase.
Analysts expect ABC’s EPS for the quarter ended June 30, 2022, to increase 21.8% year-on-year to $2.63. Its revenue for fiscal year 2022 is expected to grow 11% year over year to $237.44 billion. It topped consensus EPS estimates in each of the last four quarters. And over the past year, the share price has risen 38.1% to close the last trading session at $144.84.
ABC’s strong fundamentals are reflected in its POWR Rating. The stock has an overall A rating, which is equivalent to a Strong Buy in our proprietary rating system.
It has a B rating for Growth, Value, Stability, and Sentiment. It is ranked #5 of 84 stocks on Medical services industry. Click here to see other ratings from ABC for Momentum and Quality.
Click here to check out our Health Sector Report for 2022
Coca-Cola FEMSA, SAB de CV (KOF)
KOF is based in Mexico City, Mexico. The company is the largest bottler of Coca-Cola’s trademark beverage franchise globally by sales volume. It manufactures, distributes, and markets certain Coca-Cola drinks. Its segments include the Mexican and Central American divisions; its South American division; and its Asian division.
KOF’s total revenue increased 8.4% year-on-year to Mex$53.27 billion ($2.51 billion) for the fourth quarter, ending December 31, 2021. The company’s gross profit increased 9.3% year-on-year to Mex $23.98 billion ($1.13 billion). Also, its net profit increased 82.8% year over year to Mex$5.80 billion ($0.27 billion).
For fiscal year 2023, KOF’s EPS and revenue are expected to increase 11.3% and 6.5%, year-over-year, to $3.74 and $10.44 billion, respectively. It topped EPS Street estimates in three of the last four quarters. Over the past year, the share price has gained 10.1% to close the last trading session at $51.21.
KOF’s POWR rating reflects a solid outlook. This company has an overall A rating, which is a Strong Buy in our proprietary rating system.
It has an A grade for Stability and a B grade for Value and Quality. In the Beverage industry, it is ranked #2. To see other KOF rankings for Growth, Momentum and Sentiment, Click here.
Petco Health and Wellness Company, Inc. (FEED)
WOOF operates as a retailer of premium pet consumables, supplies, companion animals and services. The San Diego, California-based company also offers grooming, in-store and online training, tele-veterinary, pet health insurance services, and veterinary services through its Vetco clinic. It also offers pet consumables, supplies, and services through petco.com, petcoach.co, petinsurancequotes.com, and pupbox.com.
On March 3, 2022, WOOF announced that it would purchase the remaining stake in its joint venture with Thrive Pet Healthcare to further its veterinary focus and services. WOOF CEO Ron Coughlin said, “As we continue to fulfill Petco’s mission to improve lives, executing one of the fastest veterinary expansions in history allows us to help keep more pets healthy, welcome new veterinary professionals into our family, encourage pets additional maintenance center traffic and provide exceptional shareholder value.”
WOOF’s net sales increased 14.6% year-on-year to $1.44 billion for the third quarter, ending October 30, 2021. The company’s gross profit was $594.71 million, representing a 9.8% year-over-year increase. Also, adjusted revenue increased 296.6% year over year to $53.98 million.
Analysts expect WOOF’s EPS and revenue for fiscal year 2022 to increase by 217.9% and 17.7%, year-on-year, to $0.89 and $5.79 billion, respectively. It topped EPS Street forecasts in each of the last four quarters. Over the past month, the share price has fallen 4.4% to close the last trading session at $17.69.
WOOF’s POWR rating reflects this promising prospect. The stock has an overall B rating, which is equivalent to Buy in our proprietary rating system.
It has a B value for Growth. It is ranked #10 of 62 stocks on Consumer goods industry. Click here to view additional WOOF ratings for Value, Momentum, Stability, Sentiment and Quality.
VRTX shares were unchanged in Tuesday’s premarket trading. This year, the VRTX has gained 7.26%, versus the -11.51% gain in the benchmark S&P 500 index over the same period.
About the Author: Dipanjan Banchur
Since he was in elementary school, Dipanjan has been interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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Posts 5 Highest Recession Resistant Stocks to Buy Immediately first appeared in StockNews.com
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