The stock market has faced intense selling pressure of late on investor angst over the Fed’s aggressive monetary policy tightening to tame surging inflation, which might push the economy into recession. The overall market sentiment has been bearish since the beginning of the year due to the multi-decade high inflation, the war between Ukraine and Russia, and high energy and commodity prices.
Many high-quality stocks have borne the brunt of the recent sell-off and are now trading at deep discounts. Quilter Cheviot investment manager Poppy Fox said, “There can be some sound logic in buying shares of companies after their price takes a tumble, particularly if you continue to believe in the investment case.”
Given this backdrop, we think it could be wise to add battered stocks Zoetis Inc. (ZTS), O’Reilly Automotive, Inc. (ORLY), and Endeavor Group Holdings, Inc. (EDR) to one’s portfolio. Due to these company’s solid fundamentals and growth prospects, their stocks are expected to rebound strongly once the market stabilizes.
Zoetis Inc. (ZTS)
ZTS in Parsippany, N.J., discovers, develops, manufactures, and commercializes animal health medicines, vaccines, and diagnostic products. The company offers vaccines and pharmaceutical products that comprise pain and sedation, antiemetic, reproductive, oncology products, and dermatology products.
On Dec. 7, 2021, ZTS announced that its board of directors had approved a $3.5 billion share repurchase program over a multi-year period as part of its capital allocation plans. Executive VP and CFO Wetteny Joseph said, “Our financial performance has remained solid this year and allows us to continue making meaningful investments in our business while returning capital to our shareholders.”
ZTS’ revenue increased 6.1% year-over-year to $1.98 billion for the first quarter, ended March 31, 2022. The company’s net income increased 6.4% year-over-year to $595 million. Also, its EPS came in at $1.26, representing an increase of 7.6% year-over-year.
Analysts expect ZTS’ EPS for its fiscal 2023 to increase 13.5% year-over-year to $5.80. Its revenue for the quarter ending Sept. 30, 2022, is expected to increase 11% year-over-year to $2.14 billion. It surpassed the Street EPS estimates in each of the trailing four quarters. The stock has declined 33.1% in price year-to-date to close the last trading session at $163.08.
ZTS’ POWR Ratings reflect solid prospects. According to our proprietary rating system, it has an overall rating of B, which translates to a Buy. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has an A grade for Quality and a B grade for Stability. It is ranked #16 out of 166 stocks in the Medical – Pharmaceuticals industry. Click here to see the other ratings of ZTS for Growth, Value, Momentum, and Sentiment.
O’Reilly Automotive, Inc. (ORLY)
ORLY in Springfield, Mo., is a specialty retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories. The company sells its products to both DIY and professional service provider customers. Its product line includes new and remanufactured complex automotive parts, such as alternators, starters, fuel pumps, and water pumps.
For its fiscal first quarter, ended March 31, 2022, ORLY’s sales increased 6.6% year-over-year to $3.29 billion. The company’s gross profit increased…
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