3 Stocks Poised for Bull Runs Following a disappointing 2022, the stock market has gained significantly in the first month of the new year, generating fresh optimism. Moreover, consumer sentiment has been improving. Therefore, quality stocks...
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Following a disappointing 2022, the stock market has gained significantly in the first month of the new year, generating fresh optimism. Moreover, consumer sentiment has been improving. Therefore, quality stocks CVS Health (CVS), AmerisourceBergen (ABC), and Celestica (CLS), which look poised for bull runs in 2023, could be ideal buys now. Keep reading.
After a disappointing last year, benchmark indices have gained significantly in the first month of 2023. The S&P 500 gained 7.3%, while the Dow Jones Industrial Average gained 2.9%. Historically, more than 85% of the time, the market has performed well throughout the year if it is up in January.
Moreover, the stock market gained during the Santa Claus rally, the first five trading days of 2023, and in January, marking the 'trifecta of bullish indicators.' Consequently, trifecta researcher Jeff Hirsch of the Stock Trader's Almanac believes, "You should be bullish for this year. The market is probably going to go up significantly higher."
Also, consumer sentiment continues to improve steadily. The University of Michigan's consumer sentiment index measured 64.9 for January, up 9% month-over-month.
Given the backdrop, investors might buy quality stocks CVS Health Corporation (CVS), AmerisourceBergen Corporation (ABC), and Celestica Inc. (CLS), which look poised for bull runs in 2023.
CVS Health Corporation (CVS)
CVS provides health services in the United States. Its segments are Health Care Benefits; Pharmacy Services; and Retail/LTC.
On January 23, 2023, CVS Accountable Care Organization, Inc., a division of CVS, announced its collaboration with RUSH University System for Health to expand access for Medicare patients. This collaboration will offer advanced medical services and drive growth.
In terms of forward EV/Sales, CVS' 0.53x is 87.2% lower than the industry average of 4.15x. Its forward Price/Sales of 0.37x is 92.4% lower than the industry average of 4.82x.
CVS' trailing-12-month EBITDA margin of 6.08% is 55.4% higher than the industry average of 3.91%.
CVS' total revenues increased 10% year-over-year to $81.16 billion for the quarter ended September 30, 2022. Its product revenue came in at $57.64 billion, up 11.2% year-over-year, while its premiums revenue came in at $21 billion, up 10.6% year-over-year.
Analysts expect CVS' revenue to increase 3.3% year-over-year to $325.11 billion for 2023. Its EPS is expected to increase by 5.4% per annum for the next five years. It surpassed EPS estimates in all four trailing quarters. CVS' shares have lost marginally intraday to close the last trading session at $87.49.
CVS' POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CVS has an A grade for Growth and a B for Value, Stability, and Sentiment. CVS is ranked first among the four stocks within the B-rated Medical – Drug Stores industry. Click here for additional CVS ratings (Momentum and Quality).
AmerisourceBergen Corporation (ABC)
ABC sources and distributes pharmaceutical products. Its segments are U.S. Healthcare Solutions and International Healthcare Solutions.
On January 3, 2023, ABC completed its acquisition of PharmaLex Holding GmbH. This acquisition is expected to help ABC expand its prowess as a global pharmaceutical company.
ABC's forward EV/Sales of 0.14x is 96.5% lower than the industry average of 4.15x. Its forward Price/Sales of 0.13x is 97.4% lower than the industry average of 4.87x.
ABC's trailing-12-month net income margin of 0.71% is significantly higher than the negative industry average of 5.84%.
ABC's revenue increased 5.4% year-over-year to $62.85 billion for the quarter ended December 31, 2022. Its non-GAAP net income came in at $559.64 million, up 2.6% year-over-year, while its non-GAAP EPS came in at $2.71, representing a 5% year-over-year rise.
Street expects ABC's revenue to increase 5.6% year-over-year to $252 billion for the current fiscal year 2023. Its EPS is expected to rise 8.2% per annum for the next five years. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 17% to close the last trading session at $161.05.
It's no surprise that ABC has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has a B grade for Growth, Value, Stability, and Sentiment.
ABC is ranked #3 out of 80 stocks in the Medical – Services industry. Get additional POWR Ratings for ABC (Momentum and Quality) here.
Celestica Inc. (CLS)
Headquartered in Toronto, Canada, CLS provides hardware platform and supply chain solutions in North America, Europe, and Asia. Its two segments are Advanced Technology Solutions and Connectivity & Cloud Solutions.
In terms of forward EV/Sales, CLS' 0.27x is 90.9% lower than the industry average of 2.96x. Its forward Price/Sales of 0.21x is 93% lower than the industry average of 3.05x.
CLS' trailing-12-month ROCE and ROTC of 9.27% and 7.14% are 86.4% and 134.3% higher than the industry average of 4.97% and 3.05%, respectively.
CLS' revenue is expected to increase 35.1% year-over-year to $2.04 billion for the quarter ended December 31, 2022. Its adjusted net earnings came in at $68.40 million, up 23.9% year-over-year. Also, its adjusted EPS came in at $0.56, up 27.3% year-over-year.
CLS' revenue is expected to increase 4.8% year-over-year to $7.60 billion for the current fiscal year, 2023. Its EPS is expected to increase by 16.2% per annum for the next five years. It surpassed EPS estimates in all four trailing quarters. Over the past month, the stock has gained 19.5% to close the last trading session at $13.47.
CLS has an overall A grade, equating to a Strong Buy in our POWR Ratings system. It has an A grade for Growth and Value and a B for Momentum and Sentiment.
It is ranked first among 78 stocks in the Technology – Services industry. To see Stability and Quality ratings for CLS, click here.
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CVS shares fell $0.49 (-0.56%) in premarket trading Thursday. Year-to-date, CVS has declined -5.47%, versus a 7.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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