Despite sky-high prices and consecutive rate hikes, the economy seems resilient. The labor market remains tight, with a less than 4% unemployment rate. Moreover, the third quarter GDP increased by 2.6% at an annualized pace, better than expected. This has somewhat eased recession worries.

In addition, experts remain hopeful of prices coming down. Fundstrat’s head of research, Tom Lee, opines that inflation indicators, like housing prices, are witnessing a decline, and the Fed could soon soften its pace of rate hikes. Moreover, according to Morgan Stanley’s Mike Wilson, investors could see the bear market to end as soon as early next year.

However, the market remains volatile amid uncertainties. So, we think fundamentally solid stocks Johnson & Johnson (JNJ) and Novartis AG (NVS), which are relatively stable, should be on your watchlist now.

Johnson & Johnson (JNJ)

JNJ and its subsidiaries research, develop, manufacture, and sell various products in the healthcare field worldwide. The company operates through three segments: Consumer Health; Pharmaceutical; and Medical Devices.

On September 20, 2022, On September 20, JNJ opened its San Francisco Bay Campus, a cutting-edge Research and Development (R&D) center in the Bay Area, one of the most well-known global hubs for innovation and entrepreneurship.

The facility connects essential scientific and technology resources by combining Janssen R&D, Johnson & Johnson Innovation, and Johnson & Johnson Technology and is expected to contribute significantly to the field of medicine.

JNJ’s total sales increased 1.9% year-over-year to $23.79 billion for the third quarter ended 2022. Moreover, its net earnings came in at $4.46 billion, up 21.6% year-over-year. Also, its EPS came in at $1.68, up 22.6% year-over-year.

JNJ’s revenue is expected to increase by 2.8% year-over-year to $97.83 billion in 2023. Its EPS is expected to grow 3.2% year-over-year to $10.37 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 5.2% to close the last trading session at $172.31. It has a beta of 0.42.

JNJ’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall A rating indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

JNJ has an A grade for Stability and a B for Quality. In the Medical – Pharmaceuticals industry, it is ranked #4 out of 162 stocks. Click here for the additional POWR Ratings for Value, Sentiment, Growth, and Momentum for JNJ.

Novartis AG (NVS)

Headquartered in Basel, Switzerland, NVS researches, develops, manufactures, and markets healthcare products worldwide. The company operates through two segments: Innovative Medicines; and Sandoz.

On October 25, 2022, Vas Narasimhan, NVS’ M.D. and CEO, said, “Looking ahead, we are confident in delivering growth and margin expansion through our new focused “pure-play” Innovative Medicines strategy, underpinned by our five core T.A.s, technology platforms, priority geographies, and a deep, value-oriented pipeline.”

NVS’ total current liabilities came in at $28.16 billion for the period ended September 30, 2022, compared to $30.21 billion for the period ended December 31, 2021. Its total liabilities came in at $57.57 billion, compared to $63.97 billion for the same period.

NVS’ revenue is expected to increase marginally yearly to $52.48 billion in 2023. Its EPS is expected to grow 6.6% year-over-year to $6.45 in 2023. It surpassed EPS estimates in three of four trailing quarters. Over the past month has gained 6.6% to close the last trading session at $79.54. It has a beta of 0.50.  

NVS’ POWR Ratings reflect this promising outlook. It has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has an A grade for Stability and a B for Value and Quality. It is ranked #13 in the same industry.

We have also rated NVS for Growth, Sentiment, and Momentum. Get all NVS ratings here.

JNJ shares were trading at $174.59 per share on Friday afternoon, up $2.28 (+1.32%). Year-to-date, JNJ has gained 4.07%, versus a -17.17% rise in the benchmark S&P 500 index during the same period.

Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.

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