Inflation is still far from the Fed’s target, which is expected to keep the central bank on track with its interest rate hikes. The higher interest rates might push the economy into a recession.
While the stock market could bear the brunt, large-cap stocks are often considered safer options for investors due to their stability during economic turmoil and their ability to generate stable cash flows.
So, let’s look at two large-cap stocks, The Coca-Cola Company (KO) and AstraZeneca PLC (AZN), which are trading under $100 and could help survive a market downturn.
According to OECD Secretary-General Mathias Cormann, this year’s global economic outlook is “slightly better,” but inflationary pressures continue. The threat of a U.S. recession remains alive in 2023. According to a recent poll of economists from the Wall Street Journal, the recession chances in 2023 are at 61%.
As the market is expected to remain volatile, investors should wait no further to add KO and AZN to their portfolios.
The Coca-Cola Company (KO)
KO is a beverage company that operates through segments, including Europe, the Middle East, and Africa; Latin America; North America; Asia Pacific; Global Ventures; and Bottling Investments. It owns and markets five non-alcoholic sparkling soft drink brands, and its products are sold in more than 200 countries. KO has a market capitalization of $259.99 billion.
KO’s trailing-12-month gross profit and EBITDA margins of 58.14% and 31.42% are 84.3% and 198.9% higher than the industry averages of 31.55% and 10.51%.
KO has paid dividends for 60 consecutive years. Over the last three years, KO’s dividend payouts have grown at a 3.2% CAGR. While KO’s four-year average dividend yield is 3.06%, its current dividend translates to a 3.06% yield.
KO’s net operating revenue increased 7% year-over-year to $10.13 billion in the fourth quarter that ended December 31, 2022. Its gross profit grew 4.4% from the year-ago value to $5.16 billion, while its operating income increased 24.1% year-over-year to $2.08 billion.
KO’s revenue is expected to increase 4.5% year-over-year to $44.98 billion in 2023. Its EPS is expected to grow 4.8% year-over-year to $2.6 in 2023. It surpassed EPS estimates in all four trailing quarters. KO’s shares have gained marginally intraday to close the last trading session at $60.09.
KO’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall B rating indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
KO has an A grade for Sentiment and a B for Stability and Quality. In the B-rated Beverages industry, it is ranked #17 out of 37 stocks. Click here for the additional POWR Ratings for Growth, Value, and Momentum for KO.
AstraZeneca PLC (AZN)
Headquartered in Cambridge, the United Kingdom, AZN is a biopharmaceutical company that develops, manufactures, and markets pharmaceutical products. It serves primary care and specialty care physicians through distributors and local representatives. AZN has a market capitalization of $211.29 billion.
On February 2, 2023, AZN and Amgen Inc.’s (AMGN) TEZSPIRE was approved in the US for self-administration in a pre-filled, single-use pen for patients aged 12 years and older with severe asthma.
TEZSPIRE is the only biologic licenced for severe asthma that does not have any phenotypic or biomarker restrictions in its approved label.1. This should assist AZN in meeting unmet needs for asthma patients.
On January 16, 2023, AZN acquired Neogene Therapeutics Inc., a global clinical-stage biotechnology company that pioneers the discovery, development, and manufacturing of next-generation T-cell receptor medicines (TCR-Ts). Neogene’s experience with TCR-T could help AZN achieve its goal of enhancing patient outcomes.
AZN’s trailing-12-month gross profit and EBITDA margins of 80.57% and 31.33% are 43.9% and 740.9% higher than the industry averages of 55.97% and 3.73%.
AZN has paid dividends for 23 consecutive years. Over the last three years, AZN’s dividend payouts have grown at a 1.9% CAGR. While AZN’s four-year average dividend yield is 2.67%, its current dividend translates to a 2.92% yield.
AZN’s gross profit increased 12.5% year-over-year to $8.31 billion for the fiscal 2022 fourth quarter that ended December 31, 2022. Its profit for the period came in at $902 million, compared to a loss of $346 million in the previous-year quarter.
Also, its EPS came in at $0.58, compared to a loss per share of $0.22 in the previous-year quarter, while the company’s EBITDA came in at $2.57 billion, up 35.5% year-over-year.
Street expects AZN’s revenue to increase 10.5% year-over-year to $50.81 billion in 2024. Its EPS is estimated to increase 17.7% year-over-year to $4.32 in 2024. Over the past year, the stock has gained 11.3% to close the last trading session at $67.40.
It’s no surprise that AZN has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has a B grade for Growth, Stability, Sentiment, and Quality. It is ranked #9 out of 174 stocks in the Medical - Pharmaceuticals industry.
Beyond what is stated above, we’ve also rated AZN for Value and Momentum. Get all AZN ratings here.
What To Do Next?
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What gives these stocks the right stuff to become big winners, even in this brutal stock market?
First, because they are all low-priced companies with the most upside potential in today’s volatile markets.
But even more important is that they are all top Buy rated stocks according to our coveted POWR Ratings system, and they excel in key areas of growth, sentiment and momentum.
Click below now to see these 3 exciting stocks that could double or more in the year ahead.
KO shares were trading at $59.59 per share on Friday morning, down $0.50 (-0.83%). Year-to-date, KO has declined -6.32%, versus a 3.04% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
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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