Multi-decade-high inflation and aggressive Fed rate hikes could push the economy into recession. Therefore, investors looking to mitigate a market crash should invest in Dollar Tree (DLTR) and Vertex Pharmaceuticals (VRTX), as they could offer stable returns so that their businesses enjoy almost inelastic demand.
Overall market sentiment has been bearish since the beginning of the year, due to the war between Ukraine and Russia, the disruption of the supply chain and rising energy prices. In addition, the economy has suffered from strong inflationary pressures, with an increase in the consumer price index 8.3% in Aprilwhich was higher than the Dow Jones estimate of 8.1%.
In addition, the stock market has witnessed a massive sell-off recently, amid concerns over aggressive Fed interest rate hikes to combat the high inflation of several decades. Investors are concerned that the tightening of the Fed’s monetary policy could push the economy into recession, hampering corporate growth.
Given this scenario, we believe it would be prudent to bet on the actions of the Dollar Tree defense companies (DLTR) and Vertex Pharmaceuticals (VRTX) due to the almost inelastic demand for its products and services.
Dollar Tree Inc. (DLTR)
DLTR is a discount variety retail store that operates across two segments: Dollar Tree and Family Dollar. The Dollar Tree segment offers merchandise at a fixed price of $ 1, and the company also offers exclusive merchandise through its online platform. It has more than 15,000 stores in 48 contiguous states and five Canadian provinces.
On March 2, 2022, Michael Witynski, President and CEO, said: “We continue to perform well on other key strategic initiatives, including expanding our $ 3 and $ 5 Plus range to our stores. Dollar Tree, as well as our Combined Stores and H2 Renovations at Family Dollar. “
DLTR’s net sales rose 4.6% year-on-year to $ 7.08 billion for the fourth fiscal quarter ended Jan. 29, 2022. Its total assets grew 5% year-over-year to $ 21.7 billion .
For the quarter ending July 31, 2022, analysts expect DLTR’s EPA to rise 39.8% year-over-year to $ 1.72. He overcame the consensus EPS estimates for three of the next four quarters. Its annual revenue is expected to be $ 27.9 billion in fiscal year 2023, an increase of 6.2% year-on-year. Over the past nine months, shares rose 34.2% to close yesterday’s trading session at $ 135.57.
The solid foundations of DLTR are reflected in his POWR ratings. The shares have an overall rating of B, which is equivalent to Buy in our own rating system. It has a B grade for Sentiment.
We have also rated DLTR for growth, value, momentum, stability and quality. Click here to access all DLTR ratings. DLTR ranks 28th out of 38 shares in Class A Grocery / Big Box industry.
Vertex Pharmaceuticals Inc. (VRTX)
VRTX is dedicated to developing and marketing therapies to treat cystic fibrosis. The company markets SYMDEKO / SYMKEVI, ORKAMBI and KALYDECO, to treat patients with cystic fibrosis who have specific mutations in their gene regulating the transmembrane conductance of cystic fibrosis.
On May 17, 2022, VRTX announced plans to build another 344,000-square-foot facility at the seaport to support its continued rapid growth, especially the expansion of its cell and gene therapy programs. With the completion of this new site scheduled for 2025, Vertex will occupy 1.9 million square feet of real estate at the seaport in five locations, making it Boston’s largest biotechnology in terms of square feet.
VRTX product revenue increased 18% year-over-year to $ 2.1 billion in the first fiscal quarter ended March 31, 2022. The company’s non-GAAP operating revenue grew 17% year-on-year to $ 1.04 billion dollars, while your non-GAAP net. Revenue amounted to $ 907 million, an increase of 16% year-on-year. In addition, its non-GAAP EPS reached $ 3.52, 18% more than the previous year.
For the quarter ended December 31, 2021, analysts expect the EPA and VRTX revenue to increase 15.5% and 18.9% year-on-year to $ 3.59 billion and $ 2.13 billion, respectively. , respectively. In addition, it exceeded Street EPS estimates in each of the following four quarters. Over the past six months, shares have gained 39.7% to close yesterday’s trading session at $ 255.45.
VRTX’s POWR ratings reflect this promising prospect. The company has an overall rating of A, which translates into a strong buy in our proprietary rating system. The stock has an A grade for Quality and a B grade for Value, Feeling and Growth.
Within Biotechnology industry, VRTX ranks No. 1 out of 395 shares. Click here to see additional POWR ratings for VRTX (stability and boost).
DLTR shares were trading at $ 127.88 per share on Friday afternoon, down $ 7.69 (-5.67%). To date, the DLTR has decreased by -9.00%, compared to an increase of -17.71% in the S&P 500 benchmark during the same period.
About the author: Nimesh Jaiswal
Nimesh Jaiswal’s His keen interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in boosting stock prices is the key approach he takes while advising investors on his articles.
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