Despite the growing anxiety over the surge in COVID-19 cases worldwide and the geopolitical tensions related to the collapse of the Afghan government, the Dow Jones Industrial Average registered a new record close on August 16. Buoyed by a solid set of corporate earnings results, the blue-chip index also closed at a record high last week.
Declining demand for crude oil and lagging economic recovery in China have raised investor concerns about the potentially dampening effect on business activities and global growth. However, some Wall Street analysts remain optimistic because the U.S. stock market indices have recovered quickly from the pandemic-induced recession. According to JPMorgan, “We remain bullish on stocks (particularly cyclicals/value) thanks to a strong earnings season, signs of receding risk from the Delta variant, and normalization of bond-equity correlation.”
Salesforce.com, Inc. (CRM) and Amgen Inc. (AMGN) are two fundamentally stable Dow Jones stocks with considerable growth potential. Given the positive market sentiment, growing market share, and solid business models, we think these two stocks should soar.
Salesforce.com, Inc. (CRM)
Cloud-based software company CRM develops enterprise cloud computing solutions focusing on customer service, analytics, marketing automation, and application development. The San Francisco-based company offers a Customer 360 Platform for integrating and managing business apps, Service Cloud to deliver personalized customer support, Marketing Cloud to personalize marketing interactions, and various other platforms.
On August 10, CRM introduced an all-new streaming service, Salesforce+, with original content series, live experiences, and podcasts for every industry and line of business. The company believes that the new service will help individuals to flourish in the digital-first, work anywhere globally. Also, this platform should enable CRM to build a trusted relationship with customers and the business community.
Also this month, the company was recognized as a Leader in the Sales Force Automation Magic Quadrant by Gartner for the 15th consecutive year. This demonstrates CRM’s solid business results, above-average customer experience levels, and innovative tools to drive growth.
CRM’s revenue increased 23% year-over-year to $5.96 billion in its fiscal first quarter, ended April 30, 2021. Its subscription and support revenues rose 21%, while its professional services and other revenues grew 47%. The company’s gross profit was $4.41 billion, representing a 22.1% increase from its year-ago value. CRM’s net income increased 373.7% from the same period last year to $469 million. Furthermore, its income from operations stood at $354 million for this quarter, compared to a $140 million loss from operations in the prior-year period.
A $4.32 consensus EPS estimate for its fiscal year 2023 represents a 13.1% improvement year-over-year. In addition, CRM has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. The $26.01 billion consensus revenue estimate for the current year indicates a 22.4% increase year-over-year. The stock has gained 28.9% over the past year and 3.1% over the past month.
CRM’s strong fundamentals are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has a B grade for Sentiment and Quality. We have also graded CRM for Momentum, Stability, Value, and Growth. Click here to access all of CRM’s ratings. CRM is ranked #29 of 145 stocks in the Software – Application industry.
Click here to check out our Cloud Computing Industry Report for 2021
Amgen Inc. (AMGN)
Biopharmaceutical company AMGN in Thousand Oaks, Calif., develops and manufactures human therapeutics worldwide. Its product portfolio includes Enbrel to treat rheumatoid arthritis; Aranesp to treat a lower-than-normal number of red blood cells; Xgeva for skeletal-related events prevention. In addition, AMGN has collaborations with Novartis Pharma AG, Kyowa Kirin Co., Ltd., BeiGene, Ltd., and Eli Lilly and Company (LLY).
In July, AMGN agreed to acquire Teneobio, a clinical-stage biotechnology company, for a $900 million upfront cash payment, along with future contingent milestone payments. The acquisition should complement AMGN’s antibody research capabilities and strengthen its product portfolio across its core therapeutic areas.
Also in July, the FDA accepted AMGN’s Biologics License Application (BLA) and granted Priority Review for tezepelumab for the treatment of asthma. This development should enable the company to treat patients with severe asthma and cater to the high unmet medical need.
In the second quarter, ended June 30, 2021, AMGN’s revenue increased 5.2% year-over-year to $6.53 billion, driven by higher unit demand. The company’s non-GAAP net income increased 2% year-over-year to $2.52 billion. In addition, its non-GAAP EPS totaled $4.38, representing a 4% increase from the prior-year quarter. Also, AMGN’s free cash flow stood at $1.75 million for this period.
Analysts expect AMGN’s revenue for its fiscal year 2022 to be $27.16 billion, representing 4.3% year-over-year growth. AMGN has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. The company’s EPS is expected to increase 9.6% next year. The stock has gained 0.5% year-to-date.
AMGN’s POWR Ratings reflect this promising outlook. The stock has a B overall rating which translates to Buy in our POWR Ratings system. It has an A grade for Quality, and a B grade for Stability and Value.
In addition to the POWR Ratings grades we’ve just highlighted, one can see AMGN ratings for Sentiment, Momentum, and Growth here. Of the 503 stocks in the Biotech industry, AMGN is ranked #17.
Click here to checkout our Healthcare Sector Report for 2021
CRM shares fell $0.70 (-0.28%) in premarket trading Tuesday. Year-to-date, CRM has gained 11.71%, versus a 19.74% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization.
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