The second quarter was a sigh of relief for the S&P 500, with plenty of stocks to buy after earnings emerged post-results.
Insights from research firm Factset show that out of 87% of S&P 500 firms reporting actual results, more than 70% reported positive earnings and revenue surprises.
The blended earnings growth for the quarter came in at just 6.7%, which marks the lowest earnings expansion since the fourth quarter of 2020.
Additionally, the forward price-earnings ratio for the index came in over 5.50% lower than its historical 5-year average.
Judging the second quarter by the numbers, the second quarter was a step in the right direction for the S&P 500.
Equity markets have been battling many challenges, which is why a better-than-expected second quarter was potentially needed to reverse course.
Having said that, there were clear winners and losers from the quarter, and we’ll be looking at three of the best stocks to buy after earnings.
| PFE | Pfizer | $48.58 |
| DVN | Devon Energy Corp. | $67.92 |
| H | Hyatt Hotels | $95.48 |
Pfizer (PFE)
Pharma giant Pfizer (NYSE:PFE) became a cash-rich business thanks to its coronavirus vaccine Comirnaty, and antiviral Paxlovid.
It continues to knock the ball out of work with its earnings results, and the second quarter was no exception. Moreover, it’s working on a plan to continue delivering for its investors by aggressively increasing its merger and acquisitions activity.
Also, it offers a relatively safe dividend, which has plenty of leeway to grow in the foreseeable future.
Pfizer reported second-quarter sales of $27.7 million, representing a massive 47% bump from last year. On an operational basis, its sales soared even higher, at a whopping 53%.
It was Pfizer’s highest quarterly revenue in its illustrious history. Moreover, it posted a net income of $9.9 billion, a 78% increase from the prior-year period. Also, its adjusted earnings rocketed to a 94% gain to nearly $11.7 billion.
Over the long-term, the firm believes it could dish out an additional $25 billion in sales by 2030, driven by its M&A spree.
Pfizer will be looking to invest in various pharma businesses ranging from upstarts to more established players, to increase its total addressable market.
Devon Energy Corporation
Devon Energy Corporation (NYSE:DVN) is one of the top energy firms involved in oil and natural gas production.
In its current state, DVN believes it has more than 10 years of high-margin oil and gas assets. Moreover, it continues to expand its asset base by acquiring new companies.
With its diversified positioning and a top-tier balance sheet, it remains an excellent investment over the long-term
During the second quarter, it posted comfortable revenue and earnings beat. Its sales came in at a spectacular 132.6% to $5.63 billion. Moreover, it bumped its upstream guidance to $2.2 billion to $2.4 billion, from its previous guidance of $2.1 billion.
Devon Energy recently added Eagle Ford-focused firm Validus Energy to its portfolio. The acquisition will enable the company to scale its operations as the region expands effectively.
It will save significant costs and add $50 million to its annualized cash flows. The acquisition will be immediately accretive and help the business boost its variable dividend payout by more than 10%.
It already boasts a monster 9.7% dividend yield, with more than four years of growth.
Hyatt Hotels Corporation
Hyatt Hotels (NYSE:H) has reemerged stronger from the pandemic-led slowdown in its business.
It is now placed in a more advantageous position to go for more prudent expansion opportunities. Its transition to a fee-based model enables it to optimize its opportunities effectively.
The pent-up demand for leisure and business travel is likely to help sustain growth. Nevertheless, pandemic-led disruptions still exist though, but with a more robust liquidity positioning and greater operational capacity, it can effectively tackle the blow.
Its second-quarter results were incredible, showing sustained recovery from its rock-bottom position in 2020 to 2021.
Revenue per available room rose 82% from the second quarter last year, while its adjusted EBITDA shot up to $255 million from $55 million. Its rebound and growth prospects are more attractive than ever.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
