Morningstar gives these stocks high certainty ratings.
Stocks are on track to end 2020 on a relatively high note, but there’s no question it has been an extremely stressful, unpredictable and volatile year. Given all the craziness in the market this year, some investors may be looking to play it safer with their portfolios in 2021 by buying core, long-term investments that are stable and reliable. The Morningstar analyst team rates each stock on a five-point uncertainty scale from “low” to “extreme.” Here’s a list of six buy-rated stocks with low Morningstar uncertainty ratings that investors can buy today and still sleep easy at night.
International Flavors & Fragrances (ticker: IFF)
International Flavors & Fragrances is a specialty chemical company that produces flavors and fragrances used in food, beverages, perfumes and other products. Analyst Andrew Lane says International Flavors’ earnings have held up relatively well throughout the health crisis. International Flavors has roughly a 25% global market share of the $20 billion flavor and fragrance industry. Lane projects margin expansion in coming years due to both improved product mix and synergies from a recent merger with DuPont’s nutrition and biosciences business. International Flavors also pays a 2.8% dividend. Morningstar has a “buy” rating and $125 fair value estimate for IFF stock.
NiSource is a fully regulated U.S. utility company with roughly 4 million natural gas and electric customers. Analyst Charles Fishman says NiSource provides investors with a rare degree of long-term visibility given its highly regulated business model and stable rate outlook. Fishman is projecting NiSource will invest roughly $2 billion per year in its business over the next five years, including $1.8 billion to $2 billion in wind energy. NiSource pays a 3.6% dividend, and Fishman projects 7% annual dividend growth in the years ahead. Morningstar has a “buy” rating and $27 fair value estimate for NI stock.
Novartis is a Swiss pharmaceutical company that owns leading drugs such as Cosentyx for plaque psoriasis and other skin conditions and Entresto for heart failure. Analyst Damien Conover says the outcome of the U.S. election should ease concerns over major changes to drug pricing policies. Given the company’s leading position in a handful of key indications, Conover says Novartis should generate steady, long-term earnings growth. In addition, Conover says Novartis’ impressive drug development pipeline should help offset the impact of upcoming patent losses. Morningstar has a “buy” rating and $91 fair value estimate for NVS stock.
Pfizer has been one of the most volatile stocks on Wall Street since the company reported its coronavirus vaccine candidate has a more than 90% efficacy rate in late-stage clinical trials. However, in addition to the major near-term impact the vaccine could make, Pfizer is also one of the largest and most diversified global drugmakers. Conover says Pfizer has multiple bullish catalysts ahead over the next three years, including immunology drugs abrocitinib and ritlecitinib, cancer drug Lorbrena and vaccine Prevnar 20. Morningstar has a “buy” rating and $42.50 fair value estimate for PFE stock.
Philip Morris International (PM)
Philip Morris is one of the largest international tobacco companies and owner of popular brands such as Marlboro, Parliament and L&M. Analyst Philip Gorham says the company’s Unsmoke campaign should help insulate it from declining cigarette volumes. Philip Morris is updating its portfolio to include innovative next-generation combustible heated tobacco and vaping products. Gorham says cigarette loyalty trends tend to be strongest on the higher end of the price scale, which bodes well for Philip Morris’ premium brands. The stock also pays a 6.3% dividend. Morningstar has a “buy” rating and $98 fair value estimate for PMI stock.
Roche Holding (RHHBY)
Roche is a Swiss pharmaceutical and diagnostics company that owns leading oncology drugs Avastin, Herceptin and Rituxan. Analyst Karen Andersen says more than 80% of Roche’s drug sales come from bilologics, limiting the company’s exposure to generic competition. In addition to new oncology drug launches, Roche is also expanding outside of cancer treatments with its multiple sclerosis drug Ocrevus and its hemophilia drug Hemlibra, which represent combined peak sales of $15 billion. Anderson is also bullish on Roche’s leading share of the global in vitro diagnostics market. Morningstar has a “buy” rating and $57 fair value estimate for RHHBY stock.
Buy these stocks for certainty:
— International Flavors & Fragrances (IFF)
— NiSource (NI)
— Novartis (NVS)
— Pfizer (PFE)
— Philip Morris International (PM)
— Roche Holding (RHHBY)
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