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The Zacks Analyst Blog Highlights Archer-Daniels-Midland, McKesson, Marathon Petroleum, Exxon Mobil and Merck & Co

For Immediate Release

Chicago, IL – November 23, 2022 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Archer-Daniels-Midland Co. ADM, McKesson Corp. MCK, Marathon Petroleum Corp. MPC, Exxon Mobil Corp. XOM and Merck & Co. Inc. MRK.

Here are highlights from Tuesday’s Analyst Blog:

Buy These 5 Corporate Giants Flying High in a Disappointing 2022

Less than six weeks of trading are left to complete 2022, which has been rather disappointing. Throughout the year, the inflation rate has stayed at a 40-year high due to the complete devastation of the global supply-chain system, which has been complicated further by the Russia-Ukraine geopolitical conflict. Demand has remained rock solid owing to the unprecedented fiscal and monetary stimulus given in the last two pandemic-ridden years.

Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — have tumbled 7.3%, 17.1% and 29.5%, respectively. Despite these headwinds, several corporate bigwigs have flourished this year with more upside left. Five such stocks with a favorable Zacks Rank are Archer-Daniels-Midland Co., McKesson Corp., Marathon Petroleum Corp., Exxon Mobil Corp. and Merck & Co. Inc.

Peak Inflation Seems Behind Us

On Nov 10, the Department of Labor reported that the consumer price index (CPI) in October rose 0.4% month over month and 7.7% year over year. The consensus estimate was for a month-over-month rise of 0.5% and a year-over-year gain of 7.9%

Core CPI (excluding volatile food and energy items) increased 0.3% month over month and 6.3% year over year. The consensus estimate was for a rise of 0.5% month over month and 6.5% year over year.

On Nov 15, the Department of Labor reported that the producer price index (PPI) increased 0.2% in October compared with the consensus estimate of a 0.5% rise. September's data was revised downward from 0.4% to 0.2%.

Year over year, PPI rose 8%, dropping from the 8.4% rise in September. Core PPI increased 0.2% in October compared with the consensus estimate of 0.4%. Year over year, core PPI rose 5.4% in October.

In third-quarter 2022, the chain-weighted price index — a cost-of-living index adjusted for consumer behavior — rose 4.1%, well below the consensus estimate of a 5.3% gain. The personal consumption expenditure (PCE) price index increased 4.2%, exhibiting a sharp fall from 7.3% in the second quarter. The core PCE price index — Fed's favorite inflation gauge — rose 4.5% in the third quarter, in line with market expectations.

As peak inflation seems behind us, the Fed is likely to relax its tighter monetary control. The central bank is expected to reduce the magnitude of the interest rate hike from the December FOMC meeting. This will help the overall equity market.

Our Top Picks

We have narrowed our search to five U.S. corporate behemoths (market capital > $50 billion) that have popped year to date. These stocks have solid growth potential for the rest of 2022 and have seen positive earnings estimate revisions in the last 30 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Archer-Daniels-Midland has been gaining from solid demand, improved productivity and product innovations. Persistent growth in the Nutrition segment of ADM, aided by significant gains in the Human and Animal Nutrition units, remains the key growth driver.

Archer-Daniels-Midland expects the nutrition segment to record operating profit growth of 20% in 2022. The company has been significantly progressing on its three strategic pillars — optimize, drive and growth.

Zacks Rank #1 Archer-Daniels-Midland has an expected earnings growth rate of 42.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 7.4% over the last 30 days. The stock price of ADM has surged 42.2% year to date.

Marathon Petroleum is poised for further price gains based on a slew of positives. MPC's $21 billion sales of its Speedway retail business provided it with a much-needed cash infusion. The deal also comes with a 15-year fuel supply agreement under which Marathon Petroleum will supply 7.7 billion gallons of gasoline per year to 7-Eleven, thus ensuring a steady revenue stream.

MPC's exposure to more stable cash flows from the logistics segment diversifies the earnings stream and offers a buffer against the volatile refining business. Consequently, Marathon Petroleum is primed for significant capital appreciation and is viewed as a preferred downstream operator to own now.

Zacks Rank #1 Marathon Petroleum has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.3 % over the last seven days. The stock price of MPC has soared 88% year to date.

McKesson provides pharmaceuticals and medical supplies in the United States and internationally. The strong fiscal first-quarter show by three of the four segments of MCK is encouraging. A strong earnings outlook for fiscal 2023 instill optimism.

Strong adjusted operating profit growth across the key segments of MCK is encouraging. A strong position in the Distribution market continues to favor the stock. McKesson played a crucial role in the COVID-19 response efforts in the United States and abroad via the distribution of COVID-19 vaccines, ancillary supply kits, and COVID-19 tests.

Zacks Rank #2 McKesson has an expected earnings growth rate of 4.5% for the current year (ending March 2023). The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last seven days. The stock price of MCK has climbed 48.3% year to date.

Exxon Mobil's bellwether status and an optimal integrated capital structure, which have historically led to industry-leading returns, make it a relatively lower-risk energy sector play. The integrated oil giant expects to reduce greenhouse gas emissions by 30% in its upstream business.

At the same time, XOM expects to reduce flaring and methane emissions by 40%. With the reopening of the global economy, crude oil prices are likely to remain high despite near-term growth concerns.

Zacks Rank #2 Exxon Mobil has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 6.2% over the last 30 days. The stock price of XOM has jumped 81.3% year to date.

Merck has been benefiting from strong sales of  Keytruda, Lynparza and Bridion. With continued label expansion into new indications and early-stage settings, Keytruda is expected to remain a key top-line driver of MRK.

Animal health and vaccine products are the core growth drivers. Merck's new COVID oral antiviral pill, Lagevrio, should be a key top-line driver in 2022. MRK boasts a strong cancer pipeline, including Keytruda, which should drive long-term growth.

Zacks Rank #2 Merck has an expected earnings growth rate of 22.6% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1% over the last 30 days. The stock price of MRK has advanced 37.8% year to date.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report

Merck & Co., Inc. (MRK) : Free Stock Analysis Report

Archer Daniels Midland Company (ADM) : Free Stock Analysis Report

McKesson Corporation (MCK) : Free Stock Analysis Report

Marathon Petroleum Corporation (MPC) : Free Stock Analysis Report

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