The Federal Reserve’s hawkish stance on fighting multi-decade high inflation has raised concerns about a potential economic slowdown, which has driven massive stock market volatility. Shares of several Israeli companies have also witnessed a sharp decline on fears of an economic contraction. According to an initial estimate released by the Central Bureau of Statistics, Israel's GDP shrank by 1.6% on an annualized basis in the first quarter of 2022. However, its GDP growth is expected to rebound later this year.
In Israel, interest rates have remained flat for most of the last decade, making the investment environment there favorable. In addition, Israel’s GDP-to-debt ratio is the lowest in the developed world, and it is the only country in the world whose currency has appreciated relative to the dollar since the global financial crisis.
Given the economy’s growth potential, we think quality Israeli stocks Teva Pharmaceutical Industries Limited (TEVA), ZIM Integrated Shipping Services Ltd. (ZIM), and NICE Ltd. (NICE) could be solid investments to diversify one’s portfolio.
Teva Pharmaceutical Industries Limited (TEVA)
TEVA in Petah Tikva, Israel, is a pharmaceutical company that develops, manufactures, markets, and distributes generic medicines, specialty medicines, and biopharmaceutical products internationally. The company offers sterile products, hormones, high-potency drugs, and cytotoxic substances in various dosage forms.
On May 17, 2022, TEVA welcomed the U.K. Medicines & Healthcare Regulatory Agency's decision to grant a license for Ongavia, a biosimilar to Lucentis (ranibizumab), an eye injection. Richard Daniell, Executive Vice President, Teva Europe Commercial, said, “We believe that unlocking value in biologics is the new frontier in medicine and lowering system costs around the globe is the key to broadening patient access.”
For its fiscal 2023, analysts expect TEVA’s EPS and revenue to increase 6.5% and 1.8%, respectively, year-over-year to $2.62 and $16 billion. The stock has gained 19.4% in price over the past three months to close yesterday’s trading session at $9.30.
TEVA’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has an A grade for Value and a B grade for Growth. TEVA is ranked #32 out of 165 stocks within the Medical - Pharmaceuticals industry.
To see TEVA’s ratings for Sentiment, Momentum, Stability, and Quality, click here.
Click here to checkout our Healthcare Sector Report for 2022
ZIM Integrated Shipping Services Ltd. (ZIM)
ZIM provides container shipping and related services internationally. The Haifa, Israel-based company offers door-to-door and port-to-port transportation services for customers, including end-users, consolidators, and freight forwarders. The company also provides ZIMonitor, a premium reefer cargo tracking service.
On March 30, 2022, ZIM announced a new charter transaction with a group of investors initiated by MPC Capital AG. Eli Glickman, ZIM President & CEO, said, “We continue to advance our strategy of chartering in highly versatile vessels to strengthen our commercial prospects, maintain our flexibility and enhance our position as an innovative provider of seaborne transportation.”
ZIM’s revenues increased 210% year-over-year to $3.72 billion for its fiscal first quarter, ended March 31, 2022. The company’s adjusted EBITDA grew 209% year-over-year to $2.53 billion, while its net income came in at $1.71 billion, representing a 190% year-over-year increase. Also, its EPS was $14.19, up 190% year-over-year.
Analysts expect ZIM’s EPS to increase 72.5% year-over-year to $12.75 for the quarter ending June 30, 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The company’s revenue is expected to increase 25.2% year-over-year to $13.43 billion in its fiscal year 2022. The stock has gained 72.7% in price over the past year to close yesterday’s trading session at $67.47.
ZIM’s POWR Ratings reflect solid prospects. The company has an overall B rating, which translates to Buy in our proprietary rating system. It has an A grade for Value and Quality and a B grade for Momentum.
Click here to see the additional POWR Ratings for ZIM (Stability, Sentiment, and Growth). ZIM is ranked #6 out of 46 stocks in the Shipping industry.
NICE Ltd. (NICE)
NICE in Ra'anana, Israel, provides enterprise software solutions worldwide. The company operates in two segments—Customer Engagement, and Financial Crime and Compliance. It offers CXone, Enlighten, digital entry points, and journey orchestration solutions.
On May 12, 2022, Barak Eilam, CEO of NICE, said, "Three key elements are driving our continued strong revenue growth and excellent profitability: our widening leadership in the large enterprise market, our industry leading international footprint, and our unparalleled next-gen digital and AI offering. These three elements, combined with strong and durable demand in our markets, are providing us the fuel to continue executing well on our long-term strategy."
NICE’s non-GAAP revenue increased 15.4% year-over-year to $479.60 million in its fiscal first quarter, which ended March 31, 2022. The company’s non-GAAP operating income grew 15.7% year-over-year to $149 million. Also, its non-GAAP EPS came in at $1.80, representing a 16.9% year-over-year increase.
For its fiscal quarter, ending June 30, 2022, analysts expect NICE’s EPS and revenue to increase 14% and 14.1%, respectively, year-over-year to $1.79 and $523.67 million. It surpassed the consensus EPS estimates in each of the trailing four quarters. The stock gained 4.4% in price over the past month to close yesterday’s trading session at $202.91.
It is no surprise that NICE has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock has a B grade for Sentiment, Growth, Value, Stability, and Quality.
Click here to see NICE’s rating for Momentum as well. NICE is ranked #4 out of 156 in the Software - Application industry.
Click here to check out our Software Industry Report for 2022
TEVA shares were trading at $8.98 per share on Tuesday morning, down $0.08 (-0.88%). Year-to-date, TEVA has gained 12.11%, versus a -12.76% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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