The economy is in recovery mode with the rapid roll-out of vaccines. A solid start to the third-quarter earnings season, a decline in the initial jobless claims, and declining COVID-19 cases are helping the major stock indexes perform well. Therefore, we think quality stocks Bristol-Myers (BMY), Biogen (BIIB), and Ericsson (BS:ERICAs) (ERIC), which look undervalued at their current price levels, could be solid bets now. Read on. The major stock market indices finished last week higher, marking gains for three straight weeks. A solid start to the third-quarter earnings season, a decline in initial jobless claims, and declining COVID-19 cases have driven the performance of the stock market of late. According to FactSet, 23% of S&P 500 member companies had reported results for the third quarter as of October 22. Of these companies, 84% have surpassed consensus EPS estimates, besting the 76% five-year average.
While high inflation, a potential hike in corporate taxes, and supply chain bottlenecks continue to spook investors, an impressive earnings season should keep driving the market in the near term. Furthermore, U.S Treasury Secretary Janet Yellen said yesterday that the United States was not losing control of inflation, and that she expects inflation levels to return to normal by the second half of 2022.
Given this backdrop, we think it could be wise to bet on quality stocks Bristol-Myers Squibb Company (NYSE:BMY), Biogen Inc. (NASDAQ:BIIB), and Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), which look undervalued at their current price levels.