In the face of a volatile macroeconomic environment, the markets experienced significant turbulence in 2022. Over the past year, all three major indices have plunged – The S&P 500 has lost close to 20%, while the Dow Jones Industrial Average and the Nasdaq Composite have declined about 10% and 33%, respectively.
However, U.S. consumer confidence rose in December 2022. The Conference Board reported its consumer confidence index increased to 108.3 in December, posting the highest reading since April. The figure topped the forecast from economists polled by Reuters of 101.0.
Moreover, according to Oppenheimer chief investment strategist John Stoltzfus, the broad S&P 500 index would rebound 15% over 2023, reaching the 4,400 mark by the end of the year. Therefore, before the next bull market, it is wise to buy and hold fundamentally strong stocks PepsiCo, Inc. (PEP) and Fortinet, Inc. (FTNT).
PepsiCo, Inc. (PEP)
PEP is a popular food and beverage company that operates through its seven segments: Frito-Lay North America; Quaker Foods North America; PepsiCo Beverages North America; Latin America; Europe; Africa, Middle East, and South Asia; Asia Pacific, Australia and New Zealand; and China Region.
On December 5, 2022, PEP announced a new packaging goal intended to double down the scale of reusable packing models from 10% to 20% by 2030. This ambition is driven by disruptive innovation that aligns with the company’s sustainable packaging vision.
On November 17, the company increased its quarterly dividend by 7% from the prior-year value to $1.15 per share, payable on January 6, 2023. PEP has paid consecutive quarterly cash dividends since 1965, and 2022 marked the company’s 50th consecutive annual dividend increase. This reflects the strong cash generation ability of the company.
PEP’s net revenue came in at $21.97 billion for the third quarter that ended September 3, 2022, up 8.8% year-over-year. Its non-GAAP gross profit increased 8.4% year-over-year to $11.73 billion.
Also, its non-GAAP operating profit came in at $3.60 billion, up 10.9% year-over-year. The company’s non-GAAP net income attributable to PEP per common share grew 10.1% year-over-year to $1.97.
For the fiscal first quarter ending March 2023, analysts expect PEP’s revenue to increase 3.6% year-over-year to $16.78 billion. Its EPS is estimated to grow 8% year-over-year to $1.39. PEP surpassed EPS and revenue estimates in all four trailing quarters, which is impressive.
Over the past six months, the stock has gained 5.7% to close the last trading session at $178.97. Moreover, it has gained 7.1% over the past three months.
It’s no surprise that PEP’s POWR Ratings reflect a promising outlook. It has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
PEP has an A grade for Quality and a B for Growth, Stability, and Sentiment. In the A-rated Beverages industry, it is ranked #7 out of 35 stocks.
Click here for the additional POWR Ratings for Momentum and Value for PEP.
Fortinet, Inc. (FTNT)
FTNT offers comprehensive, integrated, and automated cybersecurity solutions worldwide. It provides FortiGate hardware and software licenses for various security and networking services.
On December 14, FTNT announced the adoption of Fortinet Secure SD-WAN by five new managed security service providers (MSSP) to help deliver improved business outcomes and customer experiences. The company should benefit by helping MSSPs on their digital acceleration journey.
On November 28, FTNT launched a managed next-generation firewall service for Amazon Web Services. FortiGate CNF includes FortiGuard AI-driven Security Services for real-time detection and protection against malicious external and internal threats. This new service might add to the company’s top line.
For the fiscal third quarter that ended September 30, FTNT’s revenue increased 32.6% year-over-year to $1.15 billion. Its non-GAAP operating income surged 45.3% year-over-year to $324.90 million.
The company’s non-GAAP net income attributable to FTNT grew 58.3% from the year-ago value to $262.70 million, while its non-GAAP net income per share attributable to FTNT grew 65% from the prior-year quarter to $0.33.
Street expects FTNT’s revenues and EPS to rise 24.4% and 48.4% year-over-year to $1.19 billion and $0.28, respectively, for the fiscal first quarter ending March 2023. Furthermore, FTNT topped Street EPS and revenue estimates in each of the trailing four quarters, which is impressive.
The stock has lost 1.2% over the past five days to close the last trading session at $48.30.
FTNT’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system.
FTNT also has an A grade for Quality and Sentiment and a B for Growth. Within the Software – Security industry, it is ranked first out of 22 stocks.
To see additional POWR Ratings for Momentum, Value, and Stability for FTNT, click here.
PEP shares were trading at $177.89 per share on Thursday afternoon, down $1.08 (-0.60%). Year-to-date, PEP has declined -1.53%, versus a -0.49% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
2 Stocks to Buy Before the Next Bull Market StockNews.com
