The stock market has witnessed a rally, with the S&P 500 gaining modestly over the past month after October’s inflation report came in lower than expected. Moreover, signals of less aggressive price hikes by the Fed in the future have instilled a sense of optimism among investors. Veteran investment strategist Ed Yardeni expects the stock market to jump as much as 8% before year-end as the economy seems resilient.
Additionally, Goldman Sachs Group Inc. (GS) research shows that the U.S. economy will probably stick to a ‘soft landing’ next year. The bank believes there is just a 35% chance of a recession over the next year.
Therefore, investors should buy quality stocks Comcast Corporation (CMCSA) and Albertsons Companies, Inc. (ACI) that are currently trading at attractive prices and seem poised to deliver stable returns in the future.
Comcast Corporation (CMCSA)
CMCSA is a media and technology company that operates through its Cable Communications; Media; Studios; Theme Parks; and Sky segments; worldwide.
On November 30, CMCSA announced the opening of its new Xfinity store in Mill Creek to meet the needs of its local customers in Snohomish County. This should help the company in expanding its revenue stream.
In the same month, H5 Data Centers and CMCSA announced the expansion of their national collaboration at 505 Marquette, a 225,000-square-foot carrier hotel, in Albuquerque, New Mexico. With this development, CMCA’s customers can now access Comcast Business’ connectivity, networking, and security solutions at New Mexico’s critical interconnection point.
CMCSA has paid dividends for five consecutive years. Its dividend payouts have increased at an 8.9% CAGR over the past three years and an 11.7% CAGR over the past five years. Its current dividend yield is 3.04%.
CMCSA’s forward non-GAAP PEG multiple of 0.79 is 40.5% lower than the industry average of 1.33. In terms of its forward EV/EBITDA, the stock is trading at 6.68x, 20.4% lower than the industry average of 8.40x.
CMCSA’s revenue came in at $29.85 billion for the 2022 third quarter. Its adjusted net income came in at $4.22 billion, up 4.5% year-over-year, while its adjusted EPS came in at $0.96, up 10.3% year-over-year. Also, its adjusted EBITDA came in at $9.48 billion, up 5.9% year-over-year.
For fiscal 2022, analysts expect CMCSA’s revenue to increase 4.3% year-over-year to $121.38 billion. Its EPS is expected to increase 12.3% year-over-year to $3.63 in the same period. It surpassed EPS estimates in all four trailing quarters, which is commendable.
Over the past month, the stock has gained 11.1% to close the last trading session at $35.48.
CMCSA’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Rating system. The POWR Ratings assess stocks by 118 different factors, each with its weighting.
Also, the stock has a B grade for Growth and Quality. Within the Entertainment – TV & Internet Providers industry, it is ranked first among nine stocks.
Click here for the additional POWR Ratings for Value, Momentum, Stability, and Sentiment for CMCSA.
Albertsons Companies, Inc. (ACI)
ACI engages in the operation of food and drug stores. The company offers grocery products, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services. It also manufactures and processes food products for sale in stores.
On October 14, 2022, Kroger (KR) and ACI announced that they had entered into a definitive merger agreement. CEO of ACI, Vivek Sankaran, believes that together with KR, they will be able to provide customers with greater value and access to fresh food and essential pharmacy services and positively impact their associates and communities.
On October 18, ACI declared a quarterly dividend of $0.12, which was payable on November 14. Its annual dividend of $0.48 yields 2.29% at its current share price, and its four-year average dividend yield is 3.04%.
In terms of its forward EV/Sales, ACI is currently trading at 0.29x, 82.3% lower than the industry average of 1.65x. Its forward EV/EBIT multiple of 8.53 is 45.3% lower than the industry average of 15.60.
ACI’s net sales and other revenue for the second quarter ended September 10, 2022, increased 8.6% year-over-year to $17.92 billion. The company’s adjusted net income increased 13.2% year-over-year to $418.30 million. Moreover, its adjusted EBITDA increased 8.6% year-over-year to $1.05 billion, while its adjusted net EPS came in at $0.72, representing a 12.5% increase from the prior-year quarter.
Street expects ACI’s revenue for the quarter ending November 30, 2022, to increase 4.3% year-over-year to $17.45 billion. Its EPS for the quarter ending May 2023, is expected to increase 1.2% year-over-year to $0.85.
The stock has gained 2.9% over the past month to close the last trading session at $20.96.
It’s no surprise that ACI has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The stock also has an A grade for Value and a B for Quality. It is ranked #6 out of 39 stocks in the A-rated Grocery/Big Box Retailers industry.
Beyond what is stated above, we have also given ACI grades for Growth, Momentum, Stability, and Sentiment. Get all ACI ratings here.
CMCSA shares were trading at $35.56 per share on Wednesday morning, up $0.08 (+0.23%). Year-to-date, CMCSA has declined -27.47%, versus a -15.82% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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