The Federal Reserve raised interest rates by 75 basis points on Wednesday for the fourth consecutive time, raising its benchmark lending rate to a new target range of 3.75% to 4%.
Additionally, Chairman Jerome Powell has dismissed the idea of rate hikes stopping anytime soon. However, he expects a discussion about slowing the pace of tightening in the central bank’s next few meetings.
On the other hand, the U.S. economy posted a gross domestic product rose 2.6% annualized pace in the third quarter, which beat the Dow Jones forecast of 2.3%, easing recession fears. Additionally, inflation is showing signs of cooling down.
Although economic uncertainties remain, fundamentally strong household names, The Coca-Cola Company (KO), Cisco Systems, Inc. (CSCO), and Lowe’s Companies, Inc. (LOW), might still be worth buying this year.
The Coca-Cola Company (KO)
With a market capitalization of $254.32 billion, KO, a popular beverage company, manufactures, markets, and sells various non-alcoholic beverages worldwide. The company provides sparkling soft drinks, flavored and enhanced water, sports drinks, juice, dairy, plant-based beverages, tea and coffee, and energy drinks.
On October 20, a dividend of 44 cents per common share was declared by KO, payable to shareholders on December 15, 2022. The solid cash generation ability of the company is reflected here.
On September 29, KO and Molson Coors Beverage Company (TAP) expanded its exclusive agreement to develop and commercialize Topo Chico Spirited, a line of spirit-based, ready-to-drink cocktails. It is set to be launched in more than 20 markets across the country in 2023, which should benefit the company.
For the fiscal third quarter ended September 30, KO’s non-GAAP net operating revenue came in at $11.05 billion, up 10% year-over-year. Its non-GAAP gross profit increased 6.5% year-over-year to $6.54 billion. Furthermore, its non-GAAP net income per share increased 6.2% year-over-year to $0.69.
Analysts expect KO’s EPS and revenue to increase 6.9% and 10.4% year-over-year to $2.48 and $42.67 billion for the fiscal year ending December 2022. Moreover, KO has an impressive surprise earnings and revenue history, as it has topped consensus EPS estimates in all four trailing quarters.
The stock has gained 4.8% over the past year to close its last trading session at $58.81. It has gained 5% over the past month.
KO’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
KO is also rated a B in Stability, Sentiment, and Quality. Within the A-rated Beverages industry, it is ranked #19 of 33 stocks.
To see additional POWR Ratings for Value, Growth, and Momentum for KO, click here.
Cisco Systems, Inc. (CSCO)
CSCO, with a market cap of $180 billion, manufactures and sells Internet Protocol-based networking and other products related to the communications and information technology industry. The company serves businesses of various sizes, governments, public institutions, and service providers.
On November 1, CSCO expanded its portfolio of specializations available through the company’s partner program. The six new specializations would focus on customer priorities and represent fast-growing market opportunities for the company and its partners in areas where CSCO has been investing and innovating.
On October 12, CSCO and Microsoft Corporation (MSFT) announced their partnership to add Microsoft Teams natively on Cisco Room and Desk devices certified for it. The offering is expected to be available in the first half of 2023.
For the fiscal year ended July 30, 2022, CSCO’s total revenue increased 3.5% year-over-year to $51.56 billion. The company’s non-GAAP net income increased 3.4% year-over-year to $14.09 billion. CSCO’s non-GAAP EPS for the fiscal year increased by 4.3% from the prior year to $3.36.
For the fiscal 2023 first quarter (ended October 2022), analysts expect CSCO’s revenue to come in at $13.27 billion, representing an increase of 2.8% year-over-year. For the same quarter, the consensus EPS estimate of $0.84 indicates a 1.8% year-over-year increase. The company has surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 11.4% over the past month and marginally over the past five days to close its last trading session at $44.57.
It’s no surprise that CSCO has an overall B rating, which translates to Buy in our proprietary rating system. The stock also has an A rating for Quality. Within the B-rated Technology - Communication/Networking industry, it is ranked #6 of 48 stocks.
Click here to see the additional POWR Ratings for CSCO (Momentum, Value, Sentiment, Stability, and Growth).
Lowe’s Companies, Inc. (LOW)
LOW, having a market cap of $115.27 billion, operates as a home improvement retailer in the United States and internationally. The company offers a line of products for construction, maintenance, home improvement, repair, remodeling, and decorating.
On September 29, LOW and Samsung announced their launch of a limited-edition collection of panels for Samsung’s Bespoke 4-Door French Door Refrigerator to offer shoppers another way to customize their spaces and express their unique personal style.
Jen Wilson, Lowe’s senior vice president of enterprise brand and marketing, said, “Through this collaboration with Samsung, we’re thrilled to be bringing these one-of-a-kind panels to customers who are not only looking to upgrade their appliances but are also craving a unique way to express their personal style through art.”
In August, LOW declared a quarterly dividend of $1.05 per share, which was payable to shareholders on November 2, 2022. This reflects on the company’s ability to pay back its shareholders.
In the fiscal second quarter ended July 29, 2022, LOW’s operating income increased marginally year-over-year to $4.23 billion. For the same quarter, net earnings came in at $2.99 billion, while its earnings per common share stood at $4.67, up 9.9% from its year-ago value.
For the fiscal third quarter ended October 2022, Street expects LOW’s EPS to improve 12.7% year-over-year to $3.08. Its revenue is expected to come in at $23.14 billion, indicating a 1% year-over-year increase. The company beat the consensus EPS estimates in all of the trailing four quarters.
The stock has lost 1.1% over the past month to close its last trading session at $185.71.
LOW has an overall B rating, which equates to a Buy in our POWR Ratings system. It is also rated a B for Quality. The stock is ranked #15 of 60 in the Home Improvement & Goods industry.
Click here to see additional POWR Ratings of LOW for Stability, Sentiment, Value, Growth, and Momentum.
KO shares were trading at $58.88 per share on Thursday afternoon, up $0.07 (+0.12%). Year-to-date, KO has gained 1.66%, versus a -20.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
3 Household-Name Stocks Still Worth Buying in 2022 StockNews.com
