As the market outlook appears cloudy due to cautious remarks from Federal Reserve Chair Jerome Powell regarding future rate hikes, I think quality stocks ASML Holding N.V. (ASML), ASSA ABLOY AB (publ) (ASAZY), and Banco BBVA Argentina S.A. (BBAR), which have gained solid momentum, might be ideal additions to your watchlist.
The first half of 2023 has been marked by volatility and uncertainty in the markets, with various factors such as recession fears, interest rate hikes, inflation concerns, banking sector turmoil, and a softening US economy impacting investor sentiment.
Moreover, Federal Reserve Chair Jerome Powell recently cautioned that he and all other rate-setting Federal Open Market Committee members expect to raise interest rates further to bring down inflation.
Additionally, the upcoming Supreme Court ruling on the constitutionality of President Biden’s student loan forgiveness may be unprecedented in its near-immediate impact on consumer finances. If the conservative court strikes down the $400-billion giveaway, the U.S. economy is expected to face a close brush with recession.
Take a look at the stocks mentioned above:
ASML Holding N.V. (ASML)
Headquartered in Veldhoven, the Netherlands, ASML develops, produces, markets, sells, and services advanced semiconductor equipment systems consisting of lithography, metrology, and inspection systems for memory and logic chipmakers.
ASML’s trailing-12-month EBITDA margin of 34.68% is 326.1% higher than the 8.14% industry average. Its trailing-12-month net income margin of 28.23% is significantly higher than the 1.97% industry average.
ASML pays $7.43 annually as dividends which translates to a yield of 1.05% at the current price. Its four-year average dividend yield is 0.88%. Its dividend payouts have grown at 32.2% CAGR over the past three years.
During the fiscal first quarter ended April 2, 2023, ASML’s total net sales increased 90.9% year-over-year to €6.75 billion ($7.41 billion). Net income increased 181.3% year-over-year to €1.96 billion ($2.15 billion) and net income per ordinary share increased 186.1% year-over-year to €4.95.
Analysts expect ASML’s revenue for the fiscal second quarter ending June 2023 to increase 31% year-over-year to $7.24 billion. Its EPS is expected to increase 39.6% year-over-year to $5.03 for the same quarter. Also, it has surpassed EPS and revenue estimates in each of the trailing four quarters, which is remarkable.
Shares of ASML have gained 62.7% over the past nine months and 31.3% year-to-date to close the last trading session at $717.41. ASML is currently trading above its 50-day and 200-day moving averages of $677.42 and $596.99, indicating an uptrend.
ASML’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Quality and Momentum and a B in Sentiment. It is ranked #14 out of 91 stocks in the Semiconductor & Wireless Chip industry.
Beyond what is stated above, we’ve also rated ASML for Growth, Value, and Stability. Get all ASML ratings here.
ASSA ABLOY AB (publ) (ASAZY)
Based in Stockholm, Sweden, ASAZY provides door opening and access products, solutions, and services for the institutional, commercial, and residential markets in Europe, the Middle East, India, Africa, North and South America, Asia, and Oceania.
On June 20, 2023, ASAZY announced that it had completed the acquisition of Spectrum Brands’ Hardware and Home Improvement (HHI) division and the divestment of Emtek and the Smart Residential business in the U.S. and Canada to Fortune Brands.
Nico Delvaux, President and CEO of ASAZY, said, “HHI is an excellent addition to ASAZY, complementing our existing business in terms of product offering and geographic scope, and I am delighted to welcome HHI and all its employees to ASAZY.”
ASAZY’s trailing-12-month EBITDA margin of 34.68% is 28.9% higher than the 13.37% industry average. Its trailing-12-month gross profit margin of 39.55% is 32.5% higher than the 29.85% industry average.
The company pays an annual dividend of $0.22, which translates to a yield of 2.03% at the current price level. It has a four-year average dividend yield of 1.58%.
ASAZY’s sales increased 21.8% year-over-year to SEK32.39 billion ($3.03 billion) in the fiscal first quarter that ended March 31, 2023. Its operating income increased 29.8% year-over-year to SEK5.19 billion ($485.69 million). Also, its earnings per share increased 29.2% year-over-year to SEK3.32.
Street expects ASAZY’s revenue for the fiscal second quarter ending June 2023 to increase 8% year-over-year to $3.11 billion. Its EPS is expected to increase 19.6% year-over-year to $0.16 for the same quarter. Also, it has surpassed EPS estimates in each of the trailing four quarters.
The stock has gained 23.8% over the past nine months and 8.1% over the past year to close the last trading session at $11.43. ASAZY is currently trading above its 200-day moving average of $11.19.
ASAZY’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
ASAZY has an A grade for Momentum and Stability and a B in Growth and Quality. It is ranked #20 out of 91 stocks in the B-rated Industrial - Equipment industry.
Click here to see the additional POWR Ratings for ASAZY (Sentiment and Value).
Banco BBVA Argentina S.A. (BBAR)
Based in Buenos Aires, Argentina, BBAR provides various banking products and services to individuals and companies in Argentina.
BBAR’s trailing-12-month return on total assets of 2.77% is 146.7% higher than the 1.12% industry average. Its trailing-12-month CAPEX/Sales of 4.43% is 130.9% higher than the 1.92% industry average.
BBAR’s net interest income increased 14.7% year-over-year to ARS131.19 million ($520.23 thousand) in the fiscal first quarter, which ended March 2023. Its net operating income increased 2% year-over-year to ARS147.90 million ($586.50 thousand). Also, net income for the period increased 82.2% year-over-year to ARS15.02 million ($59.56 thousand).
BBAR’s EPS for the fiscal second quarter ending June 2023 is expected to be $0.37. Also, it has surpassed revenue and EPS estimates in each of the trailing four quarters.
The stock has gained 53.3% year-to-date and 130% over the past year to close the last trading session at $5.98. BBAR is currently trading above its 50-day and 200-day moving averages of $4.71 and $3.96, indicating an uptrend.
BBAR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
BBAR also has an A grade for Value and a B in Growth and Momentum. It is ranked #2 out of 89 stocks in the Foreign Banks industry.
To access additional ratings for BBAR’s Quality, Stability, and Sentiment, click here.
What To Do Next?
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ASML shares were trading at $700.29 per share on Friday morning, down $17.12 (-2.39%). Year-to-date, ASML has gained 28.72%, versus a 14.29% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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