Despite moderating inflation during the previous month, the Federal Reserve seems set to tighten the screws on the money supply further by going ahead with another interest rate hike during its meeting next month.
With comments from the Fed officials indicating the central bank’s reluctance to moderate its stance anytime soon, the markets are understandably subdued and undecided over the direction in which the economy is heading.
Given the noise and confusion, it may be wise to invest in fundamentally strong businesses Agilent Technologies, Inc. (A), Canon Inc. (CAJ), and Hudson Global, Inc. (HSON) that are creating long-term value for their shareholders and are poised to emerge stronger from the current turbulence.
Agilent Technologies, Inc. (A)
A is a provider of application-focused solutions for the entire laboratory workflow. The company operates in the life sciences, diagnostics, and applied chemical markets.
On November 16, A announced its quarterly dividend of $0.23 per share, reflecting a sequential increase of 7%. The quarterly dividend will be paid on January 25, 2023, to all shareholders of record as of the close of business on January 3, 2023.
A pays $0.90 per share annually as dividends, translating to a yield of 0.62% at the current price. This compares to the 4-year average dividend yield of 0.70%. Dividend payouts by the company have grown at a 9.7% CAGR over the past five years.
For the third quarter of the fiscal year ending July 31, 2022, A’s net revenue increased 8.3% year-over-year to $1.72 billion, while its income from operations increased 22.3% year-over-year to $411 million. During the same year, the company’s non-GAAP net income came in at $401 million, or $1.34 per share, up 19% and 21.8% year-over-year.
Analysts expect A’s revenue and EPS for the fiscal ending October 31, 2023, to increase 5.1% and 7.9% year-over-year to $7.11 billion and $5.47, respectively. The company has impressed further by surpassing consensus EPS estimates in each of the four trailing quarters.
The stock has gained 10.5% over the past month and 21.5% over the past six months to close the last trading session at $146.19.
A’s fundamental strength, and positive outlook are also reflected in its POWR Ratings. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
A has a grade of B for Stability, Sentiment, and Quality. It is ranked #3 of 52 stocks in the Medical - Diagnostics/Research industry.
In addition to the POWR Rating grades stated above, additional ratings for A’s Growth, Value, and Momentum can be found here.
Canon Inc. (CAJ)
CAJ, based in Japan, operates as a developer, producer, and seller of office equipment, imaging systems, medical systems, and industrial equipment and a provider of related services. The company operates through four segments: Office segment; Imaging System segment; Industrial Equipment and Others segment; and Medical System segment.
On October 6, CAJ announced that it had won the U.S trademark infringement lawsuit, filed in the United States District Court for the Northern District of Illinois, against 52 counterfeiters who sold counterfeit CAJ products (camera batteries, inkjet printer printheads, etc.) on U.S. e-commerce websites.
This would help CAJ protect its brand equity by preventing economic losses to consumers who would otherwise have purchased counterfeited goods.
Also, on October 6, CAJ announced the installation of new manufacturing facilities at its Utsunomiya Office, which produces semiconductor lithography systems and other devices. The new facilities are scheduled to commence operation in the first half of 2025.
On September 1, CAJ announced that it had acquired 14,631,200 of its shares of common stock for around ¥50 billion ($ 356 million). This would increase the intrinsic value of the holdings of the company’s remaining shareholders.
For the third quarter of the fiscal year ended September 30, CAJ’s net sales increased 19.5% year-over-year to ¥996.10 billion ($7.09 billion), driven by the price adjustment of products and depreciation of the yen. During the same period, the company’s operating profit increased 38.7% year-over-year to ¥81.44 billion ($579.85 million).
The quarterly net income attributable to CAJ came in at ¥54.12 billion ($385.32 million) or ¥52.88 per share, up 9.7% and 12.2% year-over-year, respectively.
Analysts expect CAJ’s revenue and EPS for the fiscal ending December 2023 to increase 1.9% and 5.7% year-over-year to $29.62 billion and $1.78, respectively.
The stock has gained 2.7% over the past month and 5.2% over the past year to close the last trading session at $22.79.
CAJ’s solid prospects are reflected in its overall rating of A, which equates to a Strong Buy in our POWR Rating system. It has a grade of B for Stability, Value, and Quality.
CAJ is ranked #3 of 41 stocks in the Technology - Hardware industry.
Click here for the additional ratings for CAJ’s Momentum, Sentiment, and Growth.
Hudson Global, Inc. (HSON)
HSON is a provider of customized recruitment outsourcing and talent solutions to organizations globally. The company’s geographic business segments include the Americas, Asia Pacific, and Europe.
On August 24, HSON announced the acquisition of Hunt & Badge Consulting Private Limited (H&B), an India-headquartered provider of recruitment services to customers operating in India. The company expects this move to generate considerable value for our clients, team, and stockholders.
For the third quarter of the fiscal year ended September 30, 2022, HSON’s adjusted revenue increased 34.2% year-over-year to $24.2 million, while its adjusted EBITDA increased marginally to $3.01 million. During the same period, the company reported an adjusted net income of $1.83 million or $0.58 per share.
HSON’s revenue for the fiscal ending December 2022 is expected to increase 18.7% year-over-year to $200.81 million. During the same period, the company’s EPS is expected to come in at $3.13, compared to a loss per share of $0.38 during the previous fiscal. Moreover, the company has surpassed consensus EPS estimates in three of the trailing four quarters.
The stock has dipped 22.8% year-to-date to close the last trading session at $22.38. In terms of the forward Price/Earnings, it is trading at an attractive valuation of 7.15, compared to the industry average of 17.
HSON has an overall rating of B, which equates to a Buy in our POWR Rating system. It has a grade of A for Value and B for Quality.
HSON is ranked #10 of 21 stocks in the A-rated Outsourcing - Staffing Services industry.
Get additional ratings for Growth, Momentum, Stability, and Sentiment for HSON here.
A shares were trading at $145.41 per share on Monday afternoon, down $0.78 (-0.53%). Year-to-date, A has declined -8.34%, versus a -15.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Santanu Roy
Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.
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