The stock market experienced significant volatility last year as geopolitical concerns, soaring inflation, and interest rate hikes weighed on investor sentiment. Although the stock market might remain under pressure this year, fundamentally sound stock Nokia Oyj (NOK), Weis Markets, Inc. (WMK), and Powell Industries, Inc. (POWL), which are expected to soar higher, could be ideal buy-and-hold options 2023.
According to the Labor Department, the consumer price index gained 0.4% for the month, with an annual inflation rate of 6%, in line with Dow Jones predictions.
Moreover, the Conference Board predicts that economic weakness will intensify and expand more extensively across the US economy in the coming months, resulting in a recession beginning in mid-2023. Real GDP growth is expected to decrease to 0.7% this year.
Furthermore, in response to increased uncertainty about the economic consequences of bank failures, Goldman Sachs raised the probability of a US recession over the next 12 months to 35%.
Despite the tensed scenario, NOK, WMK, and POWL look poised to continue delivering stable returns in 2023 and beyond.
Nokia Oyj (NOK)
Headquartered in Espoo, Finland, NOK provides mobile, fixed, and cloud network solutions worldwide. The company operates through four segments Mobile Networks; Network Infrastructure; Cloud and Network Services; and Nokia Technologies.
On February 27, 2023, NOK announced a contract with MTN South Africa to offer 5G Radio Access Network (RAN) equipment. Tommi Uitto, President of Mobile Networks at NOK, feels that this enhances NOK’s market position in South Africa and assists MTN in providing greater 5G experiences to its users.
On February 14, 2023, NOK and Kyndryl Holdings, Inc. (KD), the world’s largest provider of IT infrastructure services, announced a three-year extension and expansion of their global network and edge partnership, with a focus on developing and delivering industry-leading LTE and 5G private wireless services, as well as Industry 4.0 solutions to customers worldwide.
NOK’s forward EV/Sales of 0.80x is 69% lower than the industry average of 2.67x. Its forward Price/Sales multiple of 0.90 is 64.6% lower than the industry average of 2.56.
NOK’s EBIT margin of 10.95% is 84.8% higher than the 5.93% industry average, while its EBITDA margin of 14.62% is 30.4% higher than the industry average of 11.22%.
NOK’s net sales came in at €7.45 billion ($7.97 billion) for the fourth quarter that ended December 31, 2022, increasing 16,1% year-over-year. Moreover, its gross profit came in at €3.19 billion ($3.41 billion), up 25.8% year-over-year.
Also, its profit rose 363.5% year-over-year to €3.15 billion ($3.37 billion), while its EPS came in at €0.56, representing an increase of 366.7% year-over-year.
NOK’s revenue is expected to increase 5.3% year-over-year to $27.56 billion in 2023. Its EPS is expected to grow 6.7% per annum for the next five years. It surpassed EPS estimates in three of four trailing quarters. NOK’s shares have lost 4% intraday to close the last trading session at $4.49.
NOK’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall A rating indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
NOK has an A grade for Value and a B for Sentiment, Growth, and Momentum. In the B-rated Technology – Communication/Networking industry, it is ranked #5 out of 50 stocks. Click here for the additional POWR Ratings for Stability and Quality for NOK.
Weis Markets, Inc. (WMK)
WMK is a food retailer that engages in the retail sale of food through a chain of supermarkets. The company operates primarily under the Weis Markets name and Weis, Weis Great Meals Start Here, Weis Gas-n-Go, and Weis Nutri-Facts brands.
In terms of trailing-12-month EV/Sales, WMK is currently trading at 0.44x, 73.9% lower than the industry average of 1.68x. Its trailing-12-month EV/EBITDA of 7.38x is 40% lower than the industry average of 13.13x.
WMK’s trailing-12-month ROTA of 6.39% is 61.7% higher than the 3.95% industry average. Its trailing-12-month ROTC of 6.75% is 8.9% higher than the 6.20% industry average.
For the fourth quarter that ended January 31, 2023, WMK’s revenues increased 18% year-over-year to $1.31 billion. Also, its income from operations came in at $33.58 million, up 10.6% year-over-year. Its net profit and EPS came in at $28.88 million and $1.07, up 27.7% and 27.4% year-over-year.
The stock has gained 12.2% over the past six months to close the last trading session at $82.36.
It’s no surprise that WMK has an overall A rating which equates to a Strong Buy in our POWR Ratings system.
It has an A grade for Stability and a B for Growth and Quality. The stock is ranked #7 out of 37 stocks in the A-rated Grocery/Big Box Retailers industry. We’ve also rated WMK for Value, Sentiment, and Momentum. Get all WMK ratings here.
Powell Industries, Inc. (POWL)
POWL, together with its subsidiaries, designs, develops, manufactures, sells, and services custom-engineered equipment and systems to distribute, control, and monitor electrical energy.
In terms of forward EV/Sales, POWL is currently trading at 0.63x, 61.3% lower than the industry average of 1.62x. Its trailing-12-month EV/EBITDA of 14.53x is 40.8% lower than the industry average of 10.32x.
POWL’s trailing-12-month asset turnover ratio of 1.18x is 48.8% higher than the 0.79x industry average
POWL’s revenue increased 19% year-over-year to $126.86 million for the first quarter ended December 31, 2022. Its gross profit increased 44.9% year-over-year to $19.46 million. During the same period, the company’s operating income came in at $1.09 million, compared to an operating loss of $4.29 million.
Street expects POWL’s revenue to increase 12.6% year-over-year to $599.43 million in 2023. Its EPS is estimated to grow 10% per annum for the next five years. It has surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 96.7% to close the last trading session at $40.88.
POWL has an overall rating of A, equating to a Strong Buy in our POWR Ratings system. It has an A grade for Growth and a B for Value and Sentiment. It is ranked #3 out of 79 stocks in the Industrial – Machinery industry. To access the additional POWR Ratings for POWL (Stability, Momentum, and Quality), click here.
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NOK shares were trading at $4.55 per share on Thursday afternoon, up $0.06 (+1.34%). Year-to-date, NOK has declined -1.65%, versus a 3.37% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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