The stock market had a difficult first half this year amid record high inflation levels, the Fed’s hawkish tilt to fight it, and lingering geopolitical issues. Moreover, the policymakers have indicated continued rate hikes until inflation comes down to the 2% target.
However, the benchmark indexes have significantly recovered on the backs of stronger than expected corporate results and a July inflation report showing cooling price increases. The S&P 500 gained 9.1% in the previous month, its highest monthly gain since November 2020.
Although investors’ sentiments have improved lately, market volatility is rife. According to a J.P. Morgan Wealth Management study, 88% of investors are still concerned about rising inflation and interest rates.
Amid such market turmoil, it could be wise to invest in shares of mega-cap companies with stable revenue and earnings streams. We think AT&T Inc. (T), Glencore plc (GLNCY), KDDI Corporation (KDDIY), Vale S.A. (VALE), and Ford Motor Company (F), which are currently trading below $20 and are undervalued, could be ideal additions to your portfolio.
AT&T Inc. (T)
With a market cap of $129.19 billion, T provides telecommunications, media, and technical services worldwide.
On August 4, AT&T and Warner Bros. Discovery announced an agreement allowing T to continue offering internet and mobility customers access to HBO Max’s original programming and series portfolio. This demonstrates the company’s proven excellence in the field and marks an important step in its continued success.
T’s net income increased 142.1% year-over-year to $4.54 billion in the fiscal second quarter of 2022. Its EPS grew 154.5% from the year-ago value to $0.56.
Moreover, T surpassed the consensus EPS estimates in each of the trailing four quarters.
In terms of its forward EV/EBITDA, T is currently trading at 7.31x, 14.6% lower than the industry average of 8.56x. Its forward Price/Cash Flow multiple of 3.65 is 58.7% lower than the industry average of 8.84.
T gained 1.7% over the past six months to close the last trading session at $18.06.
T’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
T also has a B grade in Value. It is ranked #3 of 20 stocks in the B-rated Telecom - Domestic industry.
Beyond what is stated above, we’ve also rated T for Growth, Quality, Momentum, Sentiment, and Stability. Get all the T ratings here.
Glencore plc (GLNCY)
GLNCY produces, refines, stores, transports, and markets metals and minerals, and energy products in the Americas, Europe, Asia, Africa, and Oceania. It operates through two segments, Marketing Activities; and Industrial Activities. The company has a market cap of $78.04 billion.
On June 1, GLNCY completed its previously announced $200 million investment in Li-Cycle Holdings Corp. (LICY), an industry leader in lithium-ion battery resource recovery and recycling in North America, through the purchase of a five-year convertible note; and executed long-term commercial agreements with LICY. This strategic collaboration should help the company achieve its NetZero total emissions targets.
GLNCY’s revenue increased 43% year-over-year to $134.44 billion in the first half of 2022. Adjusted EBITDA grew 119% from the year-ago value to $18.92 billion, while the EPS for the same period stood at $0.92, reflecting an 820% increase year-over-year.
Street expects GLNCY’s revenue in the ongoing fiscal year to come in at $270.63 billion, indicating an increase of 32.8% year-over-year.
In terms of its forward EV/EBITDA, GLNCY is currently trading at 3.04x, 51% lower than the industry average of 6.21x. Its forward Price/Sales multiple of 0.28 is 75.4% lower than the industry average of 1.13.
GLNCY’s shares have gained 20.4% over the past month to close the last trading session at $11.96.
GLNCY’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our POWR Ratings system.
The company has an A grade in Momentum and a B in Quality, Value, and Stability. Out of the 42 stocks in the Miners - Diversified industry, GLNCY is ranked #3. To get GLNCY’s ratings for Growth and Sentiment, click here.
KDDI Corporation (KDDIY)
Headquartered in Tokyo, Japan, KDDIY provides telecommunications services through its Personal and Business Services segments. It has a market cap of $69.28 billion.
KDDIY’s operating revenue increased 4% year-over-year to ¥1,351.68 billion ($9.86 billion) in the fiscal quarter ended June 30, 2022. Its profit for the period grew 1.4% from the year-ago value to ¥211.10 billion ($1.54 million), while its net cash provided by operating activities improved by 515.6% year-over-year to ¥96.64 billion ($0.71 billion).
KDDIY’s revenue for the ongoing fiscal year ending March 2023 is expected to improve 34.7% year-over-year to $40.29 billion.
In terms of its forward EV/Sales, KDDIY is trading at 2x, 1.2% lower than the industry average of 2.02x. Its forward EV/EBITDA multiple of 6.10 is 28.7% lower than the industry average of 8.56.
KDDIY’s shares have gained 5.9% year-to-date to close the last trading session at $15.52
The company has an overall rating of B, translating to Buy in our proprietary rating system. KDDIY is rated A in Stability and B in Value and Quality. Within the A-rated Telecom - Foreign industry, the stock is ranked #14 of 47.
Click here for additional POWR Ratings for Growth, Momentum, and Sentiment for KDDIY.
Vale S.A. (VALE)
Based in Brazil, VALE is a global producer and seller of iron ore and iron ore pellets, key raw materials used for steel making. The company operates through three segments, Ferrous Minerals; Base Metals; and Coal. It has a market cap of $66.42 billion.
On June 9, Vale concluded the pre-feasibility study for a proposed nickel sulfate project in Quebec, Canada, with a capacity to convert 25,000 tonnes of contained nickel to nickel sulfate. The project is focused on delivering low carbon and high-purity nickel products into the growing electric vehicle industry. The feasibility study demonstrates an important milestone for the project's development.
In the same month, Vale informed that it had strengthened its low-carbon advantage with an independent third-party limited assurance of additional nickel products. With this, about 83% of Vale’s Class 1 nickel will have an independently verified carbon footprint, underscoring Vale’s commitment to delivering low-carbon metals while ensuring responsible carbon data management and transparency.
For the fiscal second quarter of 2022, the company’s net operating revenues increased 3.2% quarter-over-quarter to $11.16 billion.
Analysts expect VALE’s revenue in the ongoing fiscal year to come in at $11.70 billion in the quarter ending September 2022. Also, its EPS is expected to come in at $0.70 in the same period. VALE has an impressive earnings surprise history, as it topped Street EPS estimates in three of the trailing four quarters.
In terms of its forward Price/Cash Flow, VALE is currently trading at 3.95x, 43.4% lower than the industry average of 6.97x. Its forward P/E multiple of 3.70 is 69.9% lower than the industry average of 12.31.
VALE has gained 10.2% over the past nine months to close the last trading session at $13.76.
VALE’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, translating to Buy in our proprietary rating system. VALE is rated A in Quality and a B in Value. It is ranked #9 out of the 35 stocks in the B-rated Industrial - Metals industry.
To see additional POWR Ratings for Momentum, Growth, Stability, and Sentiment for VALE, click here.
Ford Motor Company (F)
F designs, manufactures, markets, and services a range of Ford trucks, cars, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles worldwide. It operates through three segments- Automotive; Mobility; and Ford Credit. It has a market cap of $61.59 billion.
F’s total revenues increased 50.2% year-over-year to $40.19 billion in the fiscal second quarter of 2022. Its net income improved 15.4% year-over-year to $638 million, while its EPS increased 14.3% from its year-ago value to $0.16 in the same period.
Analysts expect F’s revenue for the fiscal quarter ending September 2022 to come in at $37.25 billion, indicating a 12.2% increase year-over-year. The consensus EPS estimate of $0.52 represents a 1.3% year-over-year increase.
In terms of its forward non-GAAP P/E, F is currently trading at 7.39x, 44.9% lower than the industry average of 13.42x. Its forward EV/Sales multiple of 1.12 is 5.2% lower than the industry average of 1.18.
The stock has gained 20.4% over the past year to close the last trading session at $15.32.
It is no surprise that F has an overall rating of B, equating to Buy in our POWR Ratings system. F also has a B grade in Growth, Sentiment, and Value. In the Auto & Vehicle Manufacturers industry, F is ranked #17 of 66 stocks.
In addition to the POWR Rating grades I’ve just highlighted, you can see the F’s ratings for Momentum and Quality here.
T shares were trading at $17.94 per share on Wednesday afternoon, down $0.12 (-0.66%). Year-to-date, T has gained 1.35%, versus a -12.34% 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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