The Federal Reserve reduced its economic outlook and reiterated its commitment to increase interest rates. Wells Fargo analysts see a recession in the first half of next year. However, the Fed is expected to slow down in its rate hike aggression as inflation is expected to ease eventually, which should bode well for the market.
According to a Bankrate survey of investment professionals, the S&P 500 is expected to reach 4,243 in the coming year. “While there’s intense interest in the daily movements of the stock market and individual issues, most mere mortals aren’t capable of successfully timing the market. That’s why staying invested is key for long-term investors,” Mark Hamrick, Bankrate’s senior economic analyst, said.
Nonetheless, the market is expected to remain under pressure, and investors should invest in high-quality, fundamentally sound stocks that provide consistent returns in any economic condition.
Therefore, quality stocks Johnson & Johnson (JNJ), Berry Corporation (BRY), Honda Motor Company, Ltd. (HMC), Genie Energy Ltd. (GNE), and GEE Group Inc. (JOB) could be wise additions to your portfolio now for long-term returns.
Johnson & Johnson (JNJ)
JNJ and its subsidiaries research, develop, manufacture, and sell various products in the healthcare field worldwide. The company operates through three segments: Consumer Health; Pharmaceutical; and Medical Devices.
On November 1, 2022, JNJ and Abiomed Inc. (ABMD), a world leader in breakthrough heart, lung, and kidney support technologies, announced that they have entered into a definitive agreement under which JNJ will acquire through a tender offer all outstanding shares of Abiomed, for an upfront payment of $380.00 per share in cash.
ABMD’s skilled workforce, strong ties with clinicians, unique cardiovascular portfolio, and extensive pipeline will complement JNJ’s MedTech portfolio. It should also enable JNJ to implement its strategic priorities and vision for the new JNJ focused on Pharmaceutical and MedTech.
JNJ has paid dividends for 60 consecutive years. Over the last three years, JNJ’s dividend payouts have grown at a 5.87% CAGR. While JNJ’s four-year average dividend yield is 2.60%, its current dividend translates to a 2.55% yield.
JNJ’s sales to customers came in at $23.79 billion for the third quarter that ended 2022, increasing marginally year-over-year. Moreover, its net earnings came in at $4.46 billion, up 21.6% year-over-year. Also, its EPS came in at $1.68, up 22.6% year-over-year.
JNJ’s revenue is expected to increase 2.7% year-over-year to $97.65 billion in 2023. Its EPS is expected to grow 3.3% year-over-year to $10.38 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 5.5% to close the last trading session at $177.48.
JNJ’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.
JNJ has an A grade for Stability and a B for Quality. In the Medical – Pharmaceuticals industry, it is ranked #9 out of 159 stocks. Click here for the additional POWR Ratings for Value, Sentiment, Growth, and Momentum for JNJ.
Berry Corporation (BRY)
BRY, an independent upstream energy company, develops and produces conventional oil reserves in the western United States. It operates in two segments, Development and Production and Well Servicing and Abandonment.
On November 2, 2022, Cary Baetz, BRY’s Executive Vice President and CFO, said, “With our well-defined Shareholder Return Model, we expect to deliver top-tier returns of capital to our shareholders.”
While BRY’s four-year average dividend yield is 5.92%, its current dividend translates to a 2.98% yield.
BRY’s total revenues and other came in at $376.45 million for the third quarter that ended September 30, 2022, up 162.5% year-over-year. Its net income came in at $191.66 million, up 1848.6% year-over-year. Also, its EPS came in at $2.34, up significantly year-over-year.
BRY’s revenue is expected to increase by 49.6% year-over-year to $815.13 million in 2022. Its EPS is expected to grow 676% year-over-year to $1.94 in 2022. Over the past nine months, the stock has gained 10.4% to close the last trading session at $8.05.
BRY’s overall A rating equates to a Strong Buy in our POWR Ratings system. It has an A grade for Value and Momentum and a B for Growth and Sentiment. It is ranked #3 out of 93 stocks in the B-rated Energy - Oil & Gas industry. Beyond what is stated above, we’ve also rated BRY for Stability and Quality. Get all BRY ratings here.
Honda Motor Company, Ltd. (HMC)
Headquartered in Tokyo, Japan, HMC develops, manufactures, and distributes motorcycles, automobiles, power products, and other products in Japan, North America, Europe, Asia, and internationally. Its four segments are Motorcycle Business; Automobile Business; Financial Services Business; and Life Creation and Other Businesses.
On October 11, 2022, HMC announced the set-up of a new joint venture battery plant with LG Energy Solution in Fayette County, Ohio. The two companies will invest approximately $3.50 billion and aim to create around 2,200 jobs. This lucrative deal should help both companies broaden their future gains.
Over the last three years, HMC’s dividend payouts have grown at a 7.08% CAGR. While HMC’s four-year average dividend yield is 3.38%, its current dividend translates to a 7.66% yield.
HMC’s sales revenue came in at ¥4.26 trillion ($31 billion) for the quarter that ended September 30, 2022, up 25% year-over-year. Its operating profit came in at ¥231.20 billion ($1.69 billion), up 16.2% year-over-year. Moreover, its profit came in at ¥189.20 billion ($1.39 billion), up 13.6% year-over-year.
HMC’s revenue is expected to increase 388.8% year-over-year to $130.56 billion in 2023. Its EPS is expected to increase by 13.2% per annum for the next five years. HMC’s shares have gained marginally intraday to close the last trading session at $23.12.
HMC’s overall A rating equates to a Strong Buy in our POWR Ratings system. It has an A grade for Value and a B for Quality, Sentiment, and Stability. The stock is ranked #2 out of 62 stocks in the Auto & Vehicle Manufacturers industry. We’ve also rated HMC for Momentum and Growth. Get all HMC ratings here.
Genie Energy Ltd. (GNE)
GNE supplies electricity and natural gas to residential and small business customers internationally. It operates in three segments: Genie Retail Energy (GRE); GRE International; and Genie Renewables.
On November 30, 2022, the company acquired a portfolio of residential and small commercial customer contracts from Mega Energy. Backed by strong cash flow, this acquisition is expected to help GNE expand its footprint across seven states of retail supply markets.
Over the last five years, GNE’s dividend payouts have grown at a 1.03% CAGR. While GNE’s four-year average dividend yield is 2.97%, its current dividend translates to a 2.81% yield.
GNE’s gross profit came in at $43.14 million for the third quarter that ended September 30, 2022, up 24.7% year-over-year. The company’s income from operations increased 34.8% year-over-year to $23.54 million, while its adjusted EBITDA increased 35.3% from the year-ago value to $24.50 million.
Over the past year, the stock has gained 98.5% to close the last trading session at $10.66.
GNE has an overall A rating, which equates to a Strong Buy in our POWR Rating system. It has an A grade for Value and a B for Growth and Momentum. GNE is ranked first among 67 stocks in the Utilities - Domestic industry. Click here to see the additional POWR Ratings for GNE (Stability, Quality, and Sentiment).
GEE Group Inc. (JOB)
JOB provides permanent and temporary professional and industrial staffing and placement services in the United States. The company operates through two business segments: Industrial Staffing Services and Professional Staffing Services.
On December 21, 2022, Derek E. Dewan, Chairman, and CEO, said, “We are very proud of the outstanding results achieved by our people for fiscal 2022, especially considering the challenging environment of inflation and volatility in the economy and workforce.”
JOB’s net revenue increased marginally year-over-year to $41.52 million for the fourth quarter that ended September 30, 2022. Also, its current assets came in at $42.22 million for the period ended September 30, 2022, compared to $33.69 million for the period ended September 30, 2021. Its current liabilities came in at $15.58 million, compared to $31.16 million for the prior year.
Analysts expect JOB’s revenue to increase marginally year-over-year to $165.82 million in 2023. JOB’s shares have gained 3.8% intraday to close the last trading session at $0.52.
JOB’s overall B rating equates to a Buy in our POWR Ratings system. It has an A grade for Value and a B for Quality. It is ranked #9 out of 21 stocks in the A-rated Outsourcing - Staffing Services industry. Click here to see the additional POWR Ratings for Growth, Momentum, Sentiment, and Stability for JOB.
JNJ shares were trading at $177.69 per share on Tuesday afternoon, up $0.21 (+0.12%). Year-to-date, JNJ has gained 6.60%, versus a -18.50% 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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