U.S. stocks rallied to close higher on Friday, as the S&P 500 and Dow snapped a three-session losing streak, and the Nasdaq rose more than 2%. Also, experts believe the market will likely recover this year.
As per the Labor Department, the Producer Price Index declined 0.5% in December, more than the 0.1% expected by the Dow Jones. Also, the Consumer Price Index fell 0.1% for the month, in line with the estimate. Both were the biggest month-over-month declines since April 2020, indicating that inflation is finally easing.
Furthermore, U.S. Federal Reserve Governor Christopher Waller, one of the leading inflation hawks and an advocate of aggressive rate increases, recently said, “Based on the data in hand at this moment, there appears to be little turbulence ahead, so I currently favor a 25-basis point increase at the Federal Open Market Committee’s next meeting.”
Hence, fundamentally strong stocks Walmart Inc. (WMT), The Coca-Cola Company (KO), United Parcel Service, Inc. (UPS), Centene Corporation (CNC), and Kronos Worldwide, Inc. (KRO) might be solid buys for quality returns.
Walmart Inc. (WMT)
WMT engages in the operation of retail, wholesale, and other units worldwide. The company operates through three segments: Walmart U.S.; Walmart International; and Sam’s Club.
On January 12, the subsidiaries of WMT: Walmart Commerce Technologies, and Walmart GoLocal, announced a partnership with Salesforce.com Inc (CRM) to provide retailers access to technologies and solutions that power frictionless local pickup and delivery for shoppers everywhere.
This partnership with Salesforce will provide retailers access to the same scalable technologies that WMT uses, and these solutions will enable personalized and easy commerce experiences with real-time order visibility and reliable local pickup and delivery.
On January 5, WMT announced that it had successfully operated 36 drone delivery hubs across seven states, including Arizona, Arkansas, Florida, North Carolina, Texas, Utah, and Virginia. Over the past year, Walmart has safely completed more than 6,000 deliveries to customers in as little as 30 minutes.
WMT is uniquely positioned to offer drone delivery at scale, with its 4,700 stores located within 90% of the U.S. population, which should benefit the company.
WMT paid a quarterly dividend of $0.56 per share on January 3, 2023. Its four-year average dividend yield is 1.69%, and its annual dividend of $2.24 per share translates to a 1.59% yield on prevailing prices.
For the fiscal third quarter that ended October 31, 2022, WMT’s total revenues increased 8.7% year-over-year to $152.81 billion. Its adjusted operating income increased 3.9% year-over-year to $6.02 billion. Its adjusted EPS rose 3.4% year-over-year to $1.50.
The consensus EPS estimate of $1.39 for the fiscal 2024 first quarter ending April 2023 represents a 7.1% improvement year-over-year. The consensus revenue estimate of $145.28 billion for the same quarter represents a 3.6% increase from the same quarter the prior year.
The company has an impressive earnings surprise history, as it surpassed the consensus revenue estimates in each of the trailing four quarters.
The stock has gained 7.6% over the past six months to close the last trading session at $140.54.
WMT’s POWR Ratings reflect its promising outlook. The stock 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.
It has a B grade for Stability, Sentiment, and Quality. Within the A-rated Grocery/Big Box Retailers industry, it is ranked #8 of 39 stocks.
Click here to see the additional POWR Ratings of WMT for Growth, Value, and Momentum.
The Coca-Cola Company (KO)
KO, a beverage giant, manufactures, markets, and sells various non-alcoholic beverages globally. It sells its products under the brands: Coca-Cola, Sprite, Fanta, Diet Coke, Coca-Cola Zero Sugar, Thumbs Up, Aquarius, Minute Maid Pulpy, and Simply, among others.
Its annual dividend of $1.76 translates to a 2.93% yield at the current price level, and KO’s four-year average dividend yield is 3.06%. Its dividend payouts have grown at a 3.2% CAGR over the past three years and a 3.5% CAGR over the past five years. Also, the company has a record of 60 consecutive years of dividend growth.
KO’s non-GAAP net operating revenues increased 10% year-over-year to $11.05 billion in the fiscal third quarter that ended September 30. Its non-GAAP gross profit rose 6.5% from the prior-year quarter to $6.54 billion.
Also, the company’s non-GAAP net income increased 6.7% year-over-year to $3.01 billion, while its non-GAAP EPS came in at $0.69, representing an increase of 6.2% year-over-year.
Analysts expect KO’s EPS and revenue to increase 7.3% and 10.6% year-over-year to $2.49 and $42.77 billion, respectively, in the fiscal year 2022, which ended in December 2022. It surpassed the consensus EPS and revenue estimates in each of railing four quarters, which is impressive.
The stock has gained 9.1% over the past three months to close the last trading session at $60.08.
KO’s solid prospects are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has a B grade for Stability, Sentiment, and Quality. The stock is ranked #16 of 36 stocks in the A-rated Beverages industry.
To see additional POWR Ratings of KO for Growth, Value, and Momentum, click here.
United Parcel Service, Inc. (UPS)
UPS provides letter and package delivery, transportation, logistics, and related services worldwide. It operates through two segments, U.S. Domestic Package and International Package.
On November 16, 2022, UPS completed its acquisition of Bomi Group. The acquisition will add temperature-controlled facilities in 14 countries and 3,000 highly skilled employees to the UPS team across Europe and Latin America.
It paid a quarterly dividend of $1.52 per share on December 1, 2022. While its four-year average dividend yield is 2.87%, its forward annual dividend of $6.08 per share translates to a 3.41% yield. Over the last three years, UPS’ dividend payouts have grown at a 16.6% CAGR.
For the fiscal third quarter ended September 30, 2022, UPS’ revenue increased 4.2% year-over-year to $24.16 billion. The company’s non-GAAP operating profit increased 6% year-over-year to $3.15 billion, and its adjusted EPS came in at $2.99, representing a 10.3% increase from the prior-year quarter.
UPS’ EPS is likely to rise 6.3% year-over-year to $12.89 for the fiscal year that ended December 2022. Its revenue is expected to increase 4% year-over-year to $101.22 billion for the same year. It has an impressive earnings surprise history, surpassing the consensus EPS estimates in all the trailing four quarters.
The stock has gained 10.7% over the past three months, closing the last trading session at $178.13.
UPS’ 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.
It has an A grade for Quality and a B grade for Stability. It is ranked #7 out of 16 stocks in the A-rated Air Freight & Shipping Services industry.
In addition to the grades above, we have also given UPS grades for Growth, Value, Momentum, and Sentiment. Get all UPS ratings here.
Centene Corporation (CNC)
CNC is a multinational healthcare company that provides government-sponsored and commercial healthcare programs, focusing on underinsured and uninsured individuals. It operates through the Managed Care and Specialty Services segments.
On January 3, the company’s Health Net of California subsidiary was granted new Medi-Cal direct contracts by the California Department of Health Care Services (DHCS). This should help CNC expand its reach, deliver member-focused care, and improve health outcomes.
For the fiscal third quarter that ended September 30, 2022, CNC’s total revenues increased 10.7% year-over-year to $35.87 billion. The company’s adjusted net earnings increased marginally year-over-year to $755 million. Also, its adjusted EPS increased 3.2% year-over-year to $1.30.
Street expects CNC’s EPS and revenue to increase 11.1% and 14.7% year-over-year to $5.72 and $144.53 billion, respectively, for the fiscal year 2022. It surpassed the consensus EPS and revenue estimates in each of the trailing four quarters.
Over the past three months, the stock has gained 2.7% to close the last trading session at $76.15.
CNC’s POWR Ratings reflect this positive outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has a B grade for Value and Quality. Within the A-rated Medical – Health Insurance industry, it is ranked #6 out of 11 stocks.
Click here to see the other ratings of CNC for Growth, Momentum, Stability, and Sentiment.
Kronos Worldwide, Inc. (KRO)
KRO produces and markets titanium dioxide pigments (TiO2) in Europe, North America, the Asia Pacific, and internationally. It sells its products under the KRONOS brand through agents and distributors to various manufacturers.
Its four-year average dividend yield is 2.87%, and its annual dividend of $0.76 translates to a 6.97% yield. Over the last three years, its dividend payouts have grown at a 4.8% CAGR.
KRO’s net sales came in at $459.60 million for the quarter that ended September 30, 2022. Its net income stood at $21 million, while its EPS came in at $0.18.
Its EPS is expected to rise 4.1% year-over-year to $1.02 in the to-be-reported year ended December 2022. Its revenue will likely amount to $1.91 billion for the same year. Moreover, the company has surpassed the consensus revenue estimates in three of the trailing four quarters.
The stock has gained 20.6% over the past three months to close the last trading session at $10.90.
KRO’s stable prospects have earned it an overall rating of B, which translates to Buy in our POWR Ratings system.
It also has an A grade for Value and a B grade for Quality. KRO is ranked #39 of 89 stocks in the B-rated Chemicals industry.
Beyond what has been stated above, we have also given KRO grades for Growth, Momentum, Stability, and Sentiment. Get all KRO ratings here.
WMT shares were trading at $142.16 per share on Monday morning, up $1.62 (+1.15%). Year-to-date, WMT has gained 0.26%, versus a 4.63% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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