September’s employment and inflation data have beaten expectations and seem to have paved the way for the Fed to respond with another aggressive rate hike during its November meeting.
With the previous rate hikes manifesting in the form of softening demand, increased borrowing costs, and compressed margins in the Q3 earnings, a soft landing for the economy increasingly seems like an improbable scenario. Based on the probability model, the Conference Board has predicted a 96% likelihood of a recession in the United States within the next 12 months.
Moreover, the recent relief rally backed up by initial corporate earning beats fades as growth fears loom, and the earnings from tech companies have started to show the effects of the slowdown. According to Fahad Kamal, chief investment officer at Kleinwort Hambros, slow growth in advertising in these bellwethers “adds weight to the fear of an earnings slowdown.”
Amid an uncertain market backdrop, it could be wise to put your extra money into fundamentally strong stocks Comcast Corporation (CMCSA), Hackett Group Inc. (HCKT), and J.Jill, Inc. (JILL), which are available at discounts to generate solid returns in the long run.
Comcast Corporation (CMCSA)
CMCSA is a global media and technology company. It operates through three segments: Cable Communications; Media; Studios; Theme Parks; and Sky.
On October 26, CMCSA paid its quarterly dividend of $0.27 a share on the company’s common stock. The company pays $1.08 as a dividend annually, which translates to a yield of 3.42% at the current price. This compares favorably to the 4-year average dividend yield of 2.03%. CMCSA’s dividend payouts have grown for the past five years at an 11.7% CAGR.
On September 21, CMCSA announced that it is working with Samsung to deliver 5G Radio Access Network (RAN) solutions that can be used to enhance 5G connectivity for Xfinity Mobile and Comcast Business Mobile customers in Comcast service areas. The company expects this to deliver more next-generation applications and services to its customers seamlessly.
On September 14, CMCSA announced an expansion in its share repurchase authorization to a total of $20.0 billion, with $9 billion worth of shares repurchased to date. This demonstrates the company’s financial strength and commitment to enhancing shareholder value.
For the second quarter of the fiscal year 2022 ended June 30, CMCSA’s revenue increased 5.1% year-over-year to $30.02 billion. The company’s adjusted EBITDA increased 10.1% year-over-year to $9.83 billion, while its adjusted net income grew 14.3% year-over-year to $4.51 billion. As a result, its adjusted EPS rose 20.2% year-over-year to $1.01.
Analysts expect CMCSA’s revenue to increase 4.5% year-over-year to $121.57 billion in the current fiscal year, ending December 31, 2022, while its EPS is expected to grow 11% year-over-year to $3.59 for the same period. Also, the company has an impressive earnings history, surpassing the consensus EPS estimates in each of the four trailing quarters.
The stock has gained marginally over the past month to close the last trading session at $31.56. In terms of forward non-GAAP P/E, the stock is trading at 8.8x, 36.3% lower than the industry average of 13.81x.
CMCSA’s POWR Ratings reflect its promising outlook. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
It has a grade of B for Value and Quality. CMCSA tops the list of nine stocks in the Entertainment – TV & Internet Providers industry.
Click here for the additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for CMCSA.
Hackett Group Inc. (HCKT)
HCKT operates as a business and technology consulting firm. The company offers benchmarking, executive advisory, business transformation, and cloud enterprise application implementation.
On September 22, HCKT announced the launch of a new Market Intelligence Service for software and service providers and users. The service will measure software and service providers' ability to deliver business value and their unique capabilities to help companies achieve Digital World Class performance.
HCKT believes the new service will be a powerful and attractive value proposition for all C-level executives and their respective teams.
HCKT’s total revenue increased 3.7% year-over-year to $75.93 million for the second quarter of 2022. The company’s total assets stood at $217.89 million as of July 1, 2022, compared to $207.54 million as of December 31, 2021.
Analysts expect HCKT’s revenue and EPS for the fiscal year 2022 to increase 6.6% and 10.4% year-over-year to $297.20 million and $1.45, respectively. Also, the company has surpassed the consensus EPS estimates in each of the trailing four quarters.
HCKT’s stock has gained 19.3% over the past month to close the last trading session at $21.14. In terms of forward non-GAAP P/E, the stock is trading at 14.61x, 18.1% lower than the industry average of 17.84x.
HCKT’s promising outlook is reflected in its overall POWR Rating of A, which translates to a Strong Buy in our proprietary rating system. It also has a grade of A for Quality and B for Stability and Sentiment.
HCKT tops the list of 10 stocks in the A-rated Outsourcing – Tech Services industry.
Click here for additional ratings of HCKT (Growth, Value, and Momentum).
J.Jill, Inc. (JILL)
JILL is an omnichannel retailer of women’s apparel. The company’s flagship brand J.Jill is focused on clothing for women in the 45-age segment. It offers two sub-brands extensions of its brand aesthetic: Pure Jill and Wearever.
For the second quarter of fiscal 2022 ended July 30, JILL’s net sales increased marginally year-over-year to $160.34 million, while its adjusted income from operations increased 16.8% year-over-year to $28.19 million. The company’s adjusted EBITDA and net income grew 8.8% and 34.6% year-over-year to $35.57 million and $17.69 million, respectively.
Furthermore, JILL’s adjusted quarterly net income per share increased 33.3% year-over-year to $1.24.
Analysts expect JILL’s revenue and EPS for the current fiscal year (ending January 2023) to increase 4% and 26.8% year-over-year to $608.8 million and $2.7, respectively. The company has an impressive earnings surprise history of surpassing its consensus EPS estimates in each of the trailing four quarters.
JLL’s stock has gained 16.3% over the past month and 24% over the past year to close the last trading session at $19.32. In terms of forward non-GAAP P/E, the stock is trading at 8.59x, 66.8% lower than the industry average of 25.83x.
It is no surprise that JILL has an overall rating of A, which translates to Strong Buy in our POWR Ratings system. JILL also has a grade of A for Sentiment and Quality and a B for Value.
JILL is ranked #2 among 66 stocks in the Fashion & Luxury industry.
Beyond what we have stated above, we have also given JILL grades for Growth, Momentum, and Stability. Get all JILL ratings here.
CMCSA shares were trading at $31.56 per share on Wednesday afternoon, down $0.00 (0.00%). Year-to-date, CMCSA has declined -35.63%, versus a -18.66% 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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