According to the Bureau of Economic Analysis, inflation stayed strong in September but mostly within expectations. The core personal consumption expenditures price index increased by 0.5% from the previous month and accelerated by 5.1% over the past 12 months.
The Fed has been hiking interest rates in an effort to combat sky-high inflation. Markets widely expect the Fed to enact its fourth straight 75-basis-point rate increase at this week’s policy meeting.
Moreover, Goldman Sachs Group Inc’s (GS) economists said the U.S. Federal Reserve could bump up interest rates to as high as 5% by March 2023, 25 basis points above its earlier predictions. Investors’ concerns that the global economy could fall into recession rocked major stock indexes this year, and the market could remain under pressure.
Given this backdrop, we think fundamentally strong stocks Altria Group, Inc. (MO), Cummins Inc. (CMI), PBF Energy Inc. (PBF), and Ryder System, Inc. (R), which have managed to deliver stable gains despite the volatility and are well-positioned to keep soaring could be worth owning for the rest of 2022.
Altria Group, Inc. (MO)
MO manufactures and sells smokable and oral tobacco products in the United States. The company offers cigarettes, primarily under the Marlboro brand. Its tobacco products are sold to wholesalers and large retail organizations.
On October 27, MO announced a strategic partnership with JT Group and its expanded heated tobacco portfolio to pursue a global smoke-free partnership to accelerate harm reduction. As the heated tobacco category remains largely undeveloped in the U.S, the partnership might help the company gain a significant market share.
On October 19, MO announced that it had entered into an agreement with a subsidiary of Philip Morris International Inc (PM) under which MO will receive cash payments of approximately $2.7 billion in exchange for assigning exclusive U.S. commercialization rights to the IQOS Tobacco Heating System.
Billy Gifford, Altria’s Chief Executive Officer, said, “We believe that this agreement provides us with fair compensation and greater flexibility to allocate resources toward Moving Beyond Smoking.”
For the fiscal third quarter that ended September 30, 2022, MO’s operating income grew 5.5% from the year-ago value to $3.11 billion. Its adjusted net earnings rose 1.8% year-over-year to $2.30 billion, while its adjusted EPS improved 4.9% from the prior-year quarter.
The consensus EPS estimate of $1.16 for the fiscal fourth quarter ending December 2022 represents a 6.3% improvement year-over-year. The consensus revenue estimate of $5.19 billion indicates a 2% increase from the same period last year. The company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters.
MO’s shares have gained 14.7% over the past month to close the last trading session at $46.31.
MO’s POWR Ratings reflect this promising outlook. MO has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Growth and Quality. It is ranked #4 of 11 stocks in the B-rated Tobacco industry.
To get MO’s ratings for Stability, Sentiment, Momentum, and Value, click here.
Cummins Inc. (CMI)
CMI designs, manufactures, distributes, and services diesel and natural gas engines, electric and hybrid powertrains, and related components worldwide. It operates through five segments- Engine, Distribution, Components, Power Systems, and New Power.
On October 24, CMI announced the launch of Onan Power Stations, the latest offering in its portfolio of backup power solutions. Cummins Power Stations were created with consumers in mind, providing portable, clean power that is well-suited for various indoor and outdoor activities. This new offering should boost its portfolio.
On October 10, CMI announced that it would begin producing electrolyzers in Fridley, Minnesota, starting at 500 megawatts (MW) of manufacturing capacity annually, scalable to 1 gigawatt (GW) in the future, underscoring the company’s continued dedication to advancing the nation’s green hydrogen economy.
On October 11, CMI declared a quarterly common stock cash dividend of $1.57 per share, payable on December 1, 2022. This reflects the good liquidity of the company
CMI’s net sales increased 7.8% year-over-year to $6.59 billion in the fiscal second quarter ended June 30, 2022. Its operating income came in at $897 million, up 22% year-over-year, while its net income grew 17% from the year-ago value to $702 million. The company’s EPS stood at $4.94 in the same period.
Streets expect CMI’s revenue for the fiscal third quarter ending September 2022 to come in at $7.12 billion, indicating an increase of 19.4% year-over-year. Also, the company’s EPS is expected to grow 30.7% year-over-year to $4.82 in the same quarter.
CMI has gained 29.4% over the past six months to close the last trading session at $244.78. It has gained 20.3% over the past month.
CMI has an overall A rating, which equates to Strong Buy in our proprietary rating system. The company has a B grade in Quality, Stability, and Sentiment. Out of the 80 stocks in the B-rated Industrial – Machinery industry, CMI is ranked #2.
Click here to get CMI’s Momentum, Value, and Growth ratings.
PBF Energy Inc. (PBF)
PBF refines and supplies petroleum products. The company operates in two segments, Refining, and Logistics, producing gasoline, ultra-low-sulfur diesel, heating oil, diesel fuel, jet fuel, lubricants, petrochemicals, asphalt, unbranded transportation fuels, and other petroleum products.
On October 27, PBF announced that it would pay a quarterly dividend of $0.20 per share of Class A common stock on November 29, 2022. This reflects the shareholder return ability of the company.
On July 28, PBF and PBF Logistics LP (PBFX) announced a definitive agreement and plan of merger to acquire all the outstanding common units representing limited partner interests of PBFX. This transaction is expected to simplify the company’s corporate structure and eliminate the costs of running a separate public company.
PBF’s revenues came in at $12.76 billion for the third quarter that ended September 30, representing a 77.6% year-over-year growth. Its adjusted EBITDA grew 582.1% from the prior-year quarter to $1.54 billion. Its income from operations rose 1,287.5% from the same quarter last year to $1.40 billion, and its adjusted EPS increased 6,533.3% from the prior-year period to $7.96.
Analysts expect PBF’s revenue for the fourth quarter that ended December 2022 to be $10.14 billion, indicating a 23% year-over-year growth. The company’s EPS for the same quarter is expected to increase 334.1% from the prior-year quarter to $5.56.
PBF has gained 213.4% over the past year to close its last trading session at $45.78. The stock has gained 57.5% over the last six months.
It is no surprise that PBF has an overall A rating, which translates to Strong Buy in our POWR Ratings system.
PBF has an A grade for Momentum and a B for Growth and Value. It is ranked #13 out of 94 stocks in the B-rated Energy - Oil & Gas industry.
Click here to access additional POWR Rating grades for Stability, Sentiment, and Quality for PBF.
Ryder System, Inc. (R)
R operates as a logistics and transportation company worldwide. The company operates through three segments: Fleet Management Solutions (FMS), Supply Chain Solutions (SCS), and Dedicated Transportation Solutions (DTS).
On September 1, R announced that it had acquired Baton, a San Francisco-based start-up known for developing a proprietary logistics technology focused on optimizing transportation networks. The acquisition is consistent with R’s strategic focus to grow its supply chain and transportation solutions businesses and to bring new technology-driven solutions to the market.
On October 14, R declared a regular quarterly cash dividend of $0.62 per share of common stock to be paid on December 16, 2022.
For its fiscal third quarter ended September 30, 2022, R’s total revenues increased 23.4% year-over-year to $3.04 billion. Its earnings from continuing operations came in at $246.40 million, indicating a 77.6% year-over-year improvement.
Moreover, the company’s net earnings came in at $246 million for the quarter, up 78.1% from the year-ago period, while its EPS came in at $4.82, representing an 87.5% rise from the prior-year quarter.
R’s EPS will likely grow 66.6% year-over-year to $15.96 for the current fiscal year ending December 2022. Similarly, its revenue will likely improve by 23.3% year-over-year to $11.92 billion. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive.
Over the past six months, the stock has gained 16.9% to close the last trading session at $81.7. R has gained 8.2% in the past month.
Unsurprisingly, the stock has an overall A rating, equating to Strong Buy in our proprietary rating system. It has a B grade for Growth, Value, and Momentum. R is ranked #17 of 85 stocks in the A-rated Industrial – Services industry.
Beyond what we’ve stated above, we have also given R grades for Stability, Sentiment, and Quality. Get all R ratings here.
MO shares were trading at $46.16 per share on Monday morning, down $0.15 (-0.32%). Year-to-date, MO has gained 3.27%, versus a -17.48% 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.
The 4 Best Stocks to Buy for the Rest of 2022 StockNews.com
