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Recent inflationary trends and a strong labor market have increased the likelihood of gradual rate hikes. Therefore, the likelihood of a Fed-induced recession is increasing. Under these circumstances, it’s wise to invest in stocks with sound fundamentals such as Walmart (WMT), US Foods (USFD), and American Vanguard (AVD) that are well-positioned to weather the recession and generate stable returns. maybe. read….
Inflation jumped the most in three months in January, according to the latest consumer price index data.consumer price 6.4% YoY increase It was 0.5% month-on-month, beating economists’ estimates of 6.2% and 0.5% respectively.
Moreover, the labor market appears resilient, with strong job growth and decades-low unemployment. The January employment report showed employers added Robust 517,000 jobs, well above the market estimate of 187,000. The unemployment rate has dropped to his 3.5%. With persistent inflation and a strong labor market, aggressive rate hikes are likely to continue for the long term.
Goldman Sachs and Bank of America are the Federal Reserve triple the rate this year. Amid a string of better-than-expected economic data, the banks have raised their forecasts, forecasting Fed rates in the 5.25% to 5.5% range. What’s more, his Fed meeting at the end of March is likely to result in a rate hike of 50 basis points (bps).
Central bank policymakers, including Cleveland Fed President Loretta Mester and St. Louis Fed President James Bullard, Supports rate increments of 50 bps at the March meeting.
The economy could potentially slip into recession as the Federal Reserve is expected to remain hawkish. the conference board Real GDP growth slows to 0.3% this year.
Companies in the utilities, consumer staples and healthcare industries are known to do well during recessions due to their non-cyclical nature. Investors May Consider Buying Defensive Stocks Amid Recession Fears Widespread WalmartWMT), US Foods Holding Corporation (USFD), and American Vanguard Corporation (AVDs).
WMT operates supermarkets, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, discount stores, membership warehouse clubs, e-commerce websites (walmart.com, walmart.com.mx, flipkart.com, samsclub .com, and mobile commerce applications.The company operates in three segments: Walmart International; and Sam’s Club.
On January 12, 2023, Walmart Commerce Technologies and Walmart GoLocal will become Salesforce.com Inc. (CRM) to provide retailers with tools and services that enable smooth local pickup and delivery for customers around the world.
On January 5, WMT announced that it has successfully operated 36 drone delivery hubs in seven states, including Arizona, Arkansas, Florida, North Carolina, Texas, Utah and Virginia. Over the past year, Walmart has safely completed more than 6,000 of her deliveries to customers in just 30 minutes.
With 4,700 stores within 90% of the U.S. population, WMT is uniquely positioned to offer large-scale drone deliveries, which could be hugely profitable for the company.
In the third quarter of fiscal 2023, which ended October 31, 2022, WMT’s revenue increased 8.8% year-over-year to $152.81 billion.adjusted by the company Operating income It was $6.06 billion, an increase of 4.6% from the previous year. Adjusted EPS increased 3.4% from last year to $1.50. As of October 31, 2022, the company has $87.68 billion in current assets, up 5.7% year-over-year.
The company has increased its dividend for 49 consecutive years. WMT pays an annual dividend of $2.24 per share. This equates to his 1.53% yield at current prices. The four-year average dividend yield is 1.68%. The company’s dividend has increased at his CAGR of 1.9% over the past three years.
WMT’s revenue and EPS for the current fiscal year (ending January 2024) are expected to grow 3.3% and 6.9% from the prior year to $622.2 billion and $6.50, respectively. Additionally, the company has beaten consensus earnings estimates in each of his four subsequent quarters. This is impressive.
The stock has gained 5% over the past six months and closed its last trading session at $146.44.
WMT’s strong fundamentals are POWR ratingThe stock has an overall rating of A, which translates to a strong buy in our proprietary rating system. POWR Ratings evaluate stocks by 118 different factors, each with its own weighting.
WMT has a B grade for stability and sentiment. Out of 39 A rated stocks Grocery/Big Retail It ranks 9th in the industry.
click here Access WMT’s additional assessments of growth, value, momentum, and quality.
US Foods Holding Corporation (USFD)
USFD distributes fresh, frozen, dry and non-food products to restaurants, national restaurant chains, community concepts, hospitals, nursing homes, hotels and motels, country clubs, government, education and military organizations. sold and distributed. US retail location.
On February 1st, the USFD announced the addition of two innovative technologies to its CHECK Business Tools program. Bear Robotics and 7shifts. This is in line with the increasing trend of automated solutions to address labor issues.
The company’s CHECK Business Tools program offers foodservice operators a suite of technology solutions designed to help drive traffic, simplify staffing and reduce waste. This innovation is in line with the industry’s growing trend and should help the company solve existing labor problems.
USFD net sales increased 11.5% year-over-year to $8.5 billion for the fourth quarter of the fiscal year ended December 31, 2022, driven by food cost inflation of 8.4% year-over-year. Adjusted gross earnings increased 16% from the prior year period to $1.5 billion. The company’s Adjusted EBITDA increased 33.6% year-over-year to bring him to $350 million.
Additionally, the company’s adjusted net income increased 43.8% year-over-year to $138 million and adjusted EPS was $0.55, up 44.7% year-over-year.
Analysts expect the USFD’s EPS and earnings to grow 20% and 5.4% year-over-year to $2.57 billion and $35.81 billion for the current fiscal year ending December 31, 2023, respectively. Additionally, the consensus EPS and earnings forecasts for fiscal 2024 are $31.6 billion and $37.61 billion, representing year-over-year improvements of 22.9% and 4.7%, respectively.
USFD shares have gained 7% over the past month and 22.4% over the past six months to close the last trading session at $39.61.
It’s no surprise that the USFD has an overall A rating. This translates into a strong buy in the POWR rating system. The USFD has an A grade for growth and a B for value and stability. Out of 81 B-rated brands food manufacturer It ranks 4th in the industry.
In addition to the above, we also assessed USFD on momentum, sentiment, and quality.Get All USFD Ratings here.
American Vanguard Corporation (AVDs)
AVD develops, manufactures and markets agricultural, commercial and consumer specialty chemicals globally. The Company markets its products through national distribution companies, purchasing groups or cooperatives, sales offices, sales executives, distributors and wholly-owned distributors.
On January 17, 2023, AMGUARD™ Environmental Technologies, the specialty market division of AMVAC Chemical Corporation, a wholly owned subsidiary of AVD, acquired the product and trademark assets of American Bio-Systems, makers of BioMop, a uniquely formulated microbial cleaning product. Got.plus® and DrainGel®.
AMGUARD CEO Shayne M. Wetherall said:
AMVAC on AVD on December 22, 2022® has added BioWake™ dual-use biological seed lubricant to its GreenSolutions™ biological product portfolio. BioWake is an all-in-one biological planter solution for precise seed placement and superior plant health. The launch is expected to boost the company’s revenue stream.
Also in December, AVD’s board of directors declared a 20% increase to its quarterly cash dividend, paying shareholders $0.03 per share of the company’s common stock on January 11, 2023. Shareholders based on sound operational and financial performance.
AVD’s current dividend yield is 0.59% per annum, with an average four-year dividend yield of 0.44%. Over the past five years, its dividend has increased at his CAGR of 11.8%.
AVD net sales increased 3.3% year-over-year to $152.12 million in the third quarter ended September 30, 2022. Gross profit increased 7.6% year over year to $61.38 million and operating profit increased 25.7% to $11.24 million. Additionally, earnings per common share increased 27.8% year-over-year to $0.23.
Analysts expect AVD’s revenue to grow 8.2% year-over-year to $657.7 million for the fiscal year ending January 2023. The company’s EPS for the current year is expected to be $1.23, up 41.6% year-over-year. Shares of AVD have climbed 36.7% over the past year to close the last trading session at $20.40.
AVD’s promising outlook is reflected in its POWR rating. His overall A rating for the stock translates into a strong buy in its own rating system.
Stocks are graded B for value, stability, sentiment, and quality. in class B chemicals It ranks third in the industry.
Beyond the POWR rating grades highlighted above, you can view Momentum and Growth AVD ratings here.
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WMT shares were unchanged in pre-market trading on Monday. Year-to-date, WMT is up his 3.28%, while the benchmark S&P 500 index is up his 6.49% over the same period.
About the author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Mangeet uses her foundational approach to equity analysis to help individual investors understand the underlying factors before making an investment decision.