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The continued rise in personal consumption expenditures (PCE) and strong job gains in January took a toll on investor sentiment as the Fed is likely to go hawkish again. This could lead to even more market volatility in the coming months. Therefore, it may be wise to buy stocks with strong fundamentals such as Walmart (WMT), United Microelectronics (UMC) and Overseas Shipholding Group (OSG). keep reading.
The prospect of the Federal Reserve returning to aggressive rate hikes has significantly dampened investor sentiment recently. In an uncertain macroeconomic environment, the best approach is to bet on quality finance. I think it’s the underlying strength of Walmart (WMT), United Microelectronics Corporation (UMC), and Overseas Shiphold Group, Inc. (OSG) are now making their stock a safe investment.
Before we evaluate these stocks, let’s discuss the factors that will continue to weigh on the market in the short term.
0.6% consecutive increase, 5.4% increase YoY In personal consumption expenditure (PCE), Job Report Hotter Than Expected Since January, it has taken the streets by surprise, showing that the Fed needs to get aggressive again on rate hikes.
“Investor optimism has been hit by a slow blowout this week, but the latest data is up,” Susannah Streeter, head of money and markets at Hargreaves Lansdowne, said in a note. As indicated by , it is contracting more rapidly, indicating less progress has been made to curb inflation.”
The minutes of policy meetings of the Federal Reserve Board, Upside risks to inflation remain a key factor for participants in shaping the policy outlook. Officials believe interest rates should rise and inflation should continue to rise until he reaches 2%.
central bank announced Quarter Percentage Point Increase, It was the smallest interest rate hike since the tightening cycle began in March 2022, with the Fed Funds rate reaching its target range of 4.5% to 4.75%.
The Fed’s aggressive monetary policy tightening has brought inflation down from its peak, but it remains at uncomfortable levels. Fed officials believe it will take some time to hit their inflation target. This has led many analysts to believe that the Fed will raise the Fed Funds rate above 5% this year.
Therefore, the market is expected to remain highly volatile in the coming months. Find out why WMT, UMC, and OSG are smart buys for investors to weather market volatility.
Walmart (WMT)
WMT is involved in retail, wholesale and other sector operations around the world. The company operates through his three segments: Walmart US, Walmart International and Sam’s Club.
On January 5, 2023, WMT announced that it now operates 36 drone delivery hubs in seven states. Over the past year, we’ve completed over 6,000 deliveries in just 30 minutes. The company is well positioned to offer drone delivery at scale. With 90% of the U.S. population, he has 4,700 stores and can use drones to deliver more goods, reducing costs and increasing revenue.
In terms of return on common equity over the last 12 months, WMT’s 14.60% is 48.2 percentage points above the industry average of 9.85%. Its 4.80% 12-month return on total assets is 35.5 percentage points above the industry average of 3.54%.Similarly, its 2.50x trailing 12 months asset turnover 199.8% higher than the industry average of 0.84x.
WMT revenue increased at a CAGR of 5.3% over the past three years. Tang Book Value has grown at a CAGR of 8.1% over the past three years.
In the fourth quarter ended January 31, 2023, WMT’s total revenue increased 7.3% year-over-year to $164.05 billion. Adjusted operating profit rose 6.9% year-on-year to his $6.41 billion. The company’s consolidated net income attributable to WMT was $6.28 billion, up 76.2% year-over-year. Additionally, adjusted EPS was $1.71, an increase of 11.8% from the prior year period.
For the quarter ending April 30, 2023, WMT’s revenue is expected to grow 5% year-over-year to $147.24 billion. Fiscal 2025 EPS is expected to be $6.81, up 10.7% year over year. Exceeded street EPS estimates in three of the last four quarters. Over the past nine months, the stock has gained 14.8% and closed its last trading session at $142.47.
WMT’s POWR rating It reflects its solid outlook. The stock has an overall rating of A, which corresponds to a strong buy in our proprietary rating system. POWR ratings evaluate stocks on 118 different factors, each with its own weighting.
within A rank Grocery/Big Retail It ranks 3rd out of 39 stocks in the industry. There is an A grade for stability and a B grade for growth, value and quality. click here To see other POWR ratings for WMT on Momentum and Sentiment.
United Microelectronics Corporation (UMC)
Headquartered in Hsinchu, Taiwan, UMC operates as a semiconductor wafer foundry in Taiwan, Singapore, China, Hong Kong, Japan, the United States, Europe, and internationally.
In terms of net profit margin over the last 12 months, UMC’s 31.29% is 983.5% higher than the industry average of 2.89%. Similarly, his EBITDA margin after 12 months of 52.25% is 363% above the industry average of 11.28%. Additionally, the stock’s 28.75% capex/sales over the last 12 months is well above the industry average of 2.47%.
UMC revenue increased at a CAGR of 23.4% over the past three years. Net profit grew at a CAGR of 120.3% over the last three years. Moreover, EBIT grew at a CAGR of 176.1% over the same timeframe.
For the fourth quarter ended December 31, 2022, UMC’s operating revenue was TWD67.84 billion ($2.21 billion), an increase of 14.8% year-on-year. The company’s net profit attributable to shareholders of the parent company was NT$19.07 billion ($621.67 million), up 19.6% year-on-year. EPS was TWD 1.54, an increase of 18.5% year-on-year.
UMC’s EPS and earnings are expected to increase 22.4% and 9.8%, respectively, to $9.2 billion and $8.7 billion in fiscal 2024. The stock is up 23% year-to-date and closed the last trading session at $8.03.
UMC’s strong outlook is reflected in its POWR rating. The stock has an overall rating of B, which translates to a ‘Buy’ in our proprietary rating system.
There is an A grade for quality and a B grade for value and momentum. in B rank Semiconductor/wireless chip In the industry, it is ranked 8th out of 92 stocks. To see other UMC ratings for Growth, Stability, and Emotion, click here.
Overseas Shipholding Group (OSG)
OSG owns and operates an ocean-going fleet engaged in the transportation of crude oil and petroleum products on US flagged vessels. The company serves independent oil traders, refinery operators and government agencies.
On December 8, 2022, OSG announced that it has exercised its option to extend six bareboat charter contracts with American Shipping Company ASA for three years from December 2023.
OSG President and CEO Sam Norton said:
In terms of leveraged FCF margin over the last 12 months, OSG’s 15.41% is 128.7% higher than the industry average of 6.74%.
OSG revenue increased at a CAGR of 8.4% over the past three years. EBITDA grew at a CAGR of 17.9% over the last three years. Moreover, EBIT grew at a CAGR of 33.3% over the same timeframe.
In the third quarter ended September 30, 2022, OSG’s shipping revenue increased 31% year-on-year to $123.06 million. Net income came to $13.25 million, compared to his net loss of $16.01 million in the same period last year. Also, EPS was $0.15 and his loss per share was $0.18 in the same period last year.
Over the past year, OSG’s stock has risen 94.8% to close its last trading session at $3.74.
Unsurprisingly, the OSG’s overall rating is A, which equates to a strong buy on the POWR rating system.
Ranked 1st among 46 B-rated stocks Shipping industry. OSG has an A grade for Momentum and a B grade for Growth, Value, Sentiment and Quality. click here Check OSG’s rating for stability.
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WMT shares were unchanged in pre-market trading on Monday. Year-to-date, WMT is up his 0.48%, while the benchmark S&P 500 index is up his 3.65% over the same period.
About the author: Dipanjan Benture
Dipanjan has been interested in the stock market since elementary school. This earned him a master’s degree in Finance and Accounting. Today, Dipanjan works as an investment analyst and financial journalist with a keen interest in reading and analyzing emerging trends in financial markets.
post 3 smart stocks to buy this week first appeared StockNews.com