A high-profile bank failure exacerbated renewed volatility in the stock market. Central banks are at a policy crossroads, weighing recent strong economic data against volatile capital markets. Honda (HMC), Ryerson (RYI) and Autonation (AN) with sound fundamentals may be wise to invest in for solid long-term risk-adjusted returns in an uncertain market environment. I can’t. Keep reading…
The Fed’s fight against stubborn inflation has hit its first major obstacle with the recent bank failures. has recently caused huge market volatility. Against this background, Honda Motor Co., Ltd., a blue chip stock (HMC), Ryerson Holding Corporation (Lee), and AutoNation, Inc. (Ann) can be an ideal investment for solid long-term returns.
after recent Failure of Silicon Valley Bank (SVB) and undersigned banks, the stock market has witnessed heightened volatility, as evidenced by the CBOE Volatility Index rising more than 16% over the past month.However, the shocking collapse of two major US banks The Fed Should Not Be Deterred From a stubborn fight against inflation, according to former Fed official Thomas Hoenig.
Exactly one year ago, the Federal Open Market Committee (FOMC) raised its first interest rate. The central bank has launched his eight rate hikes by February 2023.Inflation, as measured by the Consumer Price Index (CPI), has increased from 8.5% per annum to 6% nowBut it’s still well above the Fed’s 2% target.
Recent economic data releases showing job growthstrong retail sales and high inflation put the Fed on track for another rate hike next week despite concerns that the recent banking crisis could have broader economic impact There is a possibility.
According to data compiled by CME Grouptraders have assigned about an 85% chance of a 25 basis point rate hike when the FOMC opens next week, putting the federal funds rate in the 4.75% to 5% range.Kroll Institute chief global economist Megan Green also expects the Fed to raise rates by 25 basis points next week.
On the other hand, some economists believe that central banks suspend aggressive rate hikes amid turmoil in financial markets. Barclays, which predicted a 0.5pp rate hike last week, has updated its stance and is now leaning “towards zero”. In addition, Goldman Sachs Group Inc. (GS) expectations Federal Reserve Relinquishes Rate Hike Opportunity At the next meeting, he raised the stress of the banking system.
Equity markets are expected to remain highly volatile in the coming months amid various macroeconomic headwinds. Given this background, his HMC, RYI, and AN blue chip stocks could be ideal long-term investments. Let’s discuss these stocks in detail.
Honda motor industry stock company(HMC)
Headquartered in Tokyo, Japan, HMC develops, manufactures and markets motorcycles, automobiles, power products and other spare parts in Japan, North America, Europe, Asia and internationally. It works through his four segments. Automobile business; financial services business; life creation and other businesses.
On February 28, 2023, HMC and LG Energy Solutions held an official groundbreaking ceremony for a new joint venture (JV) EV battery plant in Fayette, Ohio. The two companies signed a joint venture agreement in January to produce lithium-ion batteries for EVs. The company aims to achieve an annual production capacity of approximately 40 GWh.
Batteries produced by this joint venture will be supplied exclusively to HMC plants in North America to power battery EVs. This strategic alliance is expected to drive HMC’s profitability and growth over the next few years.
For the third quarter ended December 31, 2022, HMC’s sales increased 20.3% year-on-year to ¥4,440 billion ($33,380 million). Operating income increased 22.2% year-on-year to ¥280.49 billion ($2.11 billion). Profit attributable to owners of the parent company was ¥244.6 billion ($1.84 billion), up 26.8% year-on-year.
In terms of forward EV/EBITDA, HMC trades at 7.15x, 22.4% below the industry average of 9.22x. The stock’s future EV/sales and price/sales multiples of 0.58 and 0.33 are 48.4% and 62% lower than the industry average of 1.13 and 0.87, respectively.
Street expects HMC’s revenue to grow 377.9% year-over-year to $127.64 billion in the fiscal year ending March 2023. After that, he outperformed the consensus earnings consensus in three of the four quarters.
Over the past six months, the stock has gained 3.8% and closed its last trading session at $25.50.
HMC’s POWR rating It reflects a promising outlook. The company has an overall rating of A, which translates into a strong buy in its proprietary rating system. POWR Ratings evaluate stocks by 118 different factors, each with its own weighting.
Additionally, there is an A grade for value and a B grade for stability, sentiment, and quality. HMC ranks #3 out of 57 stocks Automobile and vehicle manufacturers industry.
click here Access additional POWR assessments for HMC (Growth and Momentum).
Ryerson Holding Corporation (Lee)
RYI processes and sells industrial metals internationally. The company offers a range of products in carbon steel, stainless steel, alloy steel, aluminum, nickel and red metal in various shapes and forms. We serve a variety of industries including metalworking and machine shops, commercial ground transportation, industrial machinery and equipment, and HVAC.
On March 3, 2023, RYI announced the acquisition of BLP Holdings, LLC, comprising three divisions: Absolute Metal Products, Metal Cutting Specialists and Houston Water Jet. BLP and its divisions provide advanced processing solutions and diversify RYI’s products. The acquisition is therefore consistent with the company’s commitment to growing its high-margin, value-added business.
Also on November 1, 2022, RYI acquired Excelsior, Inc, a full-service manufacturing and machining company with advanced processing capabilities. “This acquisition strengthens RYI’s network of value-added service centers to provide customers in the Western United States with a better experience and expanded metalworking solutions,” said Steve Bosway, president of RYI’s Western Region. Become.”
RYI reported net aluminum sales of $269 million for the fourth quarter of the fiscal year ended December 31, 2022, an increase of 1.1% from the same period last year. The company transformed its balance sheet, total debt $367 million, down 42.6% year-on-year.
The RYI’s non-GAAP projected P/E of 10.43x is 22.6% lower than the industry average of 13.48x. The stock futures EV/sales multiple of 0.35 is 75.8% lower than the industry average of 1.45. Also, the forward price/sales of 0.31x RYI is 78.1% lower than the industry average of 1.08x.
Analysts expect RYI’s EPS to grow 12.9% year-over-year to $3.73 in the fiscal year ending December 2024.
RYI’s stock has surged 23.6% over the past six months, closing its last trading session at $34.46.
It’s no surprise that RYI has an overall B rating.
RYI has an A grade for value and a B grade for quality.Within Industry – Metals It ranks 4th out of 35 stocks in the industry.
To see the RYI ratings for Growth, Momentum, Sentiment, and Stability in addition to the POWR ratings above: click here.
Autonation Co., Ltd. (Ann)
Automotive retailer AN operates in three segments: imports; and premium luxury. The company offers a variety of automotive products and services, including new and used vehicles. Parts and services, including automotive repair and maintenance parts. In addition, it offers auto finance and insurance products.
On January 26, 2023, AN completed the acquisition of RepairSmith, a full-service mobile automotive repair and maintenance solution with significant operations in the southern and western United States.
Acquisition opens up after-sales business opportunities, including using alternative channels to serve AN’s existing customer base and introducing new vehicle owners who purchased vehicles outside of the AutoNation dealer network. is born.
AN revenue increased 2% year-over-year to 6.7 billion in the fourth quarter ended December 31, 2022, driven by higher vehicle average selling prices, higher new vehicle sales and continued growth in aftersales was a dollar. New car sales increased by 4% year-on-year to 60,074 units. Also, the company’s adjusted EPS increased 11% from last year’s value to $6.37.
AN’s non-GAAP projected P/E of 6.02x is 56.3% lower than the industry average of 13.76x. Similarly, the future EV/sales multiple of 0.46 is 58.8% lower than the industry average of 1.13. Also, the forward price/sales of 0.23x stock price is 73.4% lower than the industry average of 0.87x.
Consensus revenue estimate of $27.22 billion for the fiscal year ending December 2024 reflects a 1.5% year-over-year improvement. Additionally, the company beat consensus earnings and his EPS estimates in three of his four subsequent quarters. AN’s stock has gained 18.8% over the past six months and 10.3% over the past year, closing its last trading session at $130.07.
AN’s strong fundamentals are evident in its POWR rating. The stock has an overall rating of B, which is equivalent to a buy in our proprietary rating system.
AN has an A grade for value and a B grade for quality. Ranked 2nd out of 21 brands. Auto Dealer & Rental industry.
In addition to the POWR rating I just highlighted, you can see the AN growth, stability, sentiment, and momentum ratings. here.
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First, because they are all low-priced companies with the most upside potential in today’s volatile market.
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HMC shares were down $0.25 (-0.98%) Friday morning to trade at $25.25 per share. Year-to-date, HMC is up his 10.45%, while the benchmark S&P 500 index is up his 2.91% 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.
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