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3 Defensive Stocks Breaking Out to New 52-Week Highs
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It’s been a difficult market for investors as both bulls and bears have experienced frustration with the recent whipsaw action and daily volatility. Stocks rose this morning on news of a potential de-escalation regarding the Russia-Ukraine conflict.
But for the most part, stocks have slid to start out the new year. When stocks are falling, most investors will justify buying shares on the way down as their favorite stocks become cheaper. Whereas amateur investors tend to chase depressed stocks in hope of a swift reversal, experienced investors will adapt their strategies to the volatile market environment and in turn are able to reap substantial profits. Even as the major indices decline, their stock selection process enables them to achieve market-beating returns.
Let’s take a look at which sectors are holding up best throughout the first month and a half of this year. The S&P 500 index performance is listed for comparison purposes.
Image Source: Zacks Investment Research
The three top sectors that are each handily outperforming the general market this year are energy, financials and consumer staples. Energy is a bit extended at the moment and is pulling back today as commodities have retreated across the board.
Financials and consumer staples are attractive in the current environment, and today we’re going to focus on three staple stocks that have shown immunity to the volatility and are all trading at or near 52-week highs. All three stocks provide a healthy dividend north of 4.5%, providing additional income during a time of increased market uncertainty.
Philip Morris is an international leader in the tobacco industry. The company manufactures and sells cigarettes, other nicotine-related products, and associated electronic devices and accessories. PM sells its cigarettes under recognized brands such as Marlboro, Parliament, Chesterfield, and Bond Street. In addition, its heated tobacco and vapor products include licensed brands such as HEETS, Fiit and Miix. PM markets and sells its products in Europe, the Middle East, Africa, Asia, Australia, Latin America, and Canada. Philip Morris was founded in 1847 and is headquartered in New York, NY.
The tobacco giant has undergone a business transformation in recent years as the company faces a consumer backdrop that emphasizes health consciousness. As such, PM has been expanding its presence in the reduced risk products (RRPs) category. RRPs have accounted for roughly 30% of the company’s total revenues in recent quarters. Despite the push toward more socially acceptable options, PM’s combustible category still remains its major sales contributor.
Earnings have been a bright spot for PM, as the company has surpassed estimates in each of the past 16 quarters. PM recently reported Q4 EPS earlier this month of $1.58, a +2.6% surprise over the $1.54 consensus estimate. The firm has delivered an average earnings surprise of +5.14% over the past four quarters, supporting the stock’s 34.6% return over the past year.
Philip Morris International Inc. Price and EPS Surprise
PM boasts an attractive 4.58% dividend yield, adding a nice supplement to the bull case. The forecast for earnings looks bright, with analysts expecting EPS growth of 3.29% to $6.28 in 2022. The picture looks even better for 2023, as the Zacks Consensus Estimate calls for EPS of $7.00. This would represent growth of 11.5% relative to the consensus 2022 estimate.
Altria Group is a tobacco manufacturer and sells cigarettes, oral tobacco products, and wine in the United States. In 2008, Philip Morris International was spun off from the Altria Group. However, Altria still operates as the parent company of Philip Morris USA, which continues to be a subsidiary of MO. The company offers cigarettes and cigars under recognized brands such as Marlboro and Black & Mild, respectively. MO’s smokeless tobacco products are sold under the Copenhagen, Skoal, Red Seal, and Husky brands. Altria Group was founded in 1822 and is based out of Richmond, VA.
Similar to PM, Altria Group has been evolving with the changing industry dynamics. A more health-conscious consumer has paved the way for the tobacco manufacturer to move beyond traditional cigarettes and expand in its presence in the smokeless category. Revenues from the firm’s oral products have been steadily rising. MO earnings have followed suit, and the trend looks to continue in the years ahead.
Image Source: Zacks Investment Research
MO has exceeded earnings estimates in 3 of the past 4 quarters, with an average surprise of +1.21% over that timeframe. Shares have advanced nearly 25% in the past year and have weathered the recent market volatility extremely well.
Altria Group, Inc. Price and EPS Surprise
The Zacks Consensus Estimate for 2022 EPS anticipates growth of 5.21% to $4.85. With a healthy 7.19% dividend yield and a relatively undervalued 10.34 forward P/E, bulls are likely to push the stock higher in the short run.
British American Tobacco is a holding company that provides tobacco and nicotine products to consumers worldwide. BTI offers combustible, vapor, tobacco heating, and oral nicotine products. The company distributes its products via retail outlets. British American Tobacco was founded in 1902 and is based in London.
BTI pays a durable $2.90 dividend which equates to a 6.22% dividend yield. The company is relatively undervalued (9.69 forward P/E) when compared to its industry group (9.93). BTI shares have risen substantially to start out the new year, climbing nearly 25% through mid-February.
British American Tobacco p.l.c. Price
For the current year, the Zacks Consensus Estimate calls for EPS of $4.81, translating to growth of 6.42% relative to 2021. Sales are expected to climb 9.02% to $36.08 billion.
These three tobacco companies have been outperforming and look to continue that trend this year.
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3 Defensive Stocks Breaking Out to New 52-Week Highs
It’s been a difficult market for investors as both bulls and bears have experienced frustration with the recent whipsaw action and daily volatility. Stocks rose this morning on news of a potential de-escalation regarding the Russia-Ukraine conflict.
But for the most part, stocks have slid to start out the new year. When stocks are falling, most investors will justify buying shares on the way down as their favorite stocks become cheaper. Whereas amateur investors tend to chase depressed stocks in hope of a swift reversal, experienced investors will adapt their strategies to the volatile market environment and in turn are able to reap substantial profits. Even as the major indices decline, their stock selection process enables them to achieve market-beating returns.
Let’s take a look at which sectors are holding up best throughout the first month and a half of this year. The S&P 500 index performance is listed for comparison purposes.
The three top sectors that are each handily outperforming the general market this year are energy, financials and consumer staples. Energy is a bit extended at the moment and is pulling back today as commodities have retreated across the board.
Financials and consumer staples are attractive in the current environment, and today we’re going to focus on three staple stocks that have shown immunity to the volatility and are all trading at or near 52-week highs. All three stocks provide a healthy dividend north of 4.5%, providing additional income during a time of increased market uncertainty.
Philip Morris International Inc. (PM - Free Report)
Philip Morris is an international leader in the tobacco industry. The company manufactures and sells cigarettes, other nicotine-related products, and associated electronic devices and accessories. PM sells its cigarettes under recognized brands such as Marlboro, Parliament, Chesterfield, and Bond Street. In addition, its heated tobacco and vapor products include licensed brands such as HEETS, Fiit and Miix. PM markets and sells its products in Europe, the Middle East, Africa, Asia, Australia, Latin America, and Canada. Philip Morris was founded in 1847 and is headquartered in New York, NY.
The tobacco giant has undergone a business transformation in recent years as the company faces a consumer backdrop that emphasizes health consciousness. As such, PM has been expanding its presence in the reduced risk products (RRPs) category. RRPs have accounted for roughly 30% of the company’s total revenues in recent quarters. Despite the push toward more socially acceptable options, PM’s combustible category still remains its major sales contributor.
Earnings have been a bright spot for PM, as the company has surpassed estimates in each of the past 16 quarters. PM recently reported Q4 EPS earlier this month of $1.58, a +2.6% surprise over the $1.54 consensus estimate. The firm has delivered an average earnings surprise of +5.14% over the past four quarters, supporting the stock’s 34.6% return over the past year.
Philip Morris International Inc. Price and EPS Surprise
PM boasts an attractive 4.58% dividend yield, adding a nice supplement to the bull case. The forecast for earnings looks bright, with analysts expecting EPS growth of 3.29% to $6.28 in 2022. The picture looks even better for 2023, as the Zacks Consensus Estimate calls for EPS of $7.00. This would represent growth of 11.5% relative to the consensus 2022 estimate.
Altria Group, Inc. (MO - Free Report)
Altria Group is a tobacco manufacturer and sells cigarettes, oral tobacco products, and wine in the United States. In 2008, Philip Morris International was spun off from the Altria Group. However, Altria still operates as the parent company of Philip Morris USA, which continues to be a subsidiary of MO. The company offers cigarettes and cigars under recognized brands such as Marlboro and Black & Mild, respectively. MO’s smokeless tobacco products are sold under the Copenhagen, Skoal, Red Seal, and Husky brands. Altria Group was founded in 1822 and is based out of Richmond, VA.
Similar to PM, Altria Group has been evolving with the changing industry dynamics. A more health-conscious consumer has paved the way for the tobacco manufacturer to move beyond traditional cigarettes and expand in its presence in the smokeless category. Revenues from the firm’s oral products have been steadily rising. MO earnings have followed suit, and the trend looks to continue in the years ahead.
MO has exceeded earnings estimates in 3 of the past 4 quarters, with an average surprise of +1.21% over that timeframe. Shares have advanced nearly 25% in the past year and have weathered the recent market volatility extremely well.
Altria Group, Inc. Price and EPS Surprise
The Zacks Consensus Estimate for 2022 EPS anticipates growth of 5.21% to $4.85. With a healthy 7.19% dividend yield and a relatively undervalued 10.34 forward P/E, bulls are likely to push the stock higher in the short run.
British American Tobacco p.l.c. (BTI - Free Report)
British American Tobacco is a holding company that provides tobacco and nicotine products to consumers worldwide. BTI offers combustible, vapor, tobacco heating, and oral nicotine products. The company distributes its products via retail outlets. British American Tobacco was founded in 1902 and is based in London.
BTI pays a durable $2.90 dividend which equates to a 6.22% dividend yield. The company is relatively undervalued (9.69 forward P/E) when compared to its industry group (9.93). BTI shares have risen substantially to start out the new year, climbing nearly 25% through mid-February.
British American Tobacco p.l.c. Price
For the current year, the Zacks Consensus Estimate calls for EPS of $4.81, translating to growth of 6.42% relative to 2021. Sales are expected to climb 9.02% to $36.08 billion.
These three tobacco companies have been outperforming and look to continue that trend this year.