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Shrug Off Market Gyrations With Top 5 Value Stocks
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Wall Street is just nine trading days away from closing a highly disappointing 2022. Even for these last few days, market participants are not sure in which direction the U.S. stock markets will move. Investors are skeptical of a year-end rally — popularly known as Santa Claus Rally — for this year.
These negative sentiments arise as recession fears grip markets resulting from the fact that the Fed has so far failed to cool inflation to an acceptable level despite hiking the benchmark interest rate by 4.25% in 2022 along with other monetary tightening measures like termination of the $120 billion per month quantitative easing program and gradual shrinking of the $9 trillion balance sheet.
At this stage, it would be prudent to pick value stocks with a favorable Zacks Rank to cushion the portfolio as well as make some gains from the upside potential. These stocks could prove to be valuable once the rally resumes. Five of them are Archer-Daniels-Midland Co. (ADM - Free Report) , H&E Equipment Services Inc. (HEES - Free Report) , Veritiv Corp. , U.S. Silica Holdings Inc. (SLCA - Free Report) and Barrett Business Services Inc. (BBSI - Free Report) .
Recession Fears Grip Markets
U.S. stocks continued to suffer in the last two weeks after the Fed announced a 50-basis point rate hike, with losses deepening. Stocks took a further hit as disappointing retail sales for November sparked fears of a slowing economy.
On Dec 14, the Fed increased interest rates by another 50 basis points. Fed Chair Jerome Powell had earlier hinted that the central bank could slow down its pace of rate hikes after increasing interest rates by 75 basis points for the fourth consecutive time since June.
The Fed did slow down the pace but Powell did not paint a rosy picture for the future. In fact, Powell indicated that the central bank would continue increasing interest rates at regular intervals through 2023.
Wednesday’s hike took the benchmark range of 4.25% to 4.50%, and the Fed projected it to top out at 5.25% before it takes a call on pausing the hikes. This is higher than the September forecast of 4.75%.
Recession fears were further ignited after central banks in Europe also hinted at hiking interest rates through 2023. Both the Bank of England and the European Central Bank slowed down their pace of rate hikes but increased interest rates by 50 basis points. Investors were once again alarmed by this as they believe that the ongoing rate increases could push the UK and Eurozone into a recession, setting the tone for a panic sell-off.
Our Top Picks
At this juncture, investors should be prepared to minimize fluctuations in their portfolio and consequently rebalance it with suitable financial assets to maintain stability. We have narrowed our search to five value stocks. Each of our picks carries a Zacks Rank #1 (Strong Buy) and a Value Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past three months.
Image Source: Zacks Investment Research
Archer-Daniels-Midland has been gaining from solid demand, improved productivity and product innovations. Persistent growth in the Nutrition segment of ADM, aided by significant gains in the Human and Animal Nutrition units, remains the key growth driver.
Archer-Daniels-Midland expects the nutrition segment to record operating profit growth of 20% in 2022. The company has been significantly progressing on its three strategic pillars — optimize, drive and growth.
Archer-Daniels-Midland has an expected earnings growth rate of 3.3% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 6.9% over the last 60 days.
H&E Equipment Services is one of the largest integrated equipment services companies in the United States. HEES is focused on heavy construction & industrial equipment and rents, sells and provides parts and service support to four core categories of specialized equipment namely, hi-lift or aerial platform equipment, cranes, earthmoving equipment and industrial lift trucks.
By providing equipment rental, sales, and on-site parts, repair and maintenance functions under one roof, HEES is a one-stop provider for its customers' varied equipment needs.
H&E Equipment Services has an expected earnings growth rate of 71.2% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 31.2% over the last 60 days.
Veritiv is engaged in offering North American business-to-business distribution solutions. VRTV provides packaging, print and print management, publishing, supply-chain, facility and logistics solutions that span the entire lifecycle of core business operations. VRTV’s customers vary across a number of industries, including manufacturing, healthcare, retail and more.
Veritiv has an expected earnings growth rate of 48.2% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 8.4% over the last seven days.
Barrett Business Services provides business management solutions for small and mid-sized companies in the United States. BBSI develops a management platform that integrates a knowledge-based approach from the management consulting industry with tools from the human resource outsourcing industry.
Barrett Business Services has an expected earnings growth rate of 16.4% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 1.2% over the last 60 days.
U.S. Silica produces and sells commercial silica in the United States. SLCA operates through two segments, Oil & Gas Proppants and Industrial & Specialty Products. SLCA offers whole grain commercial silica products to be used as fracturing sand in connection with oil and natural gas recovery, as well as sells its whole grain silica products in various size distributions, grain shapes, and chemical purity levels for the manufacturing of glass products.
U.S. Silica also provides various grades of whole-grain round silica to the foundry industry; ground silica and industrial minerals products for various products; and engineered performance materials made from diatomaceous earth, clay, and perlite.
U.S. Silica has an expected earnings growth rate of more than 100% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 5.7% over the last 60 days.
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Shrug Off Market Gyrations With Top 5 Value Stocks
Wall Street is just nine trading days away from closing a highly disappointing 2022. Even for these last few days, market participants are not sure in which direction the U.S. stock markets will move. Investors are skeptical of a year-end rally — popularly known as Santa Claus Rally — for this year.
These negative sentiments arise as recession fears grip markets resulting from the fact that the Fed has so far failed to cool inflation to an acceptable level despite hiking the benchmark interest rate by 4.25% in 2022 along with other monetary tightening measures like termination of the $120 billion per month quantitative easing program and gradual shrinking of the $9 trillion balance sheet.
At this stage, it would be prudent to pick value stocks with a favorable Zacks Rank to cushion the portfolio as well as make some gains from the upside potential. These stocks could prove to be valuable once the rally resumes. Five of them are Archer-Daniels-Midland Co. (ADM - Free Report) , H&E Equipment Services Inc. (HEES - Free Report) , Veritiv Corp. , U.S. Silica Holdings Inc. (SLCA - Free Report) and Barrett Business Services Inc. (BBSI - Free Report) .
Recession Fears Grip Markets
U.S. stocks continued to suffer in the last two weeks after the Fed announced a 50-basis point rate hike, with losses deepening. Stocks took a further hit as disappointing retail sales for November sparked fears of a slowing economy.
On Dec 14, the Fed increased interest rates by another 50 basis points. Fed Chair Jerome Powell had earlier hinted that the central bank could slow down its pace of rate hikes after increasing interest rates by 75 basis points for the fourth consecutive time since June.
The Fed did slow down the pace but Powell did not paint a rosy picture for the future. In fact, Powell indicated that the central bank would continue increasing interest rates at regular intervals through 2023.
Wednesday’s hike took the benchmark range of 4.25% to 4.50%, and the Fed projected it to top out at 5.25% before it takes a call on pausing the hikes. This is higher than the September forecast of 4.75%.
Recession fears were further ignited after central banks in Europe also hinted at hiking interest rates through 2023. Both the Bank of England and the European Central Bank slowed down their pace of rate hikes but increased interest rates by 50 basis points. Investors were once again alarmed by this as they believe that the ongoing rate increases could push the UK and Eurozone into a recession, setting the tone for a panic sell-off.
Our Top Picks
At this juncture, investors should be prepared to minimize fluctuations in their portfolio and consequently rebalance it with suitable financial assets to maintain stability. We have narrowed our search to five value stocks. Each of our picks carries a Zacks Rank #1 (Strong Buy) and a Value Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks in the past three months.
Image Source: Zacks Investment Research
Archer-Daniels-Midland has been gaining from solid demand, improved productivity and product innovations. Persistent growth in the Nutrition segment of ADM, aided by significant gains in the Human and Animal Nutrition units, remains the key growth driver.
Archer-Daniels-Midland expects the nutrition segment to record operating profit growth of 20% in 2022. The company has been significantly progressing on its three strategic pillars — optimize, drive and growth.
Archer-Daniels-Midland has an expected earnings growth rate of 3.3% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 6.9% over the last 60 days.
H&E Equipment Services is one of the largest integrated equipment services companies in the United States. HEES is focused on heavy construction & industrial equipment and rents, sells and provides parts and service support to four core categories of specialized equipment namely, hi-lift or aerial platform equipment, cranes, earthmoving equipment and industrial lift trucks.
By providing equipment rental, sales, and on-site parts, repair and maintenance functions under one roof, HEES is a one-stop provider for its customers' varied equipment needs.
H&E Equipment Services has an expected earnings growth rate of 71.2% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 31.2% over the last 60 days.
Veritiv is engaged in offering North American business-to-business distribution solutions. VRTV provides packaging, print and print management, publishing, supply-chain, facility and logistics solutions that span the entire lifecycle of core business operations. VRTV’s customers vary across a number of industries, including manufacturing, healthcare, retail and more.
Veritiv has an expected earnings growth rate of 48.2% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 8.4% over the last seven days.
Barrett Business Services provides business management solutions for small and mid-sized companies in the United States. BBSI develops a management platform that integrates a knowledge-based approach from the management consulting industry with tools from the human resource outsourcing industry.
Barrett Business Services has an expected earnings growth rate of 16.4% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 1.2% over the last 60 days.
U.S. Silica produces and sells commercial silica in the United States. SLCA operates through two segments, Oil & Gas Proppants and Industrial & Specialty Products. SLCA offers whole grain commercial silica products to be used as fracturing sand in connection with oil and natural gas recovery, as well as sells its whole grain silica products in various size distributions, grain shapes, and chemical purity levels for the manufacturing of glass products.
U.S. Silica also provides various grades of whole-grain round silica to the foundry industry; ground silica and industrial minerals products for various products; and engineered performance materials made from diatomaceous earth, clay, and perlite.
U.S. Silica has an expected earnings growth rate of more than 100% for the current quarter. The Zacks Consensus Estimate for current-quarter earnings has improved 5.7% over the last 60 days.