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The Zacks Analyst Blog Highlights Conagra Brands, The Coca-Cola, The Procter & Gamble, Philip Morris International and Mondelez International
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For Immediate Release
Chicago, IL – February 22, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Conagra Brands Inc. (CAG - Free Report) , The Coca-Cola Co. (KO - Free Report) , The Procter & Gamble Co. (PG - Free Report) , Philip Morris International Inc. (PM - Free Report) and Mondelez International Inc. (MDLZ - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
Solid Economic Data Unnerves Investors: 5 Low-Beta Picks
U.S. stock markets have seen northbound movement so far this year after a terrible 2022. Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are up 2.1%, 6.2% and 12.6%, respectively. However, off late, volatility has returned on Wall Street.
Several strong economic data and hotter-than-expected inflation rates of January raised concerns that the Fed's tighter monetary control and higher interest rate regime is unlikely to terminate any time soon. Market participants confidence in risky assets like equities has been dampened to some extent. Volatility is likely to continue in the near term.
Strong Economic Data for January
The nonfarm payrolls for January jumped to 517,000 in January from 260,000 in December. The consensus estimate was 198,000. The unemployment rate dropped to 3.4% in January from 3.5% in the previous month. The consensus estimate was 3.6%.
The Department of Commerce reported that retail sales unexpectedly jumped 3% in January after declining 1.1% in December. The consensus estimate was an increase of 1.7%. The ISM Services Index climbed to 55.2% in January from 49.2% In December. The consensus estimate was 50.6%. Any reading above 50% means an expansion in services activities.
Industrial production was unchanged in January after falling 0.6% and 1% in November and December, respectively. Within the overall industrial production, manufacturing and mining output rose 1% and 2%, respectively. The output of utilities fell 9.9% in January due to unseasonably warm weather in January.
Good Economic Data Bad for Wall Street
Strong economic data has unnerved investors as a higher wage rate will raise aggregate demand, making inflation stubborn. The consumer price Index and the producer price Index of January were reported last week. These two key inflation measures were higher than the consensus mark, indicating that the Fed has to go a long way to tame inflation to near 2%.
The fears of higher interest rate hikes flared up further following comments from St. Louis Federal Reserve President James Bullard. He said that he had proposed a 50-basis point rate hike in the Fed's last meeting and such a hike could be expected in the March meeting. Bullard's sentiments were echoed by Cleveland Fed President Loretta Mester, saying that she also supports a steeper rate hike in the next meeting, which further weighed on stocks.
On Feb 17, Federal Reserve Governor Michelle Bowman said "I think there's a long way to go before we reach our 2% inflation objective and I think we'll have to continue to raise the federal funds rate until we see a lot more progress on that."
Fearing a prolonged higher interest rate regime, the ICE dollar index rose 0.25% last week. The yield on the benchmark 10-Year U.S. Treasury Note rose 8.4 basis points last week to close at 3.827%.
The Dow fell recorded three consecutive weeks of decline. This happened for the first time since September 2022. The S&P 500 posted losses for two successive weeks for the first time in 2023.
Stock Selection Process
At this stage, we have applied a broad selection criteria. First, we have selected stocks from defensive sectors like consumer staples, utilities and health care. Second, we have chosen low-beta stocks. Third, high dividend yield stocks have been handpicked. Finally, we have picked stocks with a favorable Zacks Rank.
If the markets regain momentum, the favorable Zacks Rank of these stocks will capture the upside potential. However, if the downtrend continues, low- beta will minimize portfolio losses and dividend payments will act as a regular income stream.
Our Top Picks
We have narrowed our search to five consumer staples stocks with low-beta (beta >0 <1) and a solid dividend yield. These companies have strong growth potential for 2023 and have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.
Conagra Brands Inc. has been benefiting from its robust pricing actions, which aided the top line in the first quarter of fiscal 2023. Results gained from strength in CAG's brands, efficient pricing and the ongoing execution of the Conagra Way playbook. Conagra Brands delivered improved service and productivity amid ongoing inflationary pressures and industry-wide supply-chain hurdles.
Management expects the inflationary landscape to persist in fiscal 2023. Nonetheless, pricing and innovation are likely to aid CAG. We expect organic sales to increase 4.9% in fiscal 2023, which is at the higher end of management's view of 4-5%.
Conagra Brands has an expected revenue and earnings growth rate of 7.2% and 12.7%, respectively, for the current year (ending May 2023). The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last 30 days. CAG has a current dividend yield of 3.63% and a beta of 0.56.
The Coca-Cola Co. has benefited from its strategic transformation and ongoing recovery around the world. Strength across the majority of markets, investments in marketplace, recovery in certain markets as well as the cycling of last year's pandemic-led impacts aided volumes. KO is poised to gain from innovations and accelerating digital investments.
Coca-Cola has an expected revenue and earnings growth rate of 3.9% and 4.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the last seven days. KO has a current dividend yield of 2.93% and a beta of 0.55.
The Procter & Gamble Co. has benefited from robust pricing and a favorable mix, along with strength across segments. PG's products play a key role in meeting the daily health, hygiene and cleaning needs of consumers around the world. PG witnessed continued strong momentum as reflected by underlying strength in brands and appropriate strategies, which aided its organic sales growth.
Procter & Gamble remains focused on productivity and cost-saving plans to boost margins. Its continued investment in business alongside efforts to offset macro cost headwinds and balance top and bottom-line growth underscores its productivity efforts. PG is witnessing cost savings and efficiency improvements across all facets of the business.
Procter & Gamble has an expected revenue and earnings growth rate of 0.4% and 0.5%, respectively, for the current year (June 2023). The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days. PG has a current dividend yield of 2.61% and a beta of 0.42.
Philip Morris International Inc. has long been benefiting from its strong pricing power. Higher pricing variance was an upside to PM's performance across most regions. Additionally, the focus on reduced-risk products (RRPs), especially IQOS has been working well for PM, which is witnessing continued product mix shift from cigarettes to smoke-free products. Smoke-free products and RRPs are generating strong revenues.
Philip Morris has an expected revenue and earnings growth rate of 8.1% and 5.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.8% over the last seven days. PM has a current dividend yield of 4.99% and a beta of 0.68.
Mondelez International Inc. has been gaining from the strength in emerging markets and its core chocolate and biscuit categories. MDLZ has also been focused on strengthening areas with higher growth potential via prudent buyouts (like Clif Bar and Ricolino) and divestitures (like the developed market gum business).
These upsides, together with pricing actions, fueled the fourth-quarter 2022 results of MDLZ. Driven by the solid results and continued momentum in the snacks business, management issued an impressive view for 2023.
Mondelez International has an expected revenue and earnings growth rate of 9% and 7.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.6% over the last 30 days. MDLZ has a current dividend yield of 2.3% and a beta of 0.65.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights Conagra Brands, The Coca-Cola, The Procter & Gamble, Philip Morris International and Mondelez International
For Immediate Release
Chicago, IL – February 22, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Conagra Brands Inc. (CAG - Free Report) , The Coca-Cola Co. (KO - Free Report) , The Procter & Gamble Co. (PG - Free Report) , Philip Morris International Inc. (PM - Free Report) and Mondelez International Inc. (MDLZ - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
Solid Economic Data Unnerves Investors: 5 Low-Beta Picks
U.S. stock markets have seen northbound movement so far this year after a terrible 2022. Year to date, the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — are up 2.1%, 6.2% and 12.6%, respectively. However, off late, volatility has returned on Wall Street.
Several strong economic data and hotter-than-expected inflation rates of January raised concerns that the Fed's tighter monetary control and higher interest rate regime is unlikely to terminate any time soon. Market participants confidence in risky assets like equities has been dampened to some extent. Volatility is likely to continue in the near term.
Strong Economic Data for January
The nonfarm payrolls for January jumped to 517,000 in January from 260,000 in December. The consensus estimate was 198,000. The unemployment rate dropped to 3.4% in January from 3.5% in the previous month. The consensus estimate was 3.6%.
The Department of Commerce reported that retail sales unexpectedly jumped 3% in January after declining 1.1% in December. The consensus estimate was an increase of 1.7%. The ISM Services Index climbed to 55.2% in January from 49.2% In December. The consensus estimate was 50.6%. Any reading above 50% means an expansion in services activities.
Industrial production was unchanged in January after falling 0.6% and 1% in November and December, respectively. Within the overall industrial production, manufacturing and mining output rose 1% and 2%, respectively. The output of utilities fell 9.9% in January due to unseasonably warm weather in January.
Good Economic Data Bad for Wall Street
Strong economic data has unnerved investors as a higher wage rate will raise aggregate demand, making inflation stubborn. The consumer price Index and the producer price Index of January were reported last week. These two key inflation measures were higher than the consensus mark, indicating that the Fed has to go a long way to tame inflation to near 2%.
The fears of higher interest rate hikes flared up further following comments from St. Louis Federal Reserve President James Bullard. He said that he had proposed a 50-basis point rate hike in the Fed's last meeting and such a hike could be expected in the March meeting. Bullard's sentiments were echoed by Cleveland Fed President Loretta Mester, saying that she also supports a steeper rate hike in the next meeting, which further weighed on stocks.
On Feb 17, Federal Reserve Governor Michelle Bowman said "I think there's a long way to go before we reach our 2% inflation objective and I think we'll have to continue to raise the federal funds rate until we see a lot more progress on that."
Fearing a prolonged higher interest rate regime, the ICE dollar index rose 0.25% last week. The yield on the benchmark 10-Year U.S. Treasury Note rose 8.4 basis points last week to close at 3.827%.
The Dow fell recorded three consecutive weeks of decline. This happened for the first time since September 2022. The S&P 500 posted losses for two successive weeks for the first time in 2023.
Stock Selection Process
At this stage, we have applied a broad selection criteria. First, we have selected stocks from defensive sectors like consumer staples, utilities and health care. Second, we have chosen low-beta stocks. Third, high dividend yield stocks have been handpicked. Finally, we have picked stocks with a favorable Zacks Rank.
If the markets regain momentum, the favorable Zacks Rank of these stocks will capture the upside potential. However, if the downtrend continues, low- beta will minimize portfolio losses and dividend payments will act as a regular income stream.
Our Top Picks
We have narrowed our search to five consumer staples stocks with low-beta (beta >0 <1) and a solid dividend yield. These companies have strong growth potential for 2023 and have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.
Conagra Brands Inc. has been benefiting from its robust pricing actions, which aided the top line in the first quarter of fiscal 2023. Results gained from strength in CAG's brands, efficient pricing and the ongoing execution of the Conagra Way playbook. Conagra Brands delivered improved service and productivity amid ongoing inflationary pressures and industry-wide supply-chain hurdles.
Management expects the inflationary landscape to persist in fiscal 2023. Nonetheless, pricing and innovation are likely to aid CAG. We expect organic sales to increase 4.9% in fiscal 2023, which is at the higher end of management's view of 4-5%.
Conagra Brands has an expected revenue and earnings growth rate of 7.2% and 12.7%, respectively, for the current year (ending May 2023). The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last 30 days. CAG has a current dividend yield of 3.63% and a beta of 0.56.
The Coca-Cola Co. has benefited from its strategic transformation and ongoing recovery around the world. Strength across the majority of markets, investments in marketplace, recovery in certain markets as well as the cycling of last year's pandemic-led impacts aided volumes. KO is poised to gain from innovations and accelerating digital investments.
Coca-Cola has an expected revenue and earnings growth rate of 3.9% and 4.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.2% over the last seven days. KO has a current dividend yield of 2.93% and a beta of 0.55.
The Procter & Gamble Co. has benefited from robust pricing and a favorable mix, along with strength across segments. PG's products play a key role in meeting the daily health, hygiene and cleaning needs of consumers around the world. PG witnessed continued strong momentum as reflected by underlying strength in brands and appropriate strategies, which aided its organic sales growth.
Procter & Gamble remains focused on productivity and cost-saving plans to boost margins. Its continued investment in business alongside efforts to offset macro cost headwinds and balance top and bottom-line growth underscores its productivity efforts. PG is witnessing cost savings and efficiency improvements across all facets of the business.
Procter & Gamble has an expected revenue and earnings growth rate of 0.4% and 0.5%, respectively, for the current year (June 2023). The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days. PG has a current dividend yield of 2.61% and a beta of 0.42.
Philip Morris International Inc. has long been benefiting from its strong pricing power. Higher pricing variance was an upside to PM's performance across most regions. Additionally, the focus on reduced-risk products (RRPs), especially IQOS has been working well for PM, which is witnessing continued product mix shift from cigarettes to smoke-free products. Smoke-free products and RRPs are generating strong revenues.
Philip Morris has an expected revenue and earnings growth rate of 8.1% and 5.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.8% over the last seven days. PM has a current dividend yield of 4.99% and a beta of 0.68.
Mondelez International Inc. has been gaining from the strength in emerging markets and its core chocolate and biscuit categories. MDLZ has also been focused on strengthening areas with higher growth potential via prudent buyouts (like Clif Bar and Ricolino) and divestitures (like the developed market gum business).
These upsides, together with pricing actions, fueled the fourth-quarter 2022 results of MDLZ. Driven by the solid results and continued momentum in the snacks business, management issued an impressive view for 2023.
Mondelez International has an expected revenue and earnings growth rate of 9% and 7.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.6% over the last 30 days. MDLZ has a current dividend yield of 2.3% and a beta of 0.65.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.