We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Listen to the Experts When Preparing to Buy Stocks
Read MoreHide Full Article
Analyst opinion this year has varied widely on the possibility and timing of a recession. Some said that a recession was not likely, given the strength in labor. Others said that we are only putting off what’s bound to happen because rate hikes in the past have always gone too far, with the economy inevitably slipping into a recession. Others pointed out that we’ve had a couple of quarters of negative GDP already and the improvement in the back half of 2022 is muted since the December quarter was weaker than September.
CPI and PPI still look to be a challenge and manufacturing is not doing that well. The housing market is treading water. So while we may not technically be in a recession, we sure seem to be headed that way. Therefore, some estimate an official recession in the back half of this year while a few think it could happen in 2024.
With nearly a whole quarter into 2023, this picture has not changed much. We still may or may not be headed to a recession. But disconcerting news continues to pour in. With two U.S. banks going down, Credit Suisse in trouble stoking fears of a global slowdown, and First Republic Bank exploring options including a sale, things certainly aren’t looking pretty. The fear of a global slowdown is taking a toll on oil prices, which are cooling down rapidly.
Investors pulling out of banks and depositors looking for other alternatives need safer options for their cash. And strange though it may seem, the stock market still offers opportunities. The one thing I would avoid right now is an expensive stock -- even one with good long term prospects -- unless you really have the stomach for it. And even if you do, there are certainly cheaper options out there. A winning combination would be one with improving prospects and declining prices, but that may be too much to hope for.
In general, though, improving prospects are reflected in earnings estimates. So when estimates rise, the potential cash flows to the company also rise. Rising cash flows raise the intrinsic value of the shares, encouraging investors to pay more for them. And as more investors get into a stock it can create a kind of momentum that attracts even more investors. Therefore, rising estimates tend to send shares up or at least keep them buoyant in the most trying circumstances.
And to take this a step further, it might be a good idea to also check the average broker rating on a stock. If the majority of brokers are in favor of buying the shares, the average broker rating would reflect a Buy recommendation. It goes without saying that the larger the number of brokers in the recommendation, the safer the selection, since a single broker could make a mistake but the majority rarely would.
If after checking all these, you find companies that also pay dividend, then that’s even better. Who wouldn’t want some buffer in these uncertain times?
With this in mind, I’ve selected a few stocks that may be worth adding to your portfolio. Let’s take a look:
San Antonio, Texas-based Valero Energy manufactures and sells transportation fuels and petrochemical products in the U.S., Canada, UK and Ireland. The company operates through three segments: Refining, Renewable Diesel and Ethanol.
The average broker rating of 1.21 on Valero shares translates to a Strong Buy rating and considering the fact that 14 brokers are contributing to this average, the chances of error are low.
The Zacks Rank of #1 (Strong Buy) coupled with a Zacks-classified industry (Oil and Gas - Refining and Marketing) position in the top 8%, there is a good chance of near-term upside.
Estimates on this stock continue to rise steadily. In the last 30 days, they’ve jumped 60 cents (2.5%). Estimates for 2024 increased a couple of cents during the same period.
Valero’s dividend yields 3.28%.
The shares trade at a P/E of 5.47X, close to the industry’s 5.45X. They are however trading at a 14.3% discount to their median level over the past year. Therefore, they may be considered cheap.
Paris, France-based AXA provides insurance, asset management and banking services worldwide. The company operates through France, Europe, Asia, AXA XL, International and Transversal & Central Holdings segments. It offers life and savings insurance products, such as savings and retirement, health and personal protection products.
The average broker rating of 1.00 implies a Strong Buy sentiment from the four contributing brokers.
The Zacks #2 (Buy) rank on the stock and its position in the Insurance - Multi line industry which is in top 23% are also positive.
As may be expected, estimates on this stock are on the rise. The 2023 EPS estimate is up 14 cents (3.9%) in the last 30 days and the 2024 estimate is up 30 cents (7.9%).
AXA also pays a dividend that currently yields 4.72%.
The shares trade at 7.41X P/E, which is a 12.0% discount to the industry and 6.8% discount to its median level over the past year. So they are cheap by both cosniderations.
Munich, Germany-based Siemens Aktiengesellschaft sells automation and digitization software and systems into industrial, energy, automotive, healthcare and IoT markets, as well as financial services in Europe, Africa, the Middle East, the Americas, Asia and Australia.
The average rating of 2.00 from the contributing six brokers matches the Buy rating from Zacks. Although not as exciting as some of the others, this rating too suggests that buying the shares would not be out of line. Moreover, the stock belongs to the Industrial Services industry, which is in the top 12% of Zacks-classified industries, further supporting accumulation.
The estimate revisions trend is also supportive. For the year ending in September 2023, the EPS estimate is up 13 cents (2.9%) in the last 30 days while for 2024, it is up 14 cents (2.8%).
Siemens’ dividend yields 2.28%.
Siemens shares trade at a 28.8% discount to the industry. Therefore, although this is a 12.9% premium to its median value over the past year, further upside may be possible, or at least downside risk looks limited.
Perth, UK-based SSE is involved in electricity generation (from water, gas, coal, oil, other), transmission, distribution and supply to approximately 3.8 million homes and businesses across northern-central Scotland and central-southern England. The company also owns, operates and develops high voltage electricity transmission systems in the north of Scotland and remote islands. It also produces, stores, distributes, and supplies gas. Other lines of business include electricity and utility contracting, telecommunications, energy trading, insurance and property holding, and maintenance services.
Zacks #1 (Strong Buy) ranked SSE belongs to the Electronics - Power Generation industry, placing it in the top 8% of industries. This normally indicates upside potential.
Sell-side analysts are also rooting for the stock: their average recommendation of 1.83 translates to a Buy rating.
Estimates for the year ending in March 2023 have jumped 33 cents (23.7%) while 2024 estimates have increased 35 cents (22.3%).
SSE also pays a dividend that currently yields 3.13%.
The shares are trading at a 25.4% premium to the industry but at a 30.2% discount to its median value over the past year. While in the past the shares have mostly traded at a premium to the industry, the current premium to its median value looks a but too much. Therefore, upside potential exists.
3-Month Price Performance
Image Source: Zacks Investment Research
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Listen to the Experts When Preparing to Buy Stocks
Analyst opinion this year has varied widely on the possibility and timing of a recession. Some said that a recession was not likely, given the strength in labor. Others said that we are only putting off what’s bound to happen because rate hikes in the past have always gone too far, with the economy inevitably slipping into a recession. Others pointed out that we’ve had a couple of quarters of negative GDP already and the improvement in the back half of 2022 is muted since the December quarter was weaker than September.
CPI and PPI still look to be a challenge and manufacturing is not doing that well. The housing market is treading water. So while we may not technically be in a recession, we sure seem to be headed that way. Therefore, some estimate an official recession in the back half of this year while a few think it could happen in 2024.
With nearly a whole quarter into 2023, this picture has not changed much. We still may or may not be headed to a recession. But disconcerting news continues to pour in. With two U.S. banks going down, Credit Suisse in trouble stoking fears of a global slowdown, and First Republic Bank exploring options including a sale, things certainly aren’t looking pretty. The fear of a global slowdown is taking a toll on oil prices, which are cooling down rapidly.
Investors pulling out of banks and depositors looking for other alternatives need safer options for their cash. And strange though it may seem, the stock market still offers opportunities. The one thing I would avoid right now is an expensive stock -- even one with good long term prospects -- unless you really have the stomach for it. And even if you do, there are certainly cheaper options out there. A winning combination would be one with improving prospects and declining prices, but that may be too much to hope for.
In general, though, improving prospects are reflected in earnings estimates. So when estimates rise, the potential cash flows to the company also rise. Rising cash flows raise the intrinsic value of the shares, encouraging investors to pay more for them. And as more investors get into a stock it can create a kind of momentum that attracts even more investors. Therefore, rising estimates tend to send shares up or at least keep them buoyant in the most trying circumstances.
And to take this a step further, it might be a good idea to also check the average broker rating on a stock. If the majority of brokers are in favor of buying the shares, the average broker rating would reflect a Buy recommendation. It goes without saying that the larger the number of brokers in the recommendation, the safer the selection, since a single broker could make a mistake but the majority rarely would.
If after checking all these, you find companies that also pay dividend, then that’s even better. Who wouldn’t want some buffer in these uncertain times?
With this in mind, I’ve selected a few stocks that may be worth adding to your portfolio. Let’s take a look:
Valero Energy Corp. (VLO - Free Report)
San Antonio, Texas-based Valero Energy manufactures and sells transportation fuels and petrochemical products in the U.S., Canada, UK and Ireland. The company operates through three segments: Refining, Renewable Diesel and Ethanol.
The average broker rating of 1.21 on Valero shares translates to a Strong Buy rating and considering the fact that 14 brokers are contributing to this average, the chances of error are low.
The Zacks Rank of #1 (Strong Buy) coupled with a Zacks-classified industry (Oil and Gas - Refining and Marketing) position in the top 8%, there is a good chance of near-term upside.
Estimates on this stock continue to rise steadily. In the last 30 days, they’ve jumped 60 cents (2.5%). Estimates for 2024 increased a couple of cents during the same period.
Valero’s dividend yields 3.28%.
The shares trade at a P/E of 5.47X, close to the industry’s 5.45X. They are however trading at a 14.3% discount to their median level over the past year. Therefore, they may be considered cheap.
AXA SA (AXAHY - Free Report)
Paris, France-based AXA provides insurance, asset management and banking services worldwide. The company operates through France, Europe, Asia, AXA XL, International and Transversal & Central Holdings segments. It offers life and savings insurance products, such as savings and retirement, health and personal protection products.
The average broker rating of 1.00 implies a Strong Buy sentiment from the four contributing brokers.
The Zacks #2 (Buy) rank on the stock and its position in the Insurance - Multi line industry which is in top 23% are also positive.
As may be expected, estimates on this stock are on the rise. The 2023 EPS estimate is up 14 cents (3.9%) in the last 30 days and the 2024 estimate is up 30 cents (7.9%).
AXA also pays a dividend that currently yields 4.72%.
The shares trade at 7.41X P/E, which is a 12.0% discount to the industry and 6.8% discount to its median level over the past year. So they are cheap by both cosniderations.
Siemens Aktiengesellschaft (SIEGY - Free Report)
Munich, Germany-based Siemens Aktiengesellschaft sells automation and digitization software and systems into industrial, energy, automotive, healthcare and IoT markets, as well as financial services in Europe, Africa, the Middle East, the Americas, Asia and Australia.
The average rating of 2.00 from the contributing six brokers matches the Buy rating from Zacks. Although not as exciting as some of the others, this rating too suggests that buying the shares would not be out of line. Moreover, the stock belongs to the Industrial Services industry, which is in the top 12% of Zacks-classified industries, further supporting accumulation.
The estimate revisions trend is also supportive. For the year ending in September 2023, the EPS estimate is up 13 cents (2.9%) in the last 30 days while for 2024, it is up 14 cents (2.8%).
Siemens’ dividend yields 2.28%.
Siemens shares trade at a 28.8% discount to the industry. Therefore, although this is a 12.9% premium to its median value over the past year, further upside may be possible, or at least downside risk looks limited.
SSE plc (SSEZY - Free Report)
Perth, UK-based SSE is involved in electricity generation (from water, gas, coal, oil, other), transmission, distribution and supply to approximately 3.8 million homes and businesses across northern-central Scotland and central-southern England. The company also owns, operates and develops high voltage electricity transmission systems in the north of Scotland and remote islands. It also produces, stores, distributes, and supplies gas. Other lines of business include electricity and utility contracting, telecommunications, energy trading, insurance and property holding, and maintenance services.
Zacks #1 (Strong Buy) ranked SSE belongs to the Electronics - Power Generation industry, placing it in the top 8% of industries. This normally indicates upside potential.
Sell-side analysts are also rooting for the stock: their average recommendation of 1.83 translates to a Buy rating.
Estimates for the year ending in March 2023 have jumped 33 cents (23.7%) while 2024 estimates have increased 35 cents (22.3%).
SSE also pays a dividend that currently yields 3.13%.
The shares are trading at a 25.4% premium to the industry but at a 30.2% discount to its median value over the past year. While in the past the shares have mostly traded at a premium to the industry, the current premium to its median value looks a but too much. Therefore, upside potential exists.
3-Month Price Performance
Image Source: Zacks Investment Research