The Federal Reserve raised the U.S. inflation forecast to 3.4% in 2021. This, along with a 5.4% increase in the Consumer Price Index over the past 12 months, as of June 2021, is raising investor concerns about the potential for a stock market crash in the near term. Also, rising COVID-19 cases worldwide with the spread of the Delta variant of the COVID-19 virus could put pressure on the stock market in the near term. Therefore, we think that…
betting on fundamentally sound stocks could be the ticket to hedge current downside risk in an investment portfolio.
Consumer-focused goods, steel, and medical devices industries are poised to grow substantially from demand driven by the economic recovery. So, we believe Sysco Corporation (SYY – Get Rating), ArcelorMittal (MT – Get Rating), Darden Restaurants, Inc. (DRI – Get Rating), Whirlpool Corporation (WHR – Get Rating), and MKS Instruments, Inc. (MKSI – Get Rating) could be ideal additions to one’s portfolio now.
Their expanded market reach and stable financials make them well-positioned to deliver significant returns in the coming months, dodging the market’s short-term fluctuations.
Houston, Tex.-based SYY markets and distributes a range of food and related products primarily to restaurants, healthcare, and educational facilities. The company also distributes personal care guest amenities, housekeeping supplies, room accessories, and textiles to the lodging industry.
On May 20, 2021, SYY agreed to acquire Greco and Sons, an independent Italian specialty distributor of food products. Greco and Sons will operate as a standalone division within SYY’s portfolio of specialty companies. This should enable SYY to better serve Italian-focused customers by establishing a new cuisine-focused selling platform and gain expanded market reach over time.
SYY’s net sales for its fiscal first quarter, ended March 27, 2021, increased 2.3% sequentially to $11.82 billion. The company’s gross profit came in at $2.12 billion, up 1.2% from the prior quarter. Its non-GAAP operating earnings have been reported at $256.23 million for the quarter, representing a 9.5% rise from the prior quarter. SYY’s non-GAAP net earnings increased 33.7% sequentially to $114.81 million. Its non-GAAP EPS increased 29.4% sequentially to $0.22. And the company had $4.90 billion in cash and cash equivalents as of March 27, 2021.
A $0.84 consensus EPS estimate for the current quarter, ending September 30, 2021, represents a 146.6% improvement year-over-year. SYY surpassed consensus EPS estimates in three of the trailing four quarters. The $14.95 billion consensus revenue estimate for the current quarter represents a 26.9% gain from the prior-year period. Analysts expect the stock’s EPS to grow at a 28.4% rate per annum over the next five years.
In terms of non-GAAP forward EV/Sales, SYY is currently trading at 0.91x, which is 56.6% lower than the 2.09x industry average. Regarding its forward Price/Sales, the stock is currently trading at 0.74x, 53% lower than the 1.57x industry average. The stock has gained 31.1% over the past year and closed Friday’s trading session at $71.58.
SYY’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has a B grade for Value, Growth, Momentum, and Quality. Click here to see the additional ratings for SYY (Sentiment and Stability).
SYY is ranked #6 of 80 stocks in the B-rated Food Makers industry.
Based in Luxembourg, MT owns and operates steel, iron ore manufacturing, and coal mining facilities worldwide. The company serves the automotive, appliance, engineering, construction, energy, and machinery industries through a centralized marketing organization and distributors.
On July 13, 2021, MT signed a memorandum of understanding (MoU) with the Spanish Government, which will see a €1 billion ($1.18 billion) investment in decarbonization technologies at MT’s Asturias’ plant in Gijón. MT will introduce new manufacturing processes that contribute to a considerable reduction of CO2 at its Spanish operations by up to 4.8 million tonnes over the next five years. It will also further intensify its R&D capabilities in Spain to support the new project and innovation requirements.
For the fiscal first quarter, ended March 31, 2021, MT’s sales increased 9.1% year-over-year to $16.19 billion. The company’s operating income came in at $2.64 billion, compared to a $353 million loss in the prior-year period. Its adjusted net income has been reported at $2.29 billion, versus a $571 million loss in the year-ago period. MT’s EPS came in at $1.93 for the quarter, versus a $1.11 loss per share in the prior-year period. As of March 31, 2021, the company had $5.47 billion in cash and cash equivalents and restricted funds.
Analysts expect MT’s EPS to improve 1915.8% in the current quarter, ending September 30, 2021, to $3.45. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Analysts expect its revenue to be $18.61 billion for the current quarter, representing a 40.3% rise year-over-year. Its EPS is expected to grow at a 272.2% rate per annum over the next five years.
In terms of non-GAAP forward EV/Sales, MT’s 0.54x is 69.9% lower than the 1.79x industry average. Regarding its forward Price/Sales, the stock is currently trading at 0.43x, which is 70% lower than the 1.42x industry average. The stock has gained 153.4% over the past year and 106.9% over the past nine months. It ended Friday’s trading session at $29.52.
It’s no surprise that MT has an overall A rating, which equates to Strong Buy in our POWR Ratings system.
The stock has an A grade for Growth and Momentum, and a B grade for Value, Sentiment, and Quality. Click here to see the additional ratings for MT’s Stability.
MT is ranked #5 of 35 stocks in the A-rated Steel industry.
DRI owns and operates full-service restaurants. The company operates a variety of seafood and Italian restaurants under a multitude of brand names. DRI is based in Orlando, Fla.
As part of its ongoing efforts to fight hunger, DRI partnered with…
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