The stock market had a difficult first half of the year due to various macroeconomic and geopolitical concerns. However, better-than-expected corporate earnings and a slight decline in inflation led to the market witnessing a rebound since July.
Since inflation remained at an uncomfortably high level, many analysts expect the Fed to maintain its hawkish stance to bring inflation to its target level. A strong job market is expected to encourage the Fed to continue tightening its policy. Therefore, the market will likely remain under pressure.
Amid such uncertain market conditions, investing in shares of companies with strong fundamentals and solid growth prospects could be wise. Quality stocks Agilent Technologies, Inc. (A), LKQ Corporation (LKQ), and Balfour Beatty plc (BAFYY) have recently been upgraded to Strong Buy in our proprietary rating system. So, these stocks could be solid investments now.
Agilent Technologies, Inc. (A)
A is engaged in providing application-focused solutions that include instruments, software, services, and consumables for the entire laboratory workflow. It operates through three segments: Life Sciences and Applied Markets, Diagnostics and Genomics, and CrossLab. The company’s products include liquid chromatography (LC) systems and components, atomic absorption (AA) instruments, and others.
On August 2, 2022, A acquired Polymer Standards Service GmbH (PSS), a provider of solutions in the field of polymer characterization. With this acquisition, the company broadens and extends its product portfolio and customer offerings in liquid chromatography and the GPC/SEC market.
A’s net revenue increased 8.3% year-over-year to $1.72 billion for the third quarter, which ended July 31, 2022. Its income from operations grew 22.3% from the year-ago value to $411 million, while its non-GAAP net income increased 19% year-over-year to $401 million. The company’s non-GAAP EPS increased 21.8% from the year-ago value to $1.34.
The consensus revenue estimate of $1.76 billion for the fiscal fourth quarter (ending October 2022) represents a 6.1% increase from the same period last year. The consensus EPS estimate of $1.39 for the current quarter represents a 14.5% increase from the same period last year. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of A have gained 6.1% over the past month to close yesterday’s trading session at $132.64.
A’s strong fundamentals are reflected in its POWR Ratings. On August 23, the stock’s overall rating was upgraded to an A, which equates to a 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.
A has a B grade for Value, Stability, Sentiment, and Quality. The stock is ranked #2 of 54 in the Medical – Diagnostics/Research industry.
In addition to the grades I’ve just highlighted, view A’s ratings for Growth and Momentum here.
LKQ Corporation (LKQ)
Headquartered in Chicago, Illinois, LKQ offers replacement parts, components, and systems used to repair and maintain vehicles. The company operates through three segments: LKQ North America, Specialty, and LKQ Europe. In addition, it provides recreational vehicle appliances, towing hitches, truck bed covers, vehicle protection products, cargo management products, wheels, tires, and suspension products.
On May 12, 2022, the company’s Board of Directors announced a $500 million increase to its existing stock repurchase program, which raises the aggregate program authorization to $2.5 billion. This reflects the company’s strong cash flows and ability to boost shareholder returns.
For the fiscal second quarter ended June 30, 2022, LKQ’s operating income increased 25.8% year-over-year to $559 million. The company’s EBITDA increased 20.3% year-over-year to $629 million. Also, its net income increased 37.7% year-over-year to $420 million. In addition, its EPS increased 47.5% year-over-year to $1.49.
For fiscal 2022, RBA’s revenue is expected to increase marginally year-over-year to $13.11 billion. Its EPS is expected to increase 4.4% year-over-year to $0.91 for the quarter ending December 31, 2022. It has surpassed the Street EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 19.5% to close the last trading session at $54.38.
LKQ’s POWR Ratings reflect this promising outlook. On August 23, the stock’s overall rating was upgraded to an A.
It has a B grade for Stability, Sentiment, and Quality. Within the B-rated Auto Parts industry, it is ranked #6 out of 67 stocks. To see the other ratings of LKQ for Growth, Value, and Momentum, click here.
Balfour Beatty plc (BAFYY)
Headquartered in London, United Kingdom, BAFYY finances, designs, develops, builds, and maintains infrastructure primarily in the United Kingdom, the United States, and Hong Kong. The company operates through three segments: Construction Services, Support Services, and Infrastructure Investments segment.
On August 3, 2022, Balfour Beatty Living Places announced that the company had secured an eight-year, £176 million highways maintenance contract by Buckinghamshire Council.
In this regard, Steve Helliwell, Managing Director of Balfour Beatty Living Places, said, “Today’s announcement builds on our longstanding expertise and commitment to providing best-in-class highways maintenance services while offering customer-focused solutions in a collaborative partnership.” This is expected to generate substantial revenues for the company in the upcoming years.
BAFYY’s profit from operations for the six months of fiscal 2022 increased 105% year-over-year to £82 million ($96.71 million). The company’s profit for the period increased 88.5% year-over-year to £98 million ($115.58 million), while its EPS increased 101.3% year-over-year to 15.7 pence.
Over the past three months, the stock has gained 22% to close the last trading session at $7.64.
BAFYY’s POWR Ratings reflect these solid prospects. On August 23, the stock’s overall rating was upgraded to an A.
It has an A grade for Value and Stability and a B for Growth. Among 87 stocks in the B-rated Industrial – Services industry, it is ranked #6. To see the other ratings of BAFYY for Momentum, Sentiment, and Quality, click here.
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A shares were trading at $133.62 per share on Wednesday afternoon, up $0.98 (+0.74%). Year-to-date, A has declined -15.91%, versus a -12.14% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...
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