Even as inflation and a host of other threats have unnerved many investors, stocks continue to hit new record highs. This rally was helped over the past month by a very strong third quarter earnings season. Plus, stocks are still one of the most attractive asset classes right now, with interest rates so low.
Whether the overall momentum of the stock market continues or slows down, we know certain stocks have a higher chance of continuing this upward trend than others. That’s why I look at the Momentum grade in our POWR Ratings system. Stocks with a Momentum Grade of A or B are more likely to see future price gains.
So I ran a screen of stocks in the POWR Ratings with both an Overall grade of A or B, and a Momentum Grade of A or B. Accenture PLC (ACN), American Express Co. (AXP), and Infosys Limited (INFY) are three that ranked high in the results.
Accenture PLC (ACN)
ACN is a leading global IT-services firm that provides consulting, strategy, technology, and operational services. These services run the gamut from aiding enterprises with digital transformation to procurement services to software system integration. The company provides its IT offerings to various sectors, including communications, media and technology, and financial services.
The company has been gaining in its outsourcing and consulting businesses. This is due to the high demand for its services that can improve operating efficiencies plus save costs. For instance, ACN is seeing strong demand for the maintenance of digital-related services and cloud enablement. Speaking of which, the firm has been enhancing its cloud and digital marketing suite through partnerships and buyouts.
ACN has an overall grade of B, which translates into a Buy rating in our POWR Ratings system. The company has a Momentum Grade of B as the stock has shown strong near-, mid-, and long-term performance. For instance, the stock is up 8.7% over the past month and 56.6% year to date. ACN also has a Quality Grade of B due to solid fundamentals.
The company has a current ratio of 1.3 and a debt-to-equity ratio of 0.2. We also provide Growth, Value, Stability, and Sentiment grades for ACN, which you can find here. ACN is ranked #5 in the A-rated Outsourcing – Tech Services industry. For more top stocks in this industry, click here.
American Express Co. (AXP)
AXP is a global financial institution operating in about 130 countries that provide consumers and businesses with charge and credit card payment products. The company also operates a highly profitable merchant payment network. Plus, its commercial business offers expense management tools, consulting services, and business loans.
The firm recently reported solid third-quarter results. Both revenue and earnings beat expectations and rose year over year. In fact, earnings jumped 74.6% year over year. This was driven by higher card member spending that reached record highs in the quarter. AXP also benefited from an increase in consumer and small business spending and increased travel and entertainment spending.
AXP has an overall grade of B and a Buy rating in our POWR Ratings system. The company has a Momentum Grade of B, which makes sense as the stock is up 6.6% over the past month and 66.5% over the past year. AXP also has a Quality Grade of B as its balance sheet looks strong. At the end of the third quarter, its cash and equivalents balance were $24.9 billion compared to only $2.3 million in short-term borrowings.
Infosys Limited (INFY)
INFY is a leading global IT services provider with nearly 250,000 employees. Based in Bangalore, the Indian IT services firm leverages its offshore outsourcing model to derive 60% of its revenue from North America. The firm offers traditional IT services offerings, including consulting, managed services and cloud infrastructure services and business process outsourcing as a service.
The company reported better than expected second-quarter results and raised its revenue forecast for fiscal 2022. Sales rose 20.7% year over year, and earnings jumped 25% year over year. This was driven by a rise in large deal wins. INFY is also benefiting from the ongoing digital transformation as the company continues to fortify its digital capabilities. For instance, the Infosys CobaltTM cloud portfolio has so far been gaining traction.
INFY has an overall grade of B, translating into a Buy rating in our POWR Ratings system. The company has a Momentum Grade of B, which isn’t surprising, with a one-year return of 61.1%. Equally impressive is the stock’s 5% gain over the past month. INFY also has a Quality Grade of A due to a rock-solid balance sheet. Its $3.2 billion cash balance greatly outweighs its long-term debt of $587 million.
To access all AXP’s grades, including Growth, Value, Stability, and Sentiment, click here. INFY is ranked #6 in the Outsourcing – Tech Services industry.
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This article was written by David Cohne, Chief Value Strategist for StockNews.com. David has helped investors find the most profitable stocks for over 20 years.
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ACN shares were unchanged in premarket trading Tuesday. Year-to-date, ACN has gained 42.80%, versus a 26.39% rise in the benchmark S&P 500 index during the same period.
About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers. More...
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