While strong earnings reports boosted the stock market last week, geopolitical tensions, the Fed’s decision to hike interest rates in 2022, and rising inflation should keep the benchmark stock indexes under pressure in the near term. According to a Bankrate survey, most analysts predicted a market correction within the first six months of 2022.
Amid the market’s ongoing uncertainty, it could be prudent to hedge one’s portfolio by investing in shares of dividend-paying defensive companies. Because of solid business models, these stocks tend to hold up better when the economy slows, and therefore safer. These safer stocks can even outperform other industries in times of market downturn.
That’s why today we’re highlighting 3 stocks from our Top 10 Safest screen, which is just 1 of the 10 outperforming screens in our POWR Screens 10 service (more on that below). Lukoil PJSC (LUKOY), Albertsons Companies Inc. (ACI), and Crane Co. (CR) have exhibited strong resilience amid the recent market sell-off and should continue to deliver solid returns based on their solid fundamentals and defensive characteristics.
Lukoil PJSC (LUKOY)
LUKOY and its subsidiaries are involved in the exploration, production, refining, marketing, and distribution of oil and gas. The company’s Exploration and Production segment explores, develops, and produces crude oil and gas. The Refining, Marketing, and Distribution segment includes refining, petrochemical and transportation activities, marketing and trading of crude oil, natural gas, and refined products. The company operates a retail network of 5,005 filling stations in 19 countries.
LUKOY’s sales increased 62.3% year-over-year to ₽6.67 trillion ($85.18 billion) for the nine months ended September 30, 2021. Its operating income grew 273.4% from the year-ago value to $681.77 billion ($8.71 billion). The company’s net income came in at $541.48 billion ($6.92 billion), compared to a net loss of $13.33 billion ($170.29 million) in the prior year. Its EPS amounted to $788.67 ($10.07) compared to a loss per share of $21.92 ($0.28) over this period.
LUKOY’s annual dividend of $9 yields 10.3% on its current stock price. On January 13, the company paid a quarterly dividend of $4.5. Its dividend payout has grown at a CAGR of 20.1% over the past five years. The stock has gained 18.9% over the past year and 10.2% over the past nine months.
LUKOY’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
LUKOY has also rated an A grade for Momentum and a B for Growth and Value. Within the A-rated Foreign Oil & Gas industry, it is ranked #1 of 48 stocks. To see additional POWR Ratings for Quality, Stability, and Sentiment for LUKOY, click here.
Albertsons Companies Inc. (ACI)
ACI, through its subsidiaries, operates grocery and medicine shops in the United States. The company’s food and retail drug stores offer groceries, general merchandise, health and beauty care products, pharmacies, petrol, and other things. It operated 2,277 shops as of February 27, 2021.
In December, ACI introduced two new digital offerings: Meal Planning and Schedule & Save. The new features will provide loyalty members with integrated meal planning and shopping list creation, as well as the opportunity to auto-refill critical products on their lists. With this, the company’s goal is to transform its digital products and improve all aspects of the meal experience in order to save consumers time and money.
During the third quarter ended December 04, 2021, ACI’s net sales and other revenue increased 8.6% year-over-year to $16.73 billion. Its operating income grew 131.9% from the year-ago value to $599.6 million. The company’s net income surged 243.2% from the prior-year quarter of $424.5 million. Its EPS increased 270% year-over-year to $0.72.
The consensus revenue estimate of $70.89 billion for fiscal 2021 represents a 1.8% improvement year-over-year. The stock has gained 52.7% over the past year and 29.6% over the past six months.
ACI approved a quarterly dividend of $0.12 on January 11. While the four-year average dividend yield for ACI is 0.96%, the current dividend translates to a 1.8% yield.
ACI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Growth and a B for Value and Quality. In the A-rated Grocery/Big Box Retailers industry, it is ranked #1 of 39 stocks.
In total, we rate ACI on eight different levels. Beyond what we’ve stated above, we have also given ACI grades for Stability, Momentum, and Sentiment. Get all the ACI ratings here.
Crane Co. (CR)
CR manufactures and distributes designed industrial goods in the United States, Canada, the United Kingdom, Continental Europe, and globally. Aerospace & Electronics; Process Flow Technologies; and Payment & Merchandising Technologies are the company’s three operational segments.
For the fourth quarter ended December 31, 2021, CR’s total net sales increased 12.7% year-over-year to $770.5 million. Its operating profit grew 61.6% from the year-ago value to $87.1 million. The company’s net income surged 54.1% from the prior-year quarter to $72.1 million, while its EPS increased 52.5% year-over-year to $1.22.
Analysts expect CR’s revenue to increase 4.6% year-over-year to $3.33 billion in fiscal 2022. In addition, the company’s EPS is expected to grow at the rate of 9.5% per annum over the next five years. The stock has gained 31.1% over the past month and 5.7% over the past six months.
CR’s annual dividend of $1.88 yields 1.9% on its current stock price. On January 24, the company approved a $0.47 quarterly dividend, payable on February 25. It has a four-year average dividend yield of 2%.
CR’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. CR has also rated a B grade for Quality and Value. Within the B-rated Industrial -Machinery industry, it is ranked #7 of 79 stocks. Click here to see additional POWR Ratings for Stability, Growth, Sentiment, and Momentum for CR.
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LUKOY shares were trading at $88.90 per share on Monday afternoon, up $1.68 (+1.93%). Year-to-date, LUKOY has declined -1.00%, versus a -5.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...
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