So far this year, the stock market has flashed more red signs than green due to various macroeconomic and geopolitical concerns. The immense volatility weighed heavily on equities and government bond yields. The CBOE Volatility Index (VIX) gained 29.5% year-to-date.
However, the major stock indexes rose in the last trading session to end their best month since 2020, slashing some losses from a gloomy first half of the year. The S&P 500 gained 9.1% in July, while the Dow Jones Industrial Average rose 6.7%, reflecting their strongest month since November 2020. The Nasdaq Composite rose 12.4%, marking its best month since April 2020.
Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said, “We are seeing a relief rally in the stock market, as pessimism reached extreme levels, and as longer-term interest rates have been coming back down.”
Optimistic expectations from the upcoming earnings releases have also encouraged investors to take a breather from the idea of a slowing economy and further interest rate hikes.
Occidental Petroleum Corporation (OXY), Molina Healthcare, Inc. (MOH), and Greif, Inc. (GEF) are hovering near their 52-week highs and could be the ideal additions to your watchlist now given their strong fundamentals and momentum.
Occidental Petroleum Corporation (OXY)
OXY is engaged in acquiring, exploring, and developing oil and gas properties in the United States, Middle East, Africa, and Latin America. The company operates through three segments: Oil and Gas, Chemical, Midstream, and Marketing. It develops, processes, transports, and markets oil and condensate, natural gas liquids (NGLs), and natural gas. It also manufactures basic chemicals.
On June 27, 2022, OXY’s subsidiary, 1PointFive, and Manulife Investment Management entered into a lease agreement for approximately 27,000 acres of timberland in Western Louisiana. This agreement provides 1PointFive with access to subsurface pore space and surface rights to develop and operate a carbon sequestration hub, with access to permanently store industrial carbon emissions. This is expected to promote the company’s sustainability goals.
OXY’s net sales increased 57.7% year-over-year to $8.35 billion in the fiscal 2022 first quarter ended March 31, 2022. Its income from continuing operations rose 1,530.8% from the prior-year period to $4.88 billion. The company’s adjusted income attributable to common stockholders and adjusted EPS came in at $2.13 billion and $2.12, up 1,664% and 1,513.3%, respectively, year-over-year.
The consensus EPS estimate of $3.03 for the second quarter (ended June 30, 2022) represents an 846.6% improvement year-over-year. The consensus revenue estimate of $9.81 billion for the to-be-reported quarter indicates a 63.2% increase from the same period last year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
Over the past year, the stock has gained 145.5% to close the last trading session at $65.75. It is currently trading 11.2% below its 52-week high of $74.04, which it hit on May 31, 2022.
OXY’s POWR Ratings reflect solid prospects. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Momentum and a B for Growth and Quality. It is ranked #38 out of 97 stocks in the B-rated Energy – Oil & Gas industry. Click here to see the other ratings of OXY for Value, Stability, and Sentiment.
Molina Healthcare, Inc. (MOH)
MOH provides managed health care services to low-income families and individuals under Medicaid and Medicare programs and through state insurance marketplaces. The company operates through four segments: Medicaid, Medicare, Marketplace, and Other.
It offers healthcare services through contracts with providers, independent physicians and physician groups, hospitals, and ancillary providers.
On July 13, 2022, MOH announced that it had agreed to acquire the assets of My Choice Wisconsin. MOH’s President and CEO Joe Zubretsky said, “The addition of My Choice Wisconsin to Molina’s expanding footprint is not only complementary to our existing Medicaid business in Wisconsin, but also representative of our strategic growth initiatives.”
During the fiscal second quarter (ended June 30, 2022), MOH’s total revenue increased 18.4% year-over-year to $8.05 billion. Its operating income rose 32.2% from the year-ago value to $361 million.
The company’s adjusted net income grew 33.7% from the same period last year to $266 million, while its adjusted EPS came in at $4.55, representing a 33.8% increase year-over-year.
Analysts expect MOH’s EPS and revenue for the fiscal third quarter (ending September 2022) to increase 50.5% and 11.4% year-over-year to $4.26 and $7.84 billion. The company has surpassed the consensus EPS estimates in three of the trailing four quarters.
Over the past year, the stock has gained 28.4% to close the last trading session at $327.72. It is currently trading 6.4% below its 52-week high of $350.19, which it hit on April 21, 2022.
MOH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system. MOH also has an A grade for Quality and a B grade for Value.
Greif, Inc. (GEF)
GEF is a global producer of industrial packaging products and services with operations in over 35 countries. The company operates through three segments: Global Industrial Packaging, Paper Packaging & Services, and Land Management.
It produces steel, plastic, fiber drums, intermediate bulk containers, containerboard, uncoated and coated recycled paperboard, tubes and cores, and a diverse mix of specialty products.
On June 23, 2022, the company’s Board of Directors announced a $150 million share repurchase program. GEF has entered into a $75 million accelerated share repurchase agreement with Bank of America, N.A. to repurchase its Class A stock shares and plans to repurchase an aggregate of $75 million shares of its Class A and Class B stock in open market purchases. This reflects the company’s strong cash flows and ability to boost shareholder returns.
For the fiscal second quarter ended April 30, 2022, GEF’s net sales increased 24.4% year-over-year to $1.67 billion. The company’s gross profit increased 27.4% year-over-year to $338.70 million. Also, its adjusted EBITDA increased 42.1% year-over-year to $251 million.
For the third quarter ended July 31, 2022, GEF’s EPS and revenue are expected to increase 3.4% and 7.1% year-over-year to $2 and $1.60 billion, respectively. It has surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 16.1% over the past year to close the last trading session at $70.62. GEF is currently trading 1.9% below its 52-week high of $72, which it hit on November 10, 2021.
GEF’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, translating to a Buy in our proprietary rating system. It also has a B grade for Value and Quality.
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OXY shares fell $0.35 (-0.53%) in premarket trading Monday. Year-to-date, OXY has gained 127.77%, versus a -12.61% 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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