Even though the consumer price index rose 8.5% in July, slightly declining from the 40-year high, it still remains elevated. The high inflation and the better-than-expected economic data might give the Federal Reserve more reasons to hike the interest rates aggressively until price increases return to the central bank’s target level.
The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite closed last week with 1.2%, 0.2%, and 2.6% losses, ending their four-week winning streak. Concerns over the potential economic slowdown in the United States and the weak global economy could keep the market under pressure in the near term.
As the U.S consumer price index is still hovering near the 40-year high level, it could be wise to invest in fundamentally sound stocks Sysco Corporation (SYY) and Pilgrim’s Pride Corporation (PPC) to inflation-proof your portfolio. Also, these stocks are rated Strong Buy in our POWR Ratings system.
Sysco Corporation (SYY)
SYY engages in the marketing and distribution of various food and related products primarily to the food service or food-away-from-home industry in the United States, Canada, the United Kingdom, France, and internationally.
For the fourth quarter ending July 2, 2022, SYY’s sales increased 17.5% year-over-year to $19.00 billion. Its operating income grew 44.9% from its year-ago value to $876.80 million, while its net earnings improved 60.6% from its prior-year quarter to $588.30 million. The company’s EPS increased 62% year-over-year to $1.15.
The consensus EPS estimate of $1.01 for the first quarter ending September 2022 represents a 21.4% year-over-year improvement. Analysts expect the company’s revenue to increase 13.2% year-over-year to $18.63 billion for the same period. Moreover, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 14.7% over the past year and 16.9% over the past nine months.
SYY’s POWR Ratings reflect this promising outlook. The company’s overall A rating translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock also has a B grade for Value, Quality, and Growth. Within the B-rated Food Makers industry, it is ranked #5 of 85 stocks.
To see additional POWR Ratings for Stability, Sentiment, and Momentum, click here.
Pilgrim’s Pride Corporation (PPC)
PPC engages in the production, processing, marketing, and distribution of fresh, frozen, and value-added chicken and pork products to retailers, distributors, and foodservice operators in the United States, the United Kingdom, Mexico, the Middle East, Asia, Continental Europe, and worldwide.
In the second quarter ended June 26, 2022, PPC’s net sales increased 27.3% year-over-year to $4.63 billion. Its operating income amounted to $512.90 million compared to a loss of $123.10 million a year ago. Its adjusted EBITDA came in at $623.30 million, up 67.7% from its prior-year quarter. The company’s EPS stood at $1.50 compared to a loss per share of $0.68 in the previous period.
Analysts expect PPC’s revenue to increase 18.4% year-over-year to $4.53 billion for the third quarter ending September 2022. The company’s EPS is expected to grow 34% year-over-year to $0.90 for the same quarter. The company’s shares have soared 12.3% over the past year and 26.9% over the past six months.
PPC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our rating system. The stock also has an A grade for Growth and a B for Stability and Quality. Within the same industry, it is ranked #3.
In total, we PPC LLY on eight different levels. Beyond what we’ve stated above, we have also given PPC grades for Value, Sentiment, and Momentum. Get all the PPC ratings here.
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SYY shares were trading at $85.19 per share on Monday morning, down $1.49 (-1.72%). Year-to-date, SYY has gained 10.35%, versus a -11.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing. More...
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