The central bank raised interest rates by another 75 basis points to curb inflation and bring it down to its target level of 2%. Investors apprehend that interest rates may reach 6% soon, the highest level since 2000.
However, the latest inflation data has dramatically boosted the market. October CPI reflected a 7.7% year-over-year increase, lower than the consensus estimate. Economists surveyed by Bloomberg projected a 7.9% annual rise in inflation.
Furthermore, John Briggs of NatWest believes, “The Fed will slow and peak rather than continue to aggressively hike at 75 basis point as at a time.”
Given the backdrop, fundamentally sound stocks AT&T Inc. (T), Albertsons Companies, Inc. (ACI), Modine Manufacturing Company (MOD), Xperi Inc. (XPER), and J.Jill, Inc. (JILL) might be wise to buy under $25 for now.
AT&T Inc. (T)
T provides telecommunications, media, and technical services worldwide. It operates through two segments, namely Communications and Latin America.
On October 20, 2022, John Stankey, T’s CEO, said, “We’re investing at record levels to enhance our 5G and fiber connectivity and to deliver the best experience available in the market.”
T’s Equipment revenues came in at $5.31 billion for the third quarter that ended September 30, 2022, up 4.6% year-over-year. Its net income increased marginally year-over-year to $5.98 billion. Also, its EPS increased marginally year-over-year to $0.83.
The company’s revenue and EPS are expected to come in at $31.47 billion and $0.57, respectively, in the fiscal fourth quarter ending December 2022.
Over the past month, the stock has gained 23% to close the last trading session at $18.38.
T’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B for Value, Sentiment, and Quality. Within the Telecom – Domestic industry, it is ranked #4 out of 20 stocks. Click here for the additional POWR Ratings for Stability, Growth, and Momentum for T.
Albertsons Companies, Inc. (ACI)
ACI operates as a food and drug store in the United States. The company’s food and retail drug stores offer groceries, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services. In addition, it manufactures and processes food products for sale in stores.
On October 14, 2022, ACI and The Kroger Co. (KR) announced their definitive agreement to merge, expanding mutual customer reach and improving their proximity to deliver fresh and affordable food to approximately 85 million customers.
ACI’s net sales and other revenues came in at $17.92 billion for the second quarter that ended September 10, 2022, up 8.6% year-over-year. Moreover, its net income came in at $342.70 million, up 16.1% year-over-year. Its EPS came in at $0.59, up 13.5% year-over-year.
ACI’s revenue is expected to increase by 6.6% year-over-year to $76.6 billion in 2023. Its EPS is expected to grow 8% per annum for the next five years. It surpassed EPS estimates in all four trailing quarters. Over the past month, the stock has gained 10.8% to close the last trading session at $20.33.
ACI’s POWR Ratings reflect this promising outlook. The stock’s overall A rating indicates a Strong Buy in our proprietary rating system.
ACI has an A grade for Value and a B for Quality. In the A-rated Grocery/Big Box Retailers industry, it is ranked #10 out of 38 stocks. Click here for the additional POWR Ratings for Growth, Stability, Sentiment, and Momentum for ACI.
Modine Manufacturing Company (MOD)
MOD provides engineered heat transfer systems and heat transfer components for use in on- and off-highway original equipment manufacturer (OEM) vehicular applications. It operates in two segments: Climate Solutions; and Performance Technologies.
On November 8, 2022, MOD launched its new production facility in Rockbridge, Virginia. The new plant will manufacture cooling solutions under the Airedale by Modine™ brand to secure opportunities in the growing data center industry.
MOD’s gross profit came in at $96.2 million for the second quarter that ended September 30, 2022, up 45.1% year-over-year. Its net earnings increased 6000% year-over-year to $24.4 million. Also, its EPS increased 4500% year-over-year to $0.46.
Street expects MOD’s revenue to increase by 11.6% year-over-year to $2.29 billion in 2023. Its EPS is expected to grow 42.3% year-over-year to $1.75 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 75.8% to close the last trading session at $20.44.
MOD has an overall B rating, which equates to a Buy in our POWR Ratings system. It has an A grade for Value and Sentiment.
MOD is ranked #11 out of 66 stocks in the B-rated Auto Parts industry. Click here to see the additional POWR Ratings for MOD (Stability, Growth, Momentum, and Quality).
Xperi Inc. (XPER)
XPER provides software and services in the United States. It offers consumers a seamless end-to-end entertainment experience, from choice to consumption, in the home, in the car, and on the go. The company has three business categories: Pay- TV; Consumer Electronics; Connected Car; and Media Platform.
On November 9, 2022, Jon Kirchner, XPER’s CEO, said, “The third quarter marked an exciting turning point in our history as we successfully completed our spin-off into a new standalone publicly traded company.”
XPER’s revenue came in at $121.64 million for the third quarter that ended September 30, 2022, up 3.3% year-over-year. Its total current assets came in at $336.30 million for the period September 30, 2022, compared to $277.14 million for the period ended December 31, 2021.
Analysts expect XPER’s revenue to increase 7.4% year-over-year to $534.49 million in 2023. Its EPS is estimated to grow 15% per annum for the next five years. XPER’s shares have lost 5.9% intraday to close the last trading session at $10.58.
XPER has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system. It has a B grade in Growth, Sentiment, and Quality.
Within the Semiconductor & Wireless Chip industry, it is ranked #3 out of 92 stocks. Click here to see the additional POWR Ratings for Value, Stability, and Momentum for XPER.
J.Jill, Inc. (JILL)
JILL operates as an omnichannel retailer of women’s apparel under the J.Jill brand in the United States. It offers two sub-brands extensions of its brand aesthetic: Pure Jill and Wearever.
On September 1, 2022, Claire Spofford, JILL’s President and CEO, said, “Our results reflect the disciplined execution of our operating model focused on driving full price sales, regularly owing newness, and managing expenses.”
JILL’s net sales came in at $160.34 million for the second quarter that ended July 30, 2022, increased marginally year-over-year. Its net income came in at $17.81 million, compared to a loss of $24.65 million in the prior-year period. Moreover, the company’s EPS came in at $1.25, compared to a loss per share of $1.98 in the same period the prior year.
JILL’s revenue is expected to increase 4% year-over-year to $608.8 million in 2023. Its EPS is estimated to increase 26.8% year-over-year to $2.7 in 2023. It has surpassed EPS estimates in all four trailing quarters. Over the past nine months, the stock has gained 40.5% to close the last trading session at $22.91.
JILL’s overall A rating equates to a Strong Buy in our POWR Ratings system. It has an A for Sentiment and Quality and a B for Value.
JILL is ranked first among 66 stocks in the Fashion & Luxury industry. Click here to see the additional POWR Ratings for JILL (Stability, Growth, and Momentum).
Want More Great Investing Ideas?
REVISED: 2023 Stock Market Outlook (includes top 7 picks)
T shares were trading at $18.86 per share on Thursday afternoon, up $0.48 (+2.61%). Year-to-date, T has gained 8.44%, versus a -15.95% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...
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