The Federal Reserve raised the benchmark interest rate by 75 basis points in September for a third consecutive time. Amid widespread macro headwinds, the Conference Board has estimated a 96% likelihood of a recession in the United States within the following year.
However, Treasury Secretary Janet Yellen remains hopeful about the U.S. economy’s strength in avoiding a recession. She said, “We want to see a strong labor market and inflation coming down to more normal levels.”
In addition, consumer confidence improved in September for the second consecutive month, supported by jobs, wages, and declining gas prices. Moreover, the Expectations Index, calculated based on consumers’ short-term outlook for income, business, and labor market conditions, increased last month.
Given the backdrop, fundamentally sound stocks Texas Instruments Inc. (TXN) and Energy Transfer LP (ET) could be ideal additions to your watchlist. These stocks were recently upgraded in our proprietary rating system.
Texas Instruments Inc. (TXN)
TXN designs, manufactures, and sells semiconductors to electronics designers and manufacturers worldwide. It operates in two segments, Analog; and Embedded Processing. It markets and sells its semiconductor products through direct sales, distributors, and a website.
TXN’s revenue came in at $5.21 billion for the second quarter that ended June 30, 2022, up 13.8% year-over-year. Its net income increased 18.6% year-over-year to $2.29 billion. Moreover, the company’s EPS came in at $2.45, up 19.5% year-over-year.
Analysts expect TXN’s revenue to increase 10% year-over-year to $20.18 billion in 2022. Its EPS is estimated to increase 14.5% year-over-year to $9.46 in 2022. It surpassed EPS estimates in all four trailing quarters. Over the past three months, the stock has gained marginally.
On September 29, TXN’s overall rating was upgraded to B, which equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
TXN has a B grade for Sentiment and Quality. It is ranked #35 out of 92 in the B-rated Semiconductor & Wireless Chip industry. Click here to see the additional POWR Ratings for TXN (Growth, Momentum, Stability, and Value).
Energy Transfer LP (ET)
ET provides energy-related services. The company owns and operates approximately 11,600 miles of natural gas transportation pipeline, three natural gas storage facilities in Texas, two natural gas storage facilities located in the state of Texas and Oklahoma, and 19,830 miles of interstate natural gas pipeline.
On August 24, 2022, ET announced that its subsidiary, Energy Transfer LNG Export, LLC, entered into a 20-year LNG Sale and Purchase Agreement with Shell NA LNG LLC related to its Lake Charles LNG project. Under the agreement, Energy Transfer LNG will supply Shell with 2.1 million tonnes of LNG per annum. This collaboration is expected to generate mutual long-term benefits for both companies.
ET’s revenues came in at $25.95 billion for the second quarter that ended June 30, 2022, up 71.8% year-over-year. Its net income increased 111.8% year-over-year to $1.33 billion. In addition, its EPS increased 95% year-over-year to $0.39.
ET’s revenue is expected to increase 32.8% year-over-year to $89.53 billion in 2022. It has surpassed EPS estimates in three of four trailing quarters. Over the past nine months, the stock has gained 35.2%.
ET’s overall rating was upgraded to B (Buy) in our POWR Ratings system on September 29. It has an A grade for Momentum and a B grade for Value.
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TXN shares were trading at $158.56 per share on Monday morning, up $3.78 (+2.44%). Year-to-date, TXN has declined -14.18%, versus a -22.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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