Warren Buffett, also known as the ‘Oracle of Omaha,’ is one of the most prolific investors of the 21st century. Buffett owned Berkshire Hathaway’s Inc. (BRK.A) cash pile reached new highs to $149.20 billion in the third quarter, topping the record set in early 2020.
The consumer price index surged 6.2% last month, marking its biggest gain in 30 years. Market bull Jeremy Siegel has warned that a market correction may be imminent if another hot inflation report comes in. Moreover, the concerns over the global economic recovery due to the emergence of the omicron coronavirus variant could keep the market under pressure.
As of September 30, Buffett held 9.56 million shares of Visa Inc. (V), 400 million of The Coca-Cola Company (KO), and 61.79 million shares of The Kroger Co. (KR). Given these companies’ strong fundamentals and significant market share, they might be solid bets to hedge your portfolio against the market correction.
Visa Inc. (V)
V is a payments technology company operating worldwide. The company helps in digital payments among consumers, businesses, and government entities, offering services such as VisaNet, its transaction processing network.
On November 9, V launched Visa Eco Benefits, a sustainability-focused package-benefit aiming to bring sustainable commerce and climate action in payments. About this launch, Charlotte Hogg, Executive Vice-President and Chief Executive Officer, Europe, Visa, said, “At Visa, we recognize the urgency of climate change and are committed to a new era of sustainable and inclusive economic growth.”
On November 4, the company announced that its global payment and fraud-management platform, Cybersource, had joined the International Air Transport Association (IATA) Financial Gateway to manage payment, fraud, and revenue maximization. This venture might prove to be profitable for the company.
V’s net revenues increased 28.6% year-over-year to $6.56 billion in the fiscal fourth quarter ended September 30. Operating income rose 37.3% from the prior-year quarter to $4.32 billion. Non-GAAP net income and non-GAAP EPS improved 42.2% and 44.6% from the same period last year to $3.52 billion and $1.62, respectively.
Street EPS estimate for the current year (fiscal 2022) of $7.06 reflects a rise of 19.5% from the prior year. Likewise, Street revenue estimate of $28.25 billion for the ongoing year indicates a 17.2% year-over-year improvement. V has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
Over the past five days, the stock has gained 1% to close Friday’s trading session at $197.65.
V’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
V has a Momentum, Sentiment, and Quality grade of B. It is ranked #8 out of the 53 stocks in the Consumer Financial Services industry.
To see the additional POWR Ratings for Growth, Value, and Stability for V, click here.
The Coca-Cola Company (KO)
This global non-alcoholic beverage manufacturer needs no introduction. The company sells its beverages under popular brand names such as Coca-Cola, Sprite, Fanta, Dasani, Minute Maid, and POWERADE.
On November 8, KO named communication company WPP plc as its Global Marketing Network Partner. The company expects WPP to play a vital role in executing a new marketing model, to drive long-term growth. KO also appointed public relations company Dentsu Inc. as its Complementary Media Partner in selected markets.
On November 1, the company announced that it had acquired full-ownership of sports performance and hydration beverages company BODYARMOR. The acquisition should expand KO’s product portfolio.
For the third fiscal quarter ended October 1, non-GAAP net operating revenues increased 16.1% year-over-year to $10.04 billion, while non-GAAP operating income rose 14.6% from the prior-year quarter to $3.01 billion. Non-GAAP net income and non-GAAP net income per share stood at $2.82 billion and $0.65, both registering an 18.2% year-over-year increase, respectively.
The consensus EPS estimate of $2.29 for the current year (fiscal 2021) indicates a 17.4% year-over-year increase. Likewise, the consensus revenue estimate of $38.13 billion for the ongoing year reflects an improvement of 15.6% from the prior year. Moreover, KO has an impressive surprise earnings history as it has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 2% over the past year to close Friday’s trading session at $53.73.
It’s no surprise that KO has an overall B rating, which translates to Buy in our POWR Rating system.
KO has an A grade for Quality, and a B grade for Stability and Sentiment. In the 36-stock Beverages industry, it is ranked #12. This industry is rated B.
Click here to see the additional POWR Ratings for KO (Growth, Value, and Momentum).
The Kroger Co. (KR)
KR is a retailer that operates a combination of food and drug stores, multi-department stores, marketplace stores, and price-impact warehouses. The company’s offerings also include manufactured and processed food products and fuel.
On November 23, KR subsidiary and Home Chef, a leading meal solutions company, unveiled its new digital gifting platform, integrated with Synchrony Financial (SYF) solution, GiftNow. The platform is expected to enable KR customers to send personalized gift cards and elevate the company’s digital gifting experience.
On November 2, KR and home, baby, and wellness products retailer, Bed Bath & Beyond Inc. (BBBY), announced a strategic collaboration to offer KR customers BBBY home and baby products. About this collaboration, Rodney McMullen, KR’s chairman and CEO, said, “This strategic online collaboration and the in-store pilot will provide Kroger shoppers easy access to essential home and baby products alongside their favorite grocery staples – continuing to fulfill our commitment of providing our customers with anything, anytime, anywhere.”
KR’s sales increased 3.9% year-over-year to $31.68 billion in the second fiscal quarter ended August 14. Operating profit rose 2.3% from the prior-year quarter to $839 million. Adjusted net earnings attributable to KR per common share improved 9.6% to $0.80.
Analysts expect KR’s revenue to increase 3.8% year-over-year to $31.90 billion in the next quarter (ending January 2022). In addition, KR has beaten consensus EPS estimates in each of the trailing four quarters.
The stock has gained 33% over the past year and 35.8% year-to-date, to close Friday’s trading session at $43.14.KR’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
KR has a B grade for Value and Quality. It is ranked #25 out of the 40 stocks in the Grocery/Big Box Retailers industry. The industry is rated A.
In addition to the POWR Ratings grades we’ve stated above, one can see KR ratings for Growth, Momentum, Stability, and Sentiment here.
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V shares . Year-to-date, V has declined -9.71%, versus a 25.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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