After a disappointing third-quarter earnings season, most analysts expect corporate earnings to decline in the fourth quarter. The rising interest rates and consequent decline in business growth could lead to lower fourth-quarter earnings.

On the bright side, the Labor Department reported that consumer prices rose a seasonally adjusted 0.4% in October from a month earlier and 7.7% from a year earlier, providing some relief.

Consequently, regional Fed presidents Thomas Barkin and Susan Collins recently indicated that they see the possibility for slower rate hikes. “I think the implication for that is probably a slower pace of increases, a longer pace of increases, and a potentially higher point,” Barkin told CNBC.

Given this backdrop, fundamentally strong stocks Verizon Communications Inc. (VZ), Archer-Daniels-Midland Company (ADM), and Pilgrim’s Pride Corporation (PPC) might be solid buys now. These companies have delivered a stable financial performance in their last reported quarter.

Verizon Communications Inc. (VZ)

VZ offers communication, information, and entertainment products and services to consumers, businesses, and governmental agencies. The company provides wireless and wireline communications services and products in the United States through Consumer Group and Business Group segments.

On October 31, VZ and World Champion Fantasy, the world’s next-generation online fantasy Esports platform, announced an exciting multi-year contract. The alliance will integrate VZ’s tools, services, and tech stack into WCF’s new and industry-disruptive PlayerX platform and might help VZ penetrate the new esports market.

On October 27, VZ and Yahoo announced a new partnership designed to help Verizon improve audience engagement by using Reset Digital’s advertising network. Since the pilot launch in August 2022, the partnership has enabled VZ to reach a new multicultural audience.

In terms of its forward non-GAAP P/E, VZ is currently trading at 7.45x, 48.8% lower than the industry average of 14.56x. Its forward Price/Cash multiple of 4.26 is 53.7% lower than the industry average of 9.21.

During the third quarter of the fiscal year 2022 ended September 30, VZ’s total operating revenues grew 4% year-over-year to $34.2 billion. Its adjusted EBITDA and net income came in at $12.2 billion and $5 billion, respectively. Moreover, the company reported its adjusted EPS to be $1.32 for the quarter.

For the current fiscal year ending December 2022, VZ’s revenue is expected to increase 2.4% year-over-year to $136.82 billion. Additionally, the company has topped the consensus EPS estimates in three of the trailing four quarters.

The stock has gained 4.2% over the past month to close the last trading session at $38.55.

VZ’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It has a B grade for Growth and Stability. VZ is ranked #3 out of the 19 stocks in the Telecom – Domestic industry.

Click here to see the additional VZ ratings for Value, Momentum, Sentiment, and Quality.

Archer-Daniels-Midland Company (ADM)

ADM procures, transports, stores, processes, and merchandises agricultural commodities, products, and ingredients worldwide. The company has three operational segments, Ag Services and Oilseeds; Carbohydrate Solutions; and Nutrition. It acquires, stores, cleans and transports agricultural raw materials, such as oilseeds, corn, wheat, milo, oats, and barley.

On September 14, ADM and PepsiCo, Inc. (PEP) announced a groundbreaking 7.5-year strategic commercial agreement to collaborate closely on projects that aim to significantly expand regenerative agriculture across their shared North American supply chains.

The companies’ capabilities span the food and agriculture value chains, creating a unique, large-scale platform to support farmers’ transition to regenerative agriculture while building their resilience to climate change.

On November 2, ADM declared a cash dividend of 40.0 cents per share on the company’s common stock, payable on December 7, 2022.

ADM’s forward annual dividend of $1.6 per share yields 1.68% at the current price. The company increased its dividends for 29 consecutive years. Its dividends grew at a 4.6% CAGR in the last five years.

ADM’s forward non-GAAP PEG multiple of 1.75 is 33.1% below the industry average of 2.61. In terms of its forward Price/Sales, the stock is currently trading at 0.52x, 57.5% below the industry average of 1.22x.

For the third quarter ending September 30, 2022, ADM’s revenues increased 21.4% year-over-year to $24.68 billion. Its gross profit grew 36.6% from its year-ago value to $1.81 billion, while its adjusted net earnings per share improved 91.8% from its prior-year quarter to $1.86.

Analysts expect ADM’s revenue to increase 18.5% year-over-year to $101.04 billion for the current fiscal year ending December 2022. Its EPS is estimated to be $7.53 for the current year, representing a 45.2% improvement from the last year. Moreover, it has an impressive earnings history as it surpassed the consensus EPS estimate in all the trailing four quarters.

The company’s shares have surged 45.6% over the past year to close its last trading session at $95.15.

Its strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our POWR Ratings system. ADM also has an A grade for Growth and a B grade for Sentiment. Among the 29 stocks in the Agriculture industry, it is ranked #3.

Click here to see the additional POWR Ratings for ADM (Stability, Value, Quality, and Momentum).

Pilgrim’s Pride Corporation (PPC)

PPC produces, processes, markets, and distributes fresh, frozen, and value-added chicken and pork products to retailers, distributors, and food-service operators worldwide. The company offers its products under several brands.

In terms of its forward non-GAAP P/E, PPC is currently trading at 6.08x, 67.7% lower than the industry average of 18.83x. Its forward non-GAAP PEG multiple of 0.34 is 72% lower than the industry average of 1.22.

During the third fiscal quarter that ended September 25, 2022, PPC’s net sales increased 16.8% year-over-year to $4.47 billion. Its gross profit rose 33.7% from its prior-year quarter to $497.27 million. The company’s adjusted net income attributable to PPC grew 60.5% year-over-year to $260.73 million, while its adjusted EPS grew 62.7% year-over-year to $1.09.

Analysts expect PPC’s revenue to increase 18.9% year-over-year to $17.56 billion for the fiscal year ending December 2022. The company’s EPS is expected to grow 82.8% year-over-year to $4.17 for the same quarter. Additionally, PPC has surpassed its EPS estimates in each of the trailing four quarters.

Over the past month, PPC has gained 17.4% to close its last trading session at $25.33.

As expected, the stock has an overall A rating, which equates to a Strong Buy in our rating system. PPC also has a B grade for Growth, Value, Stability, and Quality. It is ranked #3 out of 83 stocks in the Food Makers industry.

In addition to the POWR Ratings grades just highlighted, you can see the PPC ratings for Sentiment and Momentum.

VZ shares fell $0.02 (-0.05%) in premarket trading Monday. Year-to-date, VZ has declined -21.85%, versus a -15.92% rise in the benchmark S&P 500 index during the same period.

About the Author: Kritika Sarmah

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...

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