The U.S. labor market remains strong despite lingering macroeconomic headwinds. Moreover, consumer spending has been largely resilient in the face of high inflation and steep interest-rate hikes. According to Bank of America (BAC), their credit and debit card spending per household rose 5.1% year-over-year in January, compared to 2.2% in December 2022.
Moreover, the University of Michigan’s preliminary February reading on the overall consumer sentiment index came in at 66.4, the highest reading since January 2022, up 2.3% month-over-month.
In addition, John C. Williams, the president of the Federal Reserve Bank of New York, believes, “Demand in our economy is much stronger right now than you might expect in a regular, pre pandemic situation.” Therefore, the odds of the economy avoiding a recession are significant.
However, while uncertainties remain, quality stocks Walmart Inc. (WMT), AstraZeneca PLC (AZN), and LSI Industries Inc. (LYTS) might help boost your portfolio. These stocks are A (Strong Buy) rated in our POWR Ratings system.
Walmart Inc. (WMT)
WMT operates retail, wholesale, and other units worldwide. The company operates through three segments: Walmart U.S.; Walmart International; and Sam’s Club.
On January 12, 2023, WMT Commerce Technologies and WMT GoLocal announced their partnership with Salesforce Inc. (CRM) to provide retailers access to new technologies and solutions, enabling frictionless local pickup and delivery for shoppers. WMT is constantly improving to better serve its customers.
In terms of forward EV/Sales, WMT’s 0.75x is 57.2% lower than the industry average of 1.76x, while its forward Price/Sales of 0.64x is 45.8% lower than the industry average of 1.19x.
WMT’s trailing-12-month ROCE and ROTC of 11.61% and 10.10% are 11.6% and 63.9% higher than the industry averages of 10.40% and 6.17%.
WMT’s net sales came in at $151.47 billion for the third quarter that ended October 31, 2022, up 8.8% year-over-year. Its membership and other income increased % year-over-year to $1.34 billion. Also, its total revenues came in at $152.81 billion, representing an 8.7% year-over-year rise.
Analysts expect WMT’s revenue to increase 5.9% year-over-year to $606.38 billion in the current fiscal year, 2023. Its EPS is expected to increase by 4.3% per annum for the next five years. It surpassed EPS estimates in three of the four trailing quarters. Over the past year, the stock has gained 5.6% to close the last trading session at $143.72.
WMT’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
WMT has a B grade for Stability and Sentiment. WMT is ranked #8 out of 39 stocks in the A-rated Grocery/Big Box Retailers industry. Click here for additional WMT ratings (Growth, Value, Momentum, and Quality).
AstraZeneca PLC (AZN)
Headquartered in Cambridge, the United Kingdom, AZN focuses on discovering, developing, manufacturing, and commercializing prescription medicines.
On January 9, 2023, AZN entered into a definitive agreement to acquire CinCor Pharma, Inc., a US-based clinical-stage biopharmaceutical company focused on developing novel treatments for resistant and uncontrolled hypertension and chronic kidney disease. This is expected to be an essential boost to the company’s portfolio.
AZN’s forward P/E of 24.25x is 6.5% lower than the industry average of 25.93x. Its forward EV/EBIT of 16.29x is 4.1% lower than the industry average of 17.00x.
AZN’s trailing-12-month ROCE and ROTC of 8.62% and 7.61% are higher than the negative industry averages of 39.80% and 22.18%.
AZN’s product sales came in at $10.80 billion for the 2022 fourth quarter, up 2% year-over-year. Its total revenue increased marginally year-over-year to $11.21 billion.
Street expects AZN’s revenue to increase 3.9% year-over-year to $46.08 billion in the current fiscal year, 2023. Its EPS is expected to increase by 16.2% per annum for the next five years. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 17.5% to close the last trading session at $68.88.
It’s no surprise that AZN has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has a B grade for Growth, Stability, and Quality.
AZN is ranked #10 out of 172 stocks in the Medical – Pharmaceuticals industry. Get additional POWR Ratings for AZN (Value, Momentum, and Sentiment) here.
LSI Industries Inc. (LYTS)
LYTS produces and sells non-residential lighting and retail display solutions in the United States, Canada, Mexico, Australia, and Latin America. It operates in two segments, Lighting, and Display Solutions.
On January 26, 2023, James A. Clark, President, and CEO of LYTS, said, “We’ll continue our emphasis on balancing short-term execution with long-term investments to build the business and achieve profitable growth in the years ahead.”
LYTS’ forward EV/Sales of 0.91x is 49.1% lower than the industry average of 1.79x. Its forward Price/Sales of 0.77x is 45.6% lower than the industry average of 1.42x.
Its trailing-12-month ROCE and ROTC of 14.31% and 8.46% are 2.2% and 25.1% higher than the industry averages of 13.99% and 6.76%.
LYTS’ net sales came in at $128.80 million for the quarter that ended December 31, 2022, up 15.9% year-over-year. Its adjusted EBITDA increased 54% year-over-year to $12.98 billion. Also, its EPS came in at $0.26, up 73.3% year-over-year.
LYTS’ revenue is expected to increase 9.2% year-over-year to $496.88 million for the current fiscal year 2023. Its EPS is expected to rise 32.8% year-over-year to $0.85 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock gained 98.6% to close the last trading session at $14.10.
LYTS has an overall A rating, equating to a Strong Buy in our POWR Ratings system.
It has an A grade for Value and Sentiment and a B for Quality. It is ranked #3 out of 91 stocks in the B-rated Industrial – Equipment industry. To see Growth, Momentum, and Stability and Quality ratings for LYTS, click here.
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REVISED: 2023 Stock Market Outlook (includes top 7 picks)
WMT shares were unchanged in premarket trading Monday. Year-to-date, WMT has gained 1.36%, versus a 6.70% 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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