For immediate release
Chicago, IL – November 8, 2022 – Zacks.com announces the list of stocks featured in the analyst blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Stocks recently featured in the blog include: Coca-Cola FEMSA, SAB de CV KOF, Japan Tobacco Inc. JAPAY, Magellan Midstream Partners, LP MMP, HSBC Holdings plc HSBC and Phillips 66 PSX.
Here are the highlights from Monday’s analyst blog:
Is it time to dive back into stocks?
The net effect of what we learned from the Fed last week was that interest rates would continue to rise, but it could be at lower increments and it could be that the cumulative increase is larger than we had anticipated earlier. Obviously, the Fed wants to fumble like we do, because there really isn’t a crystal ball that can tell us the exact effect on inflation.
Historically, the Fed has always overdone it, so there’s no reason to think it will be any different. Which means we could be heading into a recession in the middle of 2023.
Also, last week’s jobs data, which would be pretty good in normal times, is pretty bad now because it can only encourage the Fed to keep doing what it has been doing:
Total additions were slightly larger than expected, although hourly earnings (up 4.7% from last year, up 0.4% from the prior month) were just a little closely in line with expectations (Bloomberg estimates, quoted by Yahoo Finance).
Therefore, despite all the pessimism of the forecasts, companies still do not want to lay off their employees. Not only that, they build their strengths. All but the tech companies, because this group has built an army for itself that has been great during the pandemic but expensive to feed as we go down.
This means we still have a resilient consumer, meaning people are still buying, which means companies are still producing, which means profits are still not as bad as they should be. be (for the Fed). Which means that the rate hike saga should continue.
But there are also “encouraging” signs.
The October manufacturing PMI, although still above 1, recorded its slowest growth this year, returning to levels seen in July 2020. In addition, new orders took a hit, rising inflation continuing to increase uncertainties.
The housing market is also softening. Directly linked to interest rates, mortgage rates have reached 20-year highs. Due to the impact on affordability, house prices are falling. The Fannie Mae House Price Index shows a price increase of 9.0% at the end of 2022 (it was previously +16.0%). House prices are expected to decline 1.5% in 2023 (previous forecasts called for a 4.4% increase). Total home sales are expected to fall 18.1% from a year ago (previous forecast was for a 17.1% decline), driven by existing home sales.
The automotive market is also entering a soft phase. As supply chain issues eased, inventories increased. But higher rates have driven up the cost of borrowing, driving customers away. Therefore, prices should start falling around now, with a corresponding positive effect on inflation.
The macro situation described above seems to indicate that more softness is in the cards. However, it should be noted that estimates are down, with the benchmark S&P 500 having fallen more than 10% for 2023 on a non-energy basis since mid-April. The 3.5% growth in the S&P 500 global estimate for 2023 could present a downside risk, but as things stand, we only expect a moderate recession in the second half of the year. Therefore, there is a reasonable chance that companies will report positive surprises next year, which would support prices.
And if such an outlook seems fraught with risk, large-cap stocks that have a relatively stronger outlook based on estimate revision trends, which also pay a good dividend could be a hedge:
Coca-Cola FEMSA, SAB de CV
Based in Mexico City, the company is a franchise bottler that produces, markets, sells and distributes Coca-Cola brand beverages to retail outlets, restaurants and bars, auditoriums, supermarkets and other locations. .
Stocks ranked Zacks #1 (Strong Buy) pay an attractive dividend yielding 4.25%. It belongs to the beverage industry – soft drinks (34% of industries ranked by Zacks).
The earnings estimate for 2022 is up 11.4% over the past 30 days. The 2023 estimate is up 7.4%. Therefore, analysts are relatively optimistic about its prospects.
The shares are trading at 15.15X earnings, compared to 16.62X for the S&P. They are trading below their 5-year median level of 16.73XP/E.
Japan Tobacco Inc.
Japan Tobacco, based in Tokyo, manufactures and sells tobacco products, prescription drugs and processed foods in Japan and overseas.
Zacks Rank #1 stock offers a yield of 4.13%. It belongs to the tobacco industry, which is among the top 24% of industries ranked by Zacks.
Its 2022 estimate is up 7.3% over the past 30 days while the 2023 estimate is up 12.2%.
Shares of Japan Tobacco are trading at a multiple of 10.41X, which is lower than its median value of 11.92XP/E over the past five years. Therefore, stocks are cheap at these levels.
Magellan Midstream Partners, LP
Magellan Midstream, based in Oklahoma, is active in the transportation, storage and distribution of refined petroleum products and crude oil in the United States.
Zacks #2 (Buy) listed the stock’s dividend at 8.12%. The Oil & Gas – Production Pipeline – MLB industry it belongs to, however, is in the bottom 45% of industries Zacks ranks. These are the top 50% that historically have been known to outperform the bottom 50% in the short term. But the high yield makes this title a relatively safe game in today’s environment.
Magellan’s 2022 estimate is up 9.7% over the past 30 days while its 2023 estimate is up 4.9%.
The stock is trading at 10.35XP/E, which is cheaper than the S&P 500 and also its own median level of 12.36XP/E over the past five years.
HSBC Holdings plc
HSBC, based in London, provides banking and financial services worldwide.
Zacks Rank #2 stock pays a dividend that currently yields 4.76%. It belongs to the Banks – Foreign Industry sector (top 32%).
For 2022, analyst estimates have risen 5.1%. For 2023, they are up 1.1%.
At 6.10XP/E, the shares are trading at a significant discount to their five-year median P/E of 10.77X.
Phillips 66, based in Houston, is an energy manufacturing and logistics company. It operates through four segments: Midstream, Chemicals, Refining and Marketing and Specialties (M&S).
Zacks Rank No. 2 stock pays a dividend yield of 3.75%. It belongs to the Oil and Gas – Refining and Marketing (top 2%) industry.
Analysts have raised their estimates for 2022 by 6.8% in the past 30 days. Estimates for 2023 are also up an average of 3.1%.
Stocks are also cheap. They are trading at 8.25X earnings, which is a significant discount to the five-year median value of 12.00X.
Why haven’t you watched Zacks best action?
Our top 5 performing strategies swept away the S&P’s impressive +28.8% gain in 2021. Surprisingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today, you can access their live selections at no cost or obligation.
See Free Stocks >>
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for more information on the performance figures displayed in this press release.
Zacks names ‘only one best choice for doubling up’
From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.
It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could jump in at any moment.
This company could rival or surpass other recent Zacks stocks which are expected to double like Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in one year .
Free: See our best stock and our 4 finalists >>
Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report
Magellan Midstream Partners, LP (MMP): Free Stock Analysis Report
Coca Cola Femsa SAB de CV (KOF): Free Stock Analysis Report
Phillips 66 (PSX): Free Stock Analysis Report
HSBC Holdings plc (HSBC): Free Stock Analysis Report
JAPAN TOB (JAPAY): Free Stock Analysis Report
To read this article on Zacks.com, click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.