Fed Chair Jerome Powell has said further interest rate hikes will be necessary to achieve price stability. This has exacerbated prevailing bearish sentiment in the market. After the market swooned yesterday, Deutsche Bank cut its official target for the S&P 500.
Furthermore, the CBOE Volatility Index’s 45% gains over the past month represent unusual volatility. As recession fears grow and the odds of a continuing market slowdown increase, investors could shield themselves with stocks that are relatively stable compared to the broader market and whose companies possess robust financials.
Therefore, we think investors could bet on fundamentally sound stocks KT Corporation (KT) and Nippon Telegraph and Telephone Corporation (NTTYY), which possess low beta. They are rated Buy in our proprietary POWR Ratings system and have an A grade for Stability.
KT Corporation (KT)
Headquartered in Seongnam, South Korea, KT provides integrated telecommunications and platform services in Korea and internationally. The company offers fixed-line telephone services and continues to serve approximately 22.3 million mobile subscribers and 8.8 million IPTV subscribers. It has a 0.42 beta, which indicates significant stability compared to the broader market.
KT’s operating revenue came in at KRW 6.28 trillion ($4.92 billion) for its fiscal 2022 first quarter, up 4.1% year-over-year. Its net income was KRW 455.40 billion ($360 million), up 39.5% year-over-year. And its EBITDA came in at KRW 1.52 trillion ($1.19 billion), up 12.9% year-over-year.
Analysts expect KT’s revenue to increase 2.7% year-over-year to $14.97 billion for the fiscal period ending Dec. 31, 2023. Its EPS is estimated to grow 4.1% per annum over the next five years. The stock has gained 8.2% in price over the past six months to close yesterday’s trading session at $14.00.
KT’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has an A grade for Value and Stability. It is ranked #12 of 47 stocks in the A-rated Telecom - Foreign industry. Click here to see the additional ratings for KT (Growth, Momentum, Sentiment, and Quality).
Nippon Telegraph and Telephone Corporation (NTTYY)
Headquartered in Tokyo, Japan, NTTYY provides fixed voice-related, mobile voice-related, IP/packet communications, and system integration services in Japan and internationally. Its segments are Mobile Communications Business; Regional Communications Business; Long-Distance and International Communications Business; Data Communications Business; and Other Business. It has a 0.41 beta.
On March 29, 2022, NTT Research, Inc., a subsidiary of NTTYY, announced that it had joined the Massachusetts Institute of Technology Artificial Intelligence Hardware Program as an inaugural industrial member. Kazuhiro Gomi, President & CEO of NTT Research, Inc., said, “Expanding our relationship with MIT through this new program makes good sense, as it builds upon our existing and productive engagements.”
For the fiscal year ended March 31, 2022, NTTYY’s operating revenues came in at ¥12.16 trillion ($95.14 billion), compared to ¥11.94 trillion ($93.47 billion) in the year-ago period. Its profit was ¥1.26 trillion ($9.83 billion), up 11.4% year-over-year. Furthermore, its EPS was ¥329.29, up 32.7% year-over-year.
NTTYY’s revenue is expected to increase marginally to $98.29 billion for the fiscal period ending March 31, 2024. Its EPS is estimated to grow 7.8% per annum for the next five years. Over the past nine months, the stock has gained 16.7% in price to close yesterday’s trading session at $30.16.
It is no surprise that NTTYY has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Stability and a B grade for Value.
NTTYY is ranked #11 in the Telecom - Foreign industry. Click here to see the additional POWR Ratings for NTTYY (Growth, Momentum, Sentiment, and Quality).
KT shares were trading at $14.24 per share on Thursday morning, up $0.24 (+1.71%). Year-to-date, KT has gained 13.29%, versus a -17.05% 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.
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