Concerns over a volatile market, stubbornly high inflation, and aggressive rate hikes from the Federal Reserve have weighed on investors’ sentiments. It’s been a painful year for stocks as all the major averages march toward their worst year since 2008.
Although inflation eased for the second consecutive month in November, it still remains at elevated levels. With the Federal Reserve still trying to curb inflation, and market experts expecting a recession or a slight slowdown, 2023 doesn’t promise much change. CFRA Chief Investment Strategist Sam Stovall expects a challenging first half of the year as the economy likely succumbs to a “long anticipated, but mild, recession.”
This is expected to keep the stock market under pressure. However, it could be one of the best times to invest in quality stocks. To paraphrase Warren Buffett, “the key is to buy great companies at a fair price rather than fair companies at great prices.”
Thus, it could be wise to invest in quality stocks Comcast Corporation (CMCSA) and Albertsons Companies, Inc. (ACI), which are trading under $50. These stocks possess strong fundamentals and solid growth prospects.
Comcast Corporation (CMCSA)
CMCSA is a global media and technology company operating through five segments: Cable Communications; Media, Studios; Theme Parks; and Sky.
On December 12, CMCSA launched the world’s first live, multigigabit symmetrical Internet connection powered by 10G and Full Duplex DOCSIS 4.0. 10G technology. This technology promises to offer customers next-level net speed and performance and is expected to boost CMCSA’s product portfolio significantly.
The same day, the company announced that it had exceeded its goal of launching 1,250 Lift Zones in 2022. The Lift Zones program provides free WiFi access in neighborhood community centers nationwide.
For the fiscal third quarter that ended September 30, 2022, CMCSA’s adjusted net income increased 4.5% from the prior-year quarter to $4.22 billion. The company’s adjusted EBITDA increased 5.9% from the year-ago value to $9.48 billion, while its adjusted EPS increased 10.3% year-over-year to $0.96.
CMCSA’s EPS and revenue are expected to increase 2.8% and 0.3% year-over-year to $0.79 and $30.44 billion, respectively, in the fiscal fourth quarter (ending December 31, 2022). The company has surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.
Shares of CMCSA have gained 15.2% over the past three months to close the last trading session at $35.05.
CMCSA’s POWR Ratings reflect its solid prospects. It has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a B grade for Quality. Of the nine stocks in the Entertainment - TV & Internet Providers industry, it is ranked first. To see the other ratings of CMCSA for Growth, Value, Momentum, Stability, and Sentiment, click here.
Albertsons Companies, Inc. (ACI)
ACI is engaged in the operation of food and drug stores in the United States. It offers grocery, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services.
On October 14, Kroger Co. (KR) and ACI announced a definitive merger agreement to establish a national footprint and unite around Kroger’s Purpose to Feed the Human Spirit. The companies intend to invest $1 billion to continue raising associate wages and benefits and enhance customer experience. On top of it, ACI will pay a special cash dividend of up to $4 billion to its shareholders.
Chan Galbato, Co-Chair of the ACI board of directors, said, “This transaction with Kroger provides substantial value to shareholders and exciting opportunities for associates to be part of a combined organization with the ability to better support the lives and health of millions of Americans.”
ACI’s net sales and other revenue increased 8.6% year-over-year to $17.92 billion in the fiscal second quarter ended September 10, 2022. Its gross margin grew 6.1% from the year-ago value to $5 billion, while its operating income was up 9.3% year-over-year to $531 million.
The company’s adjusted net income came in at $418.30 million, representing an increase of 13.2% year-over-year. Also, its adjusted net income per share rose 12.5% year-over-year to $0.72. In addition, the ACI’s adjusted EBITDA increased 8.6% from the prior-year value to $1.05 billion.
Analysts expect ACI’s revenue for the quarter ended November 30, 2022, to increase 5.3% year-over-year to $17.61 billion. Its EPS is expected to increase by 8% per annum over the next five years. It has surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 10.5% over the past three months to close the last trading session at $20.98.
ACI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. It has an A grade for Value and a B for Sentiment and Quality. In the A-rated Grocery/Big Box Retailers industry, it is ranked #6 out of 39 stocks.
In addition to the POWR Rating grades I have highlighted, you can check the other ratings of ACI for Growth, Momentum, and Stability here.
CMCSA shares were trading at $34.79 per share on Friday morning, down $0.26 (-0.74%). Year-to-date, CMCSA has declined -29.05%, versus a -18.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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