Soaring worries of an economic slump due to interest rate hike trepidations could keep the stock market fluctuations clamped for some time. Therefore, let us look at some stable stocks Industria de Diseño Textil, S.A. (IDEXY), International General Insurance Holdings Ltd. (IGIC), and Information Services Group, Inc. (III) now.
Hot hiring in April and the unexpectedly high number of job openings in April have stoked fears of further rate hikes by the Federal Reserve. Even though a rate hike skip has been suggested by Fed Governor Philip Jefferson and Philadelphia Fed President Patrick Harker, some Fed officials remain in favor of further rate hikes to contain inflation.
The high inflation rates are not seemingly budging. The core Personal Consumption Expenditures (PCE) price index rose 0.4% in April and 4.7% from a year ago, indicating a higher-than-expected rise. Furthermore, according to the FOMC minutes, divergent opinions were expressed by the officials regarding future rate hikes.
Stock market fluctuations amid such macroeconomic headwinds are unlikely to subside anytime soon. Therefore, investors seeking long-term benefits could shift their focus to stable dividend-paying stocks.
Given this backdrop, fundamentally strong and stable stocks IDEXY, IGIC, and III could be solid portfolio additions now.
Industria de Diseño Textil, S.A. (IDEXY)
IDEXY engages in the retail and online distribution of clothing, footwear, accessories, and household textile products through various retail concepts and sells its products under the Zara, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, and Zara Home brands.
IDEXY’s Board of Directors plans to propose a dividend increase of 29% to €1.20 per share, composed of an ordinary dividend of €0.796 and a bonus dividend of €0.404 per share.
The dividend will be made up of two equal payments, which are, on May 2, 2023, a payment of €0.60 per share (ordinary), and on November 2, 2023, another payment of €0.60 per share (€0.196 ordinary + €0.404 bonus).
IDEXY’s annual dividend of $0.66 translates to a 3.89% yield on the current share price. Its four-year average dividend yield is 2.77%. The company’s dividend payouts have grown at a CAGR of 31.7% over the past three years and 5.8% over the past five years.
IDEXY’s trailing-12-month levered FCF margin of 14.06% is 337.4% higher than the industry average of 3.21%. Likewise, its trailing-12-month cash from operations of $7.26 billion is significantly higher than the industry average of $165.87 million.
IDEXY’s net sales surged 13.4% year-over-year to €9.51 billion ($10.16 billion) in the fiscal fourth quarter that ended January 31, 2023. The company’s operating cash flow (EBITDA) grew 21.5% year-over-year to €2.13 billion ($2.27 billion). Net income attributable to the controlling company came in at €1.04 billion ($1.11 billion), up 39.1% year-over-year.
Analysts expect IDEXY’s revenue and EPS for the fiscal year ending January 2024 to increase 7.8% and 10.7% year-over-year to $37.14 billion and $0.77, respectively.
Over the past six months, the stock has gained 30.2% to close the last trading session at $17. Over the past year, it has gained 41.6%. Its 24-month beta is 0.71, indicating lesser volatility than the broader market.
IDEXY’s robust outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It also has an A grade for Quality and a B for Growth and Stability. Within the B-rated 66-stock Fashion & Luxury industry, it is rated #12.
Click here to see IDEXY’s ratings for Value, Momentum, and Sentiment.
International General Insurance Holdings Ltd. (IGIC)
Headquartered in Amman, Jordan, IGIC provides specialty insurance and reinsurance solutions worldwide. It operates through three segments: Specialty Long-tail, Specialty Short-tail, and Reinsurance. The company underwrites a portfolio of specialty risks.
On May 19, IGIC announced that its Board of Directors declared an ordinary common share dividend of $0.01 per share for the period January 1, 2023, to March 31, 2023. The dividend is payable to shareholders on June 16, 2023. Its annual dividend translates to a 0.43% yield on the current share price. Its four-year average dividend yield is 1.99%.
IGIC’s trailing-12-month asset turnover ratio of 0.30x is 52.3% higher than the industry average of 0.20x. Likewise, its trailing-12-month ROCE and ROTA of 21.79% and 5.99% are 96.6% and 433.5% higher than the industry averages of 11.08% and 1.12%, respectively.
IGIC’s total revenues for the fiscal first quarter that ended March 31, 2023, increased 28.3% year-over-year to $118 million. Its net premiums earned increased 20.4% year-over-year to $105.10 million.
Its core operating income available to common shareholders and core operating income per share increased 22.9% and 26.5% over the prior-year quarter to $27.40 million and $0.62, respectively.
Analysts expect IGIC’s revenue and EPS for the fiscal fourth quarter ending December 2023 to increase 20% and 92.9% year-over-year to $188 million and $0.54, respectively. It surpassed Street EPS estimates in three of the trailing four quarters.
The stock gained 2% intraday to close the last trading session at $9.21. Over the past year, it has gained 21.5%. Its 24-month beta is 0.18.
It is no surprise that IGIC has an overall rating of A, which translates to a Strong Buy in our POWR Ratings system.
IGIC has an A grade for Sentiment and a B for Value, Momentum, and Stability. It is ranked first out of the nine stocks in the A-rated Insurance – Reinsurance industry.
Click here to see the other ratings of IGIC for Growth and Quality.
Information Services Group, Inc. (III)
III operates as a technology research and advisory company in the Americas, Europe, and the Asia Pacific. The company offers digital transformation services, sourcing advisory, managed governance and risk, network carrier, technology strategy and operations design, change management, and market intelligence services.
In May 2023, the company announced the payment of a quarterly dividend of $0.045 per share of common stock. The company pays an annual dividend of $0.18 per share, which translates to a 3.53% yield on the current share price. Its four-year average dividend yield is 0.94%.
On May 11, III announced the global launch of ISG Automation on Demand™, a cloud-hosted automation platform-as-a-service. The platform offers end-to-end automation of enterprise business processes and manages users’ automation infrastructure, licenses, and maintenance. This should bode well for the company.
III’s trailing-12-month EBIT margin of 9.95% is 128.7% higher than the industry average of 4.35%. Likewise, its trailing-12-month ROCE and ROTA of 18.48% and 7.51% are significantly higher than the industry averages of 0.50% and 0.08%, respectively.
III’s revenues for the first quarter that ended March 31, 2023, increased 8.2% year-over-year to $78.49 million. Its adjusted EBITDA increased 3.2% year-over-year to $10.98 million. The company’s adjusted net income and adjusted net income per share came in at $6.01 million and $0.12, respectively.
Moreover, the company’s total current assets stood at $116.42 million as of March 31, 2023, compared to $115.48 million as of December 31, 2022.
III’s revenue and EPS for the fiscal fourth quarter ending December 2023 are expected to increase 4.9% and 7.7% year-over-year to $ 77.83 million and $0.14, respectively. It has an impressive earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters.
The stock has gained marginally over the past month and intraday to close the last trading session at $5.10. Its 60-month beta is 0.89.
III’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
The company has a B grade for Stability. Within the Technology – Services industry, it is ranked #7 out of 79 stocks.
Beyond what we have highlighted above, we have also given III grades for Growth, Value, Momentum, Sentiment, and Quality. Get all III ratings here.
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IDEXY shares were trading at $16.94 per share on Thursday afternoon, down $0.06 (-0.35%). Year-to-date, IDEXY has gained 28.79%, versus a 10.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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