The stock market has experienced stomach-churning volatility over the past few months due to concerns about galloping inflation, the Fed’s hawkish monetary policy, an escalating Russia-Ukraine war, and extended lockdowns across various Chinese cities. Last week, the Fed raised its benchmark interest rate by 50 basis points to tame inflationary pressures. “A sharp rise in interest rates could lead to higher volatility, stresses to market liquidity, and a large correction in prices of risky assets, potentially causing losses at a range of financial intermediaries,” policymakers wrote in the Fed’s financial stability report.
Most investors are being drawn toward large-cap value stocks because they are known for outperforming large-cap growth stocks in risk-off environments. Given their pricing power, broader market reach, and impressive financials, large-cap stock companies are considered ideal bets because they are well-positioned to survive market turmoil and generate substantial returns over the long run.
Given these factors, Wall Street analysts expect large-cap value stocks Ford Motor Company (F), General Electric Company (GE), FedEx Corporation (FDX), and Boeing Company (BA) to surge in price in the coming months.
Ford Motor Company (F)
F designs, manufactures, markets, and sells a wide range of Ford cars, trucks, utility vehicles, electrified vehicles, and Lincoln luxury vehicles. The Dearborn, Mich.-based company operates through three business segments: Automotive; Mobility; and Ford Credit. It sells Ford and Lincoln vehicles, service parts, and accessories through distributors and dealers. It provides mobility services and self-driving systems development services. In addition, it offers vehicle-related financing and leasing services. The stock has a market capitalization of $53.74 billion.
Last month, F’s board of directors declared a second-quarter regular dividend of 10 cents per share on the company’s outstanding common and Class B stock. The dividend is payable on June 1 to shareholders. The payment of dividends regularly reflects the company’s commitment to return value to its shareholders.
On March 9, Ford Pro launched all-new commercial chargers as a new addition to its commercial charging solutions portfolio under its one-stop-shop of commercial vehicles, software, services, and financing. It has added six new scalable Level 2 AC and Level 3 DC fast chargers, ranging from 11.5 kilowatts to 180 kilowatts. This launch of charging hardware is expected to boost the company’s business growth and profitability.
For its fiscal year 2022 first quarter, ended March 31, 2022, F’s revenues from the Mobility segment increased 663.6% year-over-year to $84 million. Its net cash provided by investing activities improved 775.2% from the prior-year period to $3.32 billion. The company’s cash and cash equivalents amounted to 21.01 billion as of March 31, compared to $20.54 billion as of Dec. 31, 2021.
In terms of forward non-GAAP P/E, F is currently trading at 7.25x, which is 40.2% lower than the 12.11x industry average. Its 0.39 forward Price/Sales multiple is 57.1% lower than the 0.92x industry average. Its 5.93 forward Price/Cash Flow ratio compares with the 9.66 industry average.
The $34.63 billion consensus revenue estimate for its fiscal 2022 second quarter, ending June 30, 2022, represents 43.5% growth from the same period in 2021. Analysts expect F's EPS for the current quarter to be $0.44, representing a 238.9% rise year-over-year. The company has surpassed the consensus EPS estimates in three of the trailing four quarters.
Shares of F have increased 14.2% in price over the past year and closed yesterday's trading session at $13.37.
Among the 17 Wall Street analysts that rated F, eight rated it Buy, seven rated it Hold, while two rated it Sell. The $20.75 12-month median price target indicates a 55.2% potential upside. The price targets range from a low of $13.00 to a high of $32.00.
General Electric Company (GE)
GE is a high-tech industrial company that operates in Europe, China, Asia, the Americas, the Middle East, and Africa. The Boston-based company operates through four segments: Power; Renewable Energy; Aviation; and Healthcare. It provides gas and steam turbines, data-leveraging software, and onshore and offshore wind, blade manufacturing, and grid solutions. In addition, it produces commercial and military aircraft engines, electric power, and mechanical aircraft systems. It has an $80.32 billion market capitalization.
In April, GE and Medtronic (MDT) announced a collaboration to meet the needs and demand for care at Ambulatory Surgery Centers (ASCs) and Office-Based Labs (OBLs). Under this collaboration, customers can access extensive product portfolios, financial solutions, and services.
In February, GE Aviation partnered with The Boeing Company (BA) on a hybrid electric flight test demonstration program. “We are excited about the opportunity to collaborate with Boeing to advance hybrid electric and electric propulsion systems. NASA’s Electrified Powertrain Flight Demonstration project is an opportunity for GE Aviation and Boeing, world leaders in aviation technologies, to show hybrid electric propulsion is real and possible for the future of commercial flight to reduce carbon emissions,” said Mohamed Ali, vice president, and general manager of engineering of GE Aviation.
In its fiscal 2022 first quarter, ended March 31, 2022, GE's total revenues amounted to $17.04 billion, while its revenues from the Aviation segment improved 12.2% year-over-year to $5.60 billion. The company's adjusted profit increased 18.5% from its year-ago value to $946 million. Its adjusted earnings and adjusted earnings per share came in at $262 million and $0.24, respectively, registering an 84.5% and 84.6% increase from the prior-year period, respectively.
In terms of forward EV/Sales, GE is currently trading at 1.34x, which is 16% lower than the 1.60x industry average Its 1.13 forward Price/Sales multiple is 13.2% lower than the 1.30x industry average.
Analysts expect GE's revenue for its fiscal 2023 to come in at $83.34 billion, representing a 9% rise year-over-year. The Street expects the company's EPS for its fiscal 2022 to come in at $3.01, representing 41.8% year-over-year growth. The company has an impressive earnings surprise history; it has surpassed the consensus EPS estimates in three of the trailing four quarters.
GE has declined 24.2% year-to-date and 31.7% over the past year and closed yesterday's trading session at $72.97. However, the 12-month median price target of $105.54 indicates a 44.6% potential upside. The price targets range from a low of $55.00 to a high of $127.00. Among the 13 Wall Street analysts that rated GE, nine rated it Buy, while four rated it Hold.
FedEx Corporation (FDX)
Memphis, Tenn.-based FDX offers transportation, e-commerce, and business services in the U.S. and internationally. The company operates through five segments: FedEx Express; FedEx Ground; FedEx Freight; FedEx Services; and Corporate, Other, and Eliminations. It provides freight transportation, e-commerce, and business services, including sales, marketing, IT, customer service, and back-office function services. It has a $53.98 billion market capitalization.
This March, FedEx Office, a provider of state-of-the-art printing and shipping services and a subsidiary of FDX, formed an alliance with Notarize to launch FedEx Office Online Notary. This new service will make fully digital notarization services available to customers, small businesses, and owners. It is expected to boost the company’s revenue streams.
FDX's revenue grew 9.8% year-over-year to $23.60 billion in its fiscal 2022 third quarter, ended Feb. 28, 2022. The company's operating income rose 37.4% from its year-ago value to $1.46 billion. Its net income and earnings per share came in at $1.22 billion and $4.59, respectively, registering increases of 29.6% and 32.3% from the prior-year period.
In terms of forward non-GAAP P/E, FDX is currently trading at 10.19x, which is 38.7% lower than the 16.62x industry average. Its forward EV/EBITDA multiple of 7.94, which is 23.7% lower than the 10.41x industry average. Its forward Price/Cash Flow and EV/Sales ratios of 6.07 and 0.92, respectively, compare with 13.82 and 1.60 industry averages.
The $24.53 billion consensus revenue estimate for its fiscal 2022 fourth quarter, ending May 31, 2022, represents an 8.5% increase from the prior-year period. FDX has surpassed the consensus revenue estimates in each of the trailing four quarters. The $6.85 consensus EPS estimate for the current quarter indicates a 36.6% year-over-year rise.
Over the past five days, the stock has gained 5.9% in price and closed yesterday's trading session at $208.27.
Among the 20 Wall Street analysts that rated FDX, 17 rated it Buy, while three rated it Hold. The 12-month median price target of $291.83 indicates a 40.1% potential upside. The price targets range from a low of $231.00 to a high of $333.00.
Boeing Company (BA)
Chicago-based BA designs, develops, manufactures, sells, and supports commercial jetliners, military aircraft, satellites, human space flight systems, and missile defense worldwide. The company operates through four segments: Commercial Airplanes; Defense, Space & Security; Global Services; and Boeing Capital. It offers commercial jet aircraft, manned and unmanned military aircraft and weapons systems, strategic defense and intelligence systems, and financial services. BA has a $78.87 billion market capitalization.
In the previous month, BA and Microsoft Corp. (MSFT) formed a strategic partnership to accelerate Boeing’s digital transformation. Under the extended collaboration, BA will leverage the Microsoft cloud and its AI capabilities to update its technology infrastructure and mission-critical applications with new and advanced solutions that are data-driven. The partnership might strengthen BA’s digital foundation.
BA's revenue from its Global Services segment increased 15.1% year-over-year to $4.31 billion, while its revenues from the Commercial Airplanes segment were valued at $4.16 billion in its fiscal year 2022 first quarter, ended March 31, 2022. Its net other income improved 5% year-over-year to $190 million. The company’s net cash provided by investing activities grew 7.3% from the year-ago value to $2.97 billion.
In terms of forward Price/Sales, BA is currently trading at 1.17x, which is 10% lower than the 1.30x industry average.
Analysts expect BA's revenue for its fiscal year 2022, ending Dec. 31, 2022, to come in at $75.50 billion, representing a 21.2% rise year-over-year. The Street expects the company's EPS for the current year to grow 92.2% year-over-year. It is no surprise that the company has surpassed the consensus EPS estimates in three of the trailing four quarters.
BA stock has slumped 35.9% in price year-to-date and closed yesterday's trading session at $133.31. However, the 12-month median price target of $228.00 indicates a 71% potential upside. The price targets range from a low of $180.00 to a high of $307.00. Of the 18 Wall Street analysts that rated BA, 15 rated it Buy, while three rated it Hold.
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F shares were trading at $13.04 per share on Tuesday afternoon, down $0.33 (-2.47%). Year-to-date, F has declined -36.47%, versus a -16.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
4 Large-Cap Value Stocks With 40%-71% Upside, According to Wall Street StockNews.com
