A combination of economic factors and the Russia-Ukraine war are impacting consumer sentiments and contributing to stock market volatility. In June, U.S. inflation jumped 9.1% over the last 12 months, raising the odds of the Fed hiking interest rates by three-quarters of a percentage point this month.
David Solomon, CEO of Goldman Sachs Group Inc. (GS), believes inflation is now “deeply entrenched” in the economy. Moreover, the CBOE Volatility Index (^VIX) is up more than 40% this year.
On the other hand, the stock market seems to be pushing forward with stronger-than-expected corporate earnings, and traders believe that the market has already found a bottom. On Tuesday, the Dow gained 2.4%, the S&P 500 rose 2.8%, and the Nasdaq Composite rose 3.1%. All the averages are trading above their 50-day Moving Averages.
“Mad Money” host Jim Cramer believes that people should not get fearful over the market’s decline. Amid this, we think, the fundamentally strong stocks The Procter & Gamble Company (PG), Mitek Systems, Inc. (MITK), and Gartner, Inc. (IT) might be solid bets to navigate a volatile market.
The Procter & Gamble Company (PG)
PG is a branded consumer packaged goods provider operating in several parts of the world. The company offers beauty products under the Head & Shoulders, Herbal Essences, Pantene, Rejoice, Olay, Old Spice, Safeguard, Secret, and SK-II brands.
On July 12, PG declared a quarterly dividend of $0.9133 per share on its Common Stock and Series A and Series B ESOP Convertible Class A preferred stock, payable to shareholders on or after August 15. The company has a record of paying dividends for 132 consecutive years. This reflects upon its shareholder return ability.
On June 29, restaurant brand Arby’s and PG’s Old Spice brand announced their partnership to launch a limited edition kit featuring a custom roast beef sweat suit and Old Spice Sweat Defense Dry Spray. On June 1, the launch of VÖOST, a new vitamin boost brand with eight varieties, was reported. The new products might add to the company’s revenue stream.
For the fiscal third quarter ended March 31, PG’s net sales increased 7% year-over-year to $19.38 billion. Operating income rose 6.3% from the prior-year quarter to $4.02 billion. Net earnings and net earnings per share improved 3.6% and 5.6% from the same period the prior year to $3.37 billion and $1.33.
Street revenue estimate for the quarter that ended June 2022 of $19.43 billion reflects a rise of 2.6% from the prior-year period. Moreover, PG has an impressive surprise earnings history, as it has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 2.6% over the past year to close its last trading session at $144.04. It has gained 8.8% over the past month.
PG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PG has a Stability and Quality grade of B. In the 60-stock Consumer Goods industry, it is ranked #3. Click here to see the additional PG ratings (Growth, Value, Momentum, and Sentiment).
Mitek Systems, Inc. (MITK)
MITK develops and sells mobile image capture and digital identity verification solutions internationally. The company’s offerings include Mobile Deposit, Mobile Verify, MiSnap, Check Reader, and Check Fraud Defender.
On June 22, the company introduced MiVIP, a MITK Verified Identity Platform, which is expected to provide companies comprehensive, secure control, saving them time and money. MITK CEO Max Carnecchia stated, “Mitek’s new platform, MiVIP, is a culmination of our best technologies, our most recent acquisition, and our ongoing commitment to putting Mitek’s customers in control of their consumer experiences.”
In March, MITK announced the acquisition of HooYu, a UK-based KYC (know your customer) technology platform. This should increase the company’s operative capability.
MITK’s total revenue increased 20.6% year-over-year to $34.71 million in the fiscal second quarter that ended March 31. Non-GAAP net income improved 48.6% from the prior-year period to $10.84 million, while non-GAAP income per share came in at $0.24, up 50% from the same period the prior year.
The consensus EPS estimate of $0.86 for the fiscal year 2022 indicates a 13.2% year-over-year increase. Likewise, the consensus revenue estimate for the same period of $140.58 million reflects an improvement of 17.3% from the prior year. In addition, MITK has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
The stock has gained 9.5% over the past month and 4.6% over the past five days to close its last trading session at $9.57.
It’s no surprise that MITK has an overall B rating, which translates to Buy in our POWR Rating system.
MITK has an A grade for Growth and a B for Value and Quality. It is ranked #6 out of the 154 stocks in the Software – Application industry. Click here to see the additional POWR Ratings for Momentum, Stability, and Sentiment for MITK.
Gartner, Inc. (IT)
IT is a research and advisory company operating internationally. The company operates through its three broad segments of Research, delivering research services; Conferences, offering business professionals the opportunity to learn, share, and network; and Consulting, providing custom analysis.
For the fiscal first quarter that ended March 31, IT’s total revenues increased 14.4% year-over-year to $1.26 billion. Adjusted net income and adjusted EPS improved 8.4% and 16.5% from the prior-year quarter to $193 million and $2.33.
Analysts expect IT’s EPS to increase 7.8% year-over-year to $8.72 for the fiscal year 2023. Revenue for the same year is expected to rise 11.7% from the prior year to $5.93 billion. Additionally, IT has beaten consensus EPS estimates in each of the trailing four quarters.
IT’s shares have gained 7.5% over the past month and 4% over the past five days to close its last trading session at $247.57.
This promising prospect is reflected in IT’s POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system.
IT has a Quality grade of A and a Sentiment grade of B. In the 11-stock Outsourcing – Tech Services industry, it is ranked #4. The industry is rated A.
In addition to the POWR Rating grades we’ve stated above, one can see IT ratings for Growth, Value, Momentum, and Stability here.
PG shares were trading at $141.29 per share on Wednesday afternoon, down $2.75 (-1.91%). Year-to-date, PG has declined -12.67%, versus a -16.24% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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