The stock market has been suffering a massive sell-off of late due to concerns over several macroeconomic and geopolitical developments. The probability of the Fed raising interest rates aggressively later this year to tame the surging inflation, which accelerated 8.3% in April, has pushed the stock market down. Furthermore, the consequences of the Ukraine-Russia war and extended COVID-19 lockdowns in China have added to concerns. These factors, along with a negative GDP rate in the first quarter, could mean the nation's economy is heading into a recession.
The S&P 500 has declined 13.3% through April, marking its steepest fall in the first four months of a year since 1939. The Nasdaq Composite and Dow Jones Industrial Average have plunged 25.5% and 12.7%, respectively, so far this year. Because the market is expected to stay under pressure in the near term, we think investing in large-cap companies may help avoid short-term swings. Their larger market reach and pricing power enable them to perform steadily regardless of market fluctuations.
Therefore, we think it could be wise to invest in the stocks of fundamentally sound large-cap companies Trimble Inc. (TRMB), Wipro Limited (WIT), STMicroelectronics N.V. (STM), and James Hardie Industries plc (JHX) on their dips.
Trimble Inc. (TRMB)
Headquartered in Sunnyvale, Calif., TRMB offers technology solutions that allow professionals and field mobile workers to enhance or transform their work processes internationally. The company's Buildings and Infrastructure segment offers field and office software for route selection and design; systems to guide and control construction equipment; and other related services. It has a market capitalization of $15.68 billion.
TRMB and Qualcomm Technologies, Inc. have announced the availability of Trimble RTX GNSS technology for Snapdragon 8 Gen 1 and Snapdragon 888 Mobile Platforms. This technology enables superior location capabilities in premium Android smartphones worldwide. The integration of TRMB's RTX GNSS technology, a correction services platform with Snapdragon, contributes to a higher quality, more accurate location-based user experience, such as car navigation with lane-level guidance.
TRMB's revenue increased 12.1% year-over-year to $993.7 million during the first quarter of 2022. Its non-GAAP operating income grew 11.4% from its year-ago value to $233.1 million, while its non-GAAP net income amounted to $184.8 million, up 10.7% from the prior-year quarter. The company's non-GAAP EPS rose 10.6% year-over-year to $0.73.
The $0.71consensus EPS estimate for the third quarter, ending Sept. 30, 2022, represents 8.3% year-over-year growth. Analysts expect revenue to increase 5.7% year-over-year to $953.16 million for the same period. In addition, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has plunged 28.1% in price year-to-date.
TRMB's POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock also has a B grade for Stability. Within the Technology - Electronics Industry, it is ranked #13 of 47 stocks. To see additional POWR Ratings for Growth, Value, Quality, Sentiment, and Momentum for TRMB, click here.
Wipro Limited (WIT)
With a market capitalization of $34.94 billion, WIT, which is headquartered in Bengaluru, India, functions as an information technology (IT), consulting, and business process services company worldwide. It has three operating segments: the IT Services segment, which offers IT and IT-enabled services; the IT Products segment provides a range of third-party IT products; and India State-Run Enterprise Services (ISRE) segment offers IT services to entities and/or departments owned or controlled by the Government of India.
Last month, WIT announced that it had signed a definitive agreement to take over Rizing Intermediate Holdings, Inc., a global SAP consulting firm, considerably expanding its capacity to help businesses transform into intelligent enterprises. Rizing is the latest among various acquisitions by WIT, underscoring the company's ambitious growth strategy. Rizing's high-touch approach and its industry expertise and SAP consulting capabilities in enterprise asset management, consumer industries, and human experience management will be instrumental in improving Wipro's position as a sought-after advisor for clients' most complex SAP transformations.
Also, last month, WIT announced that it had acquired Convergence Acceleration Solutions, LLC (CAS Group), a U.S.-based consulting and program management company that concentrates on driving large-scale business and technology transformation for Fortune 100 communications service providers. CAS relationships and strong domain expertise, coupled with Wipro's execution capabilities, should deliver an end-to-end professional services solution and immediate impact on clients. The acquisition will enable clients with services ranging from strategy development and planning to execution and implementation.
For the fourth quarter, ended March 31, 2022, WIT's revenue amounted to Rs.162.45 billion ($2.10 billion). Its results from operating activities amounted to Rs.34.17 billion ($441.78 million), while its profit for the period came in at Rs.29.74 billion ($348.55 million). The company's EPS stood at Rs.5.38 over the period.
Analysts expect WIT's revenue to increase 14.7% year-over-year to $2.81 billion for the first quarter, ending June 30, 2022. The company's EPS is expected to grow 1.1% year-over-year to $0.08 in the first quarter, ending June 30, 2022. The stock has declined 36.3% year-to-date.
WIT's strong fundamentals are reflected in its POWR Ratings. The stock also has a B grade for Stability and Quality. Within the A-rated Outsourcing - Tech Services industry, it is ranked #7 of 10 stocks.
In total, we rate WIT on eight distinct levels. Beyond what we have stated above, we have also given WIT grades for Growth, Value, Sentiment, and Momentum. Get all the WIT ratings here.
STMicroelectronics N.V. (STM)
Headquartered in Geneva, Switzerland, STM, and its subsidiaries design, develop, manufacture, and sell semiconductor products in Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company has three operating segments: Automotive and Discrete Group; Analog, MEMS, and Sensors Group; and Microcontrollers and Digital ICs Group. The company has a market capitalization of $33.46 billion.
Recently STM disclosed details of its collaboration with Microsoft, an ST Authorized partner, to strengthen the security of emerging Internet-of-Things (IoT) applications. ST is unifying its ultra-low-power STM32U5 microcontrollers (MCUs) with Microsoft Azure RTOS and IoT Middleware, and a certified secure implementation of Arm® Trusted Firmware-M (TF-M) secure services for embedded systems. This thorough engineering project has produced a TF-M based, Azure IoT cloud reference implementation that leverages the inured security features of the STM32U5, complemented with the hardened key store of a STSAFE-A110 secure element.
Recently, STM created a new AWS FreeRTOS-qualified, TF-M-based reference implementation, collaborating with Amazon Web Services (AWS), an ST Authorized partner, to connect Internet of Things (IoT) devices seamlessly and securely to the AWS cloud. "The superior security built into our STM32U5 MCUs supports the creation of trusted IoT devices to connect to the AWS cloud," said Daniel Colonna, Marketing Director, Microcontroller Division of STM.
In the first quarter, ending April 2, 2022, STM's net revenues increased 17.7% year-over-year to $3.55 billion. Its operating income grew 99.5% from its year-ago value to $877.00 million, while its net income improved 105.1% from its prior-year quarter to $747.00 million. The company's EPS amounted to $0.79, up 102.6% year-over-year.
Analysts expect STM's revenue to increase 24.7% year-over-year to $3.73 billion for the second quarter, ending June 30, 2022. The company's EPS is expected to grow 71.6% year-over-year to $0.79 in the second quarter, ending June 30, 2022. Furthermore, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has declined 24.3% in price so far this year.
It is no surprise that STM has an overall A rating, equating to Strong Buy in our POWR Ratings system. STM has a B grade for Sentiment, Growth, and Quality. In the B-rated Semiconductor & Wireless Chip industry, it is ranked #3 of 95 stocks. Click here to see the additional POWR Ratings for STM (Stability, Momentum, and Value).
Click here to checkout our Semiconductor Industry Report for 2022
James Hardie Industries plc (JHX)
Headquartered in Dublin, Ireland, JHX, along with its subsidiaries, manufactures and sells fiber cement, fiber gypsum, and cement-bonded building products for interior and exterior building construction applications primarily in the United States, Australia, Europe, New Zealand, the Philippines, and Canada. It has a market capitalization of $12.03 billion.
During the third quarter, ending December 31, 2021, JHX's net sales increased 22% year-over-year to $900.00 million. Its adjusted EBIT grew 22% from its year-ago value to $204.1 million, while its adjusted net income improved 25% from its prior-year quarter to $154.1 million. The company's EPS rose 100% year-over-year to $0.30.
Analysts expect JHX's revenue to increase 21.5% year-over-year to $980.69 million for the fourth quarter, ending March 31, 2022. The stock has declined 34.7% in price year-to-date.
JHX's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Quality and a B for Sentiment and Stability. Within the B-rated Industrial - Building Materials industry, it is ranked #10 of 48 stocks.
In total, we rate JHX on eight distinct levels. Beyond what we have stated above, we have also given JHX grades for Growth, Value, and Momentum. Get all the JHX ratings here.
Click here to check out our Industrial Sector Report for 2022
TRMB shares were trading at $65.94 per share on Friday afternoon, up $3.26 (+5.20%). Year-to-date, TRMB has declined -24.37%, versus a -15.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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