With inflation still hovering around a decades-long high and the US economy expanding in the third quarter, another aggressive rate hike is set for this week. With macroeconomic headwinds set to intensify, investing in resilient stocks Walmart (WMT) and Oracle (ORCL) can provide your portfolio with solid downside protection. Read more.
While inflation is still floating almost the highest level in 40 years and the US economy is growing in the third quarter, the central bank is expected to raise interest rates by another 75 basis points this week.
As voices for slower rate hikes have grown louder after this week’s meeting, Jason Furman, a Harvard economist who served as top adviser to former President Obama, sees the fed-funds rate that will eventually reach 5.25% next yearwith a significant risk of reaching an even higher level.
With the Fed’s determination to slow the economy through tighter policy measures, markets are expected to witness increased volatility in the coming months. Therefore, stocks that are well positioned to survive volatility and deliver stable returns may now be ideal investments.
We think Walmart Inc. (WMT) and Oracle Corporation (ORCL) are two such stocks that can protect your portfolio from the potential downtrend. These stocks have weathered market pressures well and are fundamentally strong enough to remain resilient in the months ahead.
Walmart Inc. (WMT)
As a world-renowned big box retailer, WMT provides opportunities to purchase a range of goods and services at everyday low prices (EDLP) in stores and through e-commerce platforms. The company operates through three segments: Walmart US; Walmart International; and Sam’s Club.
On October 27, 2022, WMT and Netflix (NFLX) announced an in-store expansion of the popular Netflix Hub to more than 2,400 stores. It would offer customers a brand new streaming gift card, fan-favorite exclusives and more.
On October 26, WMT announced the completion of the renovation of its converted Texas Regional Distribution Center, transforming it into a high-tech automation center. This investment is intended to modernize Walmart’s extensive supply chain network to increase the speed, efficiency and security of product distribution.
Also, WMT and ANGI HomeServices Inc. on October 26 (ANGIA) announced the launch of a new product integration where customers who purchase nearly all of Walmart’s Christmas lights can easily add professional installation on Angi. As this bundling would provide additional value to customers, it is expected to have a positive impact on revenue for both companies.
For the second quarter of fiscal year 2023 ending July 2022, WMT’s total revenue grew 8.4% year over year to $152.86 billion. The company’s consolidated net income attributable to WMT increased 20.4% year-over-year to $5.15 billion or $1.88 per common share, up 23.7% year-over-year. year. WMT’s total assets were $247.20 billion as of July 31, 2022, compared to $238.55 billion a year ago.
WMT’s revenue and EPS for the fiscal year ending January 2024, is expected to increase 3.1% and 12.8% year-over-year to $613.68 billion and $6.60, respectively. The company has an impressive history of earnings surprises, as it surpassed consensus EPS estimates in three of its lagging four quarters.
The stock gained 8.4% in the past month and closed its last trading session at $142.51.
WMTs POWR ratings reflect solid prospects. The stock has an overall rating of A, which equates to a strong buy in our proprietary rating system. The POWR Ratings rate stocks on 118 different factors, each with its own weighting.
WMT has class B for growth, stability, sentiment and quality. It ranks number 5 out of 38 stocks within the A rating Grocery/Big Box Retailers industry
click here to see WMT’s additional POWR ratings for value and momentum.
Oracle company (ORCL)
ORCL offers products and services that are tailored to the needs of business IT environments. The company offers its cloud, licensing, hardware, support and services offerings, including applications, platforms and infrastructure, directly to companies across a variety of industries.
On October 20, ORCL announced its expanded partnership with NVIDIA Corp. (NVDA) to add tens of thousands of NVDA’s AI-processing graphics chips to its cloud and give customers access to NVIDIA software tools that can get even more performance out of it. Powerful cloud computing services broaden access to machine learning, data-hungry AI systems that were previously unreachable.
For the first quarter of fiscal year 2023 ending August 31, 2022, ORCL’s total revenue increased 17.7% year-over-year to $11.45 billion. The company’s non-GAAP operating income increased 3.3% year-over-year to $4.48 billion. The company’s total assets were $130.31 billion as of August 31, 2022, compared to $109.30 billion as of May 31, 2022.
ORCL’s revenue and earnings per share for fiscal 2023 are expected to grow 16.5% and 1.5% year-over-year to $49.45 billion and $4.97, respectively. The stock gained 23.8% last month and closed its last trading session at $77.36.
ORCL’s strong fundamentals are reflected in B’s overall rating, which translates to a Buy in our POWR Ratings system. It also has a grade B for growth and stability.
It ranks number 25 out of 146 shares in the Software application industry.
In addition to the above, additional POWR ratings for ORCL for value, momentum, sentiment and quality can be found here.
WMT shares traded at $142.33 per share Monday afternoon, down $0.18 (-0.13%). Year-to-date, the WMT is down -0.46%, versus the benchmark S&P 500 index’s gain of -17.74% over the same period.
About the author: Santanu Roy
Fascinated by the traditional and evolving factors influencing investment decisions, Santanu decided to pursue a career as an investment analyst. Before moving to investment research, he was a process officer at Cognizant. With a master’s degree in business administration and a fundamental approach to analyzing companies, he aims to help private investors identify the best long-term investment opportunities.
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