4 A-rated stocks to buy before the end of this month
Continued inflation could lead to more rate hikes this year, which could keep the stock market under pressure. Therefore, investors should consider buying fundamentally strong shares of Stellantis (STLA), Honda Motor (HMC), MasterCraft Boat (MCFT) and Genie Energy (GNE) given the uncertainties. These stocks are rated A (Strong Buy) in our proprietary rating system. Read more.
The benchmark S&P 500 index is up 6% year-to-date and the tech-heavy Nasdaq Composite is up 13% over the same period. While the stock market appears to be improving this year, the Fed is expected to keep interest rates high, which may continue to weigh on market sentiment.
US inflation increased by 6.4% year-on-year in January 2023. Despite easing price pressures, inflation remains well above the Fed’s target of 2%. The CPI increased by 0.5% in January much higher than the 0.1% increase in the previous month.
In addition, regional Fed presidents Loretta Mester and James Bullard said more rate hikes may be needed to tame the hot inflation. Their comments also raised concerns about a possible 50 basis point hike in Fed Funds rates at the upcoming central bank policy meeting.
The Fed could end up crushing the economy as it struggles to rein in rising prices. Therefore, investors should consider buying fundamentally strong shares of Stellantis NV (STLA), Honda Motor Co.,Ltd. (HMC), MasterCraft Boat Holdings, Inc. (MCFT), and Genie Energy Ltd. (GNE) to navigate such uncertainties.
Our own POWR ratings system currently has an A rating (Strong Buy) for these stocks. In addition, they pay stable dividends.
Stellantis N.V. (STLA)
STLA, headquartered in Hoofddorp, the Netherlands, designs, develops, manufactures, distributes and sells vehicles, components and production systems. The company’s portfolio of brands includes Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Fiat Professional, Jeep, Lancia, Ram, Peugeot, Citroën, DS Automobiles, Opel and Vauxhall, and Maserati.
On February 15, STLA announced that it is expanding its software development and engineering network to eight hubs by establishing a new facility in Poland, in partnership with GlobalLogic Inc., a digital engineering services provider, to recruit talent and the Polish software hub quick to set up. .
The companies’ new phase of collaboration will enable STLA to maximize its ability to evolve and deliver customizable open automotive platforms.
STLA’s four-year average dividend yield is 10.66% and its annual dividend of $1.12 translates to a yield of 6.49% at the prevailing price. The company’s dividend has grown at a CAGR of 17.3% over the past three years.
During the half-year ended June 30, 2022, STLA’s net income grew 21.2% year-over-year to €88 billion ($93.81 billion). Operating income rose 40.5% from the same period last year to €10.32 billion ($11 billion). Net profit and earnings per share were €7.96 billion ($8.49 billion) and €2.47, up 17.2% and 17.1% year-on-year, respectively.
Analysts expect STLA revenue to grow 9.1% year over year to $187.54 billion for fiscal year 2022. Earnings per share are expected to reach $5.52 in the same year.
The stock gained 14.7% over the past six months to close out the last trading session at $16.66.
STLA’s POWR ratings reflect its promising outlook. The stock has an overall rating of A, which translates to a strong buy in our proprietary rating system. The POWR ratings are calculated by considering 118 different factors, with each factor optimally weighted.
It also has an A rating for value and a B for stability and sentiment. It ranks number 9 out of 61 stocks in the Car and vehicle manufacturers industry.
click here to see STLA’s additional assessments for growth, momentum and quality.
Honda Motor Co., Ltd. (HMC)
Headquartered in Tokyo, Japan, HMC develops, manufactures and distributes motorcycles, automobiles, electrical products and other products in Japan, North America, Europe, Asia and internationally. It operates through four segments: Motorcycle Business; Car company; financial service providers; and Life Creation and Others.
On January 13, HMC and LG Energy Solution announced the formal establishment of a joint venture to manufacture lithium-ion batteries for HMC electric vehicles.
The joint venture will begin construction of a new battery factory early this year with a goal of completion by the end of 2024 and mass production of advanced lithium-ion battery cells by the end of 2025. The factory aims to have an annual production capacity of approximately 40GWh.
While HMC has a four-year average dividend yield of 3.99%, it pays out $1.42 per share annually, which translates to a yield of 5.57% at current price levels. Dividend payments have grown at a CAGR of 6.7% over the past three years.
During the fiscal third quarter ended December 31, 2022, HMC’s revenue increased 20.3% year over year to ¥4.44 trillion ($32.96 billion). The company’s earnings for the period grew 27.7% yoy to ¥265.14 billion ($1.96 billion), while earnings per share attributable to parent company owners increased 28.5% yoy up to ¥144.49.
HMC’s revenue is expected to grow 15.9% year-over-year to $33.40 billion in the fiscal first quarter ending June 2023. In addition, it has surpassed consensus revenue in three of the next four quarters, which is impressive.
Shares of HMC are up 13.3% year-to-date to close out the last trading session at $25.90.
HMC’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of A, which equates to a strong buy in our proprietary rating system.
The stock is rated A for value and a B for quality and stability. It is number 2 within the car and vehicle manufacturers industry.
In addition to what was mentioned above, we also assessed HMC for growth, momentum and sentiment. Get all HMC ratings here.
MasterCraft Boat Holdings, Inc. (MCFT)
MCFT designs, manufactures and markets recreational power boats. The company operates through four segments: MasterCraft; Comb; NauticStar; and Aviara.
On November 2, MCFT announced an expansion of its popular entry-level NXT lineup with the all-new 2023 NXT21 and NXT23. The new models deliver best-in-class wave performance, additional storage space, a spacious hybrid arc design and standard telematics.
Durable and uncomplicated, the two new entry-level offerings offer boaters the ultimate all-day on-water experience at an accessible price point. This should help the company expand its customer base.
MCFT’s net sales increased 10.2% year over year to $159.19 million in the second quarter of fiscal 2023, which ended January 1, 2023. adjusted EBITDA grew 9.8% year over year to $29.82 million. Adjusted net income increased 11% over the same quarter last year to $21.27 million, while adjusted earnings per share increased 18.8% year over year to $1.20.
Street expects MCFT’s earnings per share and revenue to reach $1.04 and $158.14 million in the fiscal third quarter ending March 2023. In addition, the company has updated consensus estimates for earnings per share and revenue in each of over the next four quarters.
The stock gained 47.6% over the past nine months and 18.9% over the past year to close out the last trading session at $33.24.
It’s no surprise that MCFT has an overall rating of A, which equates to a strong buy in our POWR rating system.
The stock is rated B for value, sentiment and quality. MCFT is ranked number 2 out of 37 stocks in the Athletics & Recreation industry.
In addition to the POWR ratings highlighted above, one can access MCFT’s growth, momentum and stability figure here.
Genie Energy Ltd. (GNE)
GNE and its subsidiaries provide electricity and natural gas to residential and small business customers internationally. It has three operating segments: Genie Retail Energy (GRE); GRE International; and Genie Renewable Resources.
On December 6, 2022, GNE’s subsidiary Genie Solar received notice to proceed with construction of its first company-owned community solar generation project. Given the environmental and economic benefits of solar development in the community, GNE looks forward to expanding to additional locations in the coming months.
The current annual dividend of $0.30 yields 2.38% on prevailing prices. GNE’s four-year average dividend yield is 2.93%.
During the fiscal third quarter (ending September 30, 2022), GNE’s gross profit increased 24.7% year over year to $43.14 million. The company’s operating income increased 34.8% year-over-year to $23.54 million, while adjusted EBITDA increased 35.4% from the prior year to $24.50 million.
Also, net income attributable to common stockholders of GNE was $18.31 million compared to a net loss of $2.66 million in the same quarter last year. In addition, earnings per share attributable to GNE common stockholders were $0.70 compared to a net loss per share of $0.10 in the same quarter last year.
The stock gained 106.1% over the past year to close out the last trading session at $12.43. Moreover, it is up 19.8% in the last month.
GNE’s robust outlook is reflected in the POWR ratings. The stock has an overall rating of A, which translates to a strong buy in our proprietary rating system.
It has an A rating for Value and Momentum and a B for Growth. Within the 64 stock Utilities – Domestic industry, it ranks number 2.
To access GNE’s ratings for stability, sentiment and quality, click here.
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STLA shares were unchanged in premarket trading Wednesday. Year-to-date, STLA has gained 17.32% versus a 4.36% gain in the benchmark S&P 500 index over the same period.
About the author: Kritika Sarmah
Her interest in risky instruments and passion for writing turned Kritika into an analyst and financial journalist. She received her bachelor’s degree in commerce and is currently attending the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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