Value, performance and growth you can count on
We could lay out for days the risks the market faces and the potential depth of the correction to come, but we won’t. Today, we’re here to take stock of a few stocks that we believe will perform well over the next few years, regardless of general market and economic conditions. These actions include what we consider to be the three pillars of a great investment; value, yield and growth, and they all have a bullish technical outlook for stock prices as well. We don’t know if the S&P 500 (NYSEARCA: SPY) goes into a deeper correction or will maintain the bear market it was in, but we know these companies are well positioned for the current economic conditions, have growth in the forecast, pricing power, pay dividends at high yield and may be expected to increase their dividend payouts over time.
Kraft Heinz is a textbook turnaround story
Kraft Heinz (NASDAQ: KHC) is not a new title in the Marketbeat.com universe of coverage, but it is quite unique in that it is a classic investment turnaround story. We have covered this stock for years and the news has only gotten better over this time and now the market is on the verge of a major breakout. The final chapter of this story is analyst coverage. There hasn’t been strong coverage and there are only 8 current ratings, but sentiment is heating up. In light of the early nature of this rally story, this is good news that could produce a strong tailwind for stock prices.
As it stands, the consensus estimate is 5% lower than the price action, but it tends to rise in the 12, 3 and 1 month comparisons. This year’s activity includes insider coverage with a price target in line with consensus and several price target upgrades to include the high price target of $47. This target is just under 10% above current price action, but it is also a new three-year high and the highest level since the market capitulated after the scandal in 2019. Regardless, KHC is still trading at just 16x earnings versus 27x. at 35X for the most valued consumer staples stocks and it yields 3.71%, which is above the group average.
Kellogg, a consumer staple with pricing power
Kellogg (NYSE:K) made headlines when it released its earnings because it proved it had pricing power. This is important in a world where consumers are cutting back on spending and should help maintain the earnings outlook and even expand the margin. In activity, organic strength across all categories supported results. The most important factor is that cash flow and free cash flow have increased significantly compared to last year thanks to internal improvements which should help maintain dividend increases this year. The company is currently trading at around 17x earnings while paying out 53% of its Marketbeat.com earnings consensus and reporting 3.3%.
Whirlpool reverses on mixed results
The hot tub (NYSE: WHR) First quarter results may have been mixed compared to analysts’ estimates, but some things are clear. The first is that the company’s business is healthy and supported by strong demand and a large order book. The second is cash flow and earnings are plentiful and the dividend is well supported. The third is that, trading at just 7.7x earnings and paying 3.7% yield, it is a deep value and high-yielding blue chip stock that has already seen a correction. 30% and started to rebound. We don’t expect much in terms of stock prices, but we do see support at $170 and an upward bias in the action, so expect to see limited trading at the worst.