Value, Yield, And Growth That You Can Count On
We could expound for days on the risks facing the market and the potential depth of the oncoming correction but we won’t. Today we're here to touch base on a few stocks that we expect to do well over the next few years regardless of the broad market and economic conditions.
These stocks include what we view as the three pillars of a great investment; value, yield, and growth, and they’ve all got a bullish technical outlook for share prices as well.
We don’t know if the S&P 500 is going into a deeper correction or will maintain the rolling bear market it has been in, but we do know these companies are well-positioned for today’s economic conditions, have growth in the forecast, pricing power, pay high-yielding dividends and can be expected to increase their dividend payouts over time.
1. Kraft Heinz Is A Text Book Turnaround Story
Kraft Heinz (NASDAQ:KHC) is not a new stock to the Marketbeat.com coverage universe but it is a very unique one in that it is a textbook investment turnaround story. We’ve covered this stock for years and the news has only gotten better in that time and now the market is poised for a major breakout.
The latest chapter in this story is the analyst coverage. There has not been a robust amount of coverage and there are only 8 current ratings but the sentiment is warming. In light of the early nature of this turnaround story, that is good news and one that could produce a strong tailwind for share prices.
As it is now, the consensus estimate is 5% below the price action, but it is trending higher in the 12, 3, and 1-month comparisons. The activity this year includes one initiated coverage with a price target in line with the consensus and several price target upgrades to include the high price target of $47.
That target is just shy of 10% above the current price action but is also a new three-year high and the highest level since the market capitulated post-scandal in 2019.
Regardless, KHC is still trading at only 16X its earnings compared to 27X to 35X for the highest valued consumer staples stocks and it is yielding 3.71% which is above the group average.
2. Kellogg, A Consumer Staple With Pricing Power
Kellogg Company (NYSE:K) made headlines when it reported earnings because it proved it has pricing power. This is important in a world where consumers are cutting back on their spending and is expected to help maintain the earnings outlook if not widen the margin.
As for the business, organic strength in all categories underpinned the results. The most important factor is that cash flow and free cash flow are up significantly versus last year on internal improvements that should help sustain dividend increases this year.
The company currently trades at roughly 17X its earnings while paying out 53% of its Marketbeat.com earnings consensus and yielding 3.3%.
3. Whirlpool Reverses On Mixed Results
Whirlpool Corporation's (NYSE:WHR) Q1 results may have been mixed in relation to the analyst estimates, but a few things are clear. The first is the company’s business is sound and supported by high demand and a large backlog.
The second is cash flow and earnings are ample and the dividend is well supported. The third is that trading at only 7.7X its earnings and paying 3.7% in yield it is a deep-value and a high-yielding blue-chip stock that has already seen a 30% correction and begun to rebound.
We aren’t predicting great things in terms of share prices but we do see support at $170 and an upward bias in the action so expect to see range-bound trading at the worst.
