A strong labor market has renewed concern about continued rate hikes amid endless debate about an impending recession or a strong recovery. With the Fed’s next steps likely to act as a speed bump, the fundamentally strong companies that investors have been buying this year, Comcast ( CMCSA ) and Spok Holdings ( SPOK ), could secure solid returns. Read more….
The rise in retail sales combined with January’s job growth report points to a strong economy with positive momentum. January retail sales up 3% from the previous month, beating expectations for a 1.9% increase and more than offsetting December’s decline.
The resilience shown by a tight labor market fueling a robust economy has fueled fears that the Fed may continue to tighten monetary policy more than previously predicted. In addition, leading economic indicators, such as inverted yield curvepoint to a possible mild economic downturn in the future.
However, economists at Goldman Sachs Group, Inc.G.S) believe that its current extent The yield curve inversion may be short-lived. “Much of the inversion seen in current US yield curves does not stem from high probabilities of a recession or normalizing inflation, but rather from low long-term levels of real interest rates,” the economists said.
However, given how far inflation is from the Fed’s target range, investors should stick with stocks that performed well during last year’s turbulent market. Additionally, the potential for a stronger Fed could be a catalyst for renewed volatility in the coming months.
Fundamentally strong stocks, Comcast Corporation (CMCSA) and Spok Holdings, Inc. (GHOST), with promising growth prospects, could help tide over the volatile market. Therefore, these stocks that investors seem to be buying this year may be ideal picks for one’s portfolio this year.
Comcast Corporation (CMCSA)
CMCSA is a global media and technology company operating in five segments: Cable Communications; Media, Studios; Theme parks; and Sky.
On January 26, 2023, the company increased its dividend by $0.08 to $1.16 per share on a year-over-year basis, up 7.4% year-over-year. In accordance with the increase, CMCSA declared a quarterly dividend of $0.29 per share on its common stock, payable to its shareholders on April 26, 2023.
CMCSA’s four-year average dividend the yield is 2.11% and the current dividend of $1.16 translates to a yield of 2.97% at the current price level. Its dividends have grown at 8.7% CAGR over the past three years and 11.4% CAGR over the past five years.
On December 12, 2022, CMCSA launched the world’s first live, symmetric multi-gigabit Internet connection powered by 10G and Full Duplex DOCSIS 4.0. 10G technology. This technology promises to deliver next-level pure speed and performance to customers and is expected to significantly enhance CMCSA’s product portfolio.
For the 2022 fiscal year ending December 31, 2022, CMCSA’s revenue increased 4.3% from the prior year value to $121.43 million. The company’s adjusted net income rose 7.3% year over year to $16.15 million, while its adjusted EBITDA came in at $3.02 billion, up 5% from the prior year value. Also, its adjusted EPS rose 12.7% year over year to $3.64.
CMCSA’s EPS and revenue are expected to grow 11.5% and 2.9% year-over-year to $4.08 billion and $123.76 billion, respectively, in fiscal 2024 (ends December 2024). The company has beaten consensus EPS estimates in each of the last four quarters, which is excellent.
Shares of CMCSA gained 10.2% over the past three months to close the last session at $37.84. It has grown by 8.2% year-on-year.
CMCSA’s POWR Reviews reflect his solid outlook. It has an overall rating of B, which equates to a Buy in our proprietary rating system. POWR ratings evaluate stocks against 118 different factors, each with its own weighting.
It also has a B grade for stability and quality. Of his nine shares Entertainment – TV & Internet Providers industry, is in first place. To see CMCSA’s other Growth, Value, Momentum and Sentiment ratings, Click here.
Spoke Holdings, Inc. (GHOST)
SPOK operates as a healthcare communication solutions provider, offering a range of unified clinical communication and collaboration solutions. The company offers its products and services to three market segments: healthcare, government and large enterprises.
SPOK’s four-year average dividend yield is 6.63%, and the current dividend of $1.25 translates to a 13.9% yield at prevailing prices. Its dividends have grown at 35.7% CAGR over the past three years and 10.8% CAGR over the past five years. On December 9th, the company paid a quarterly dividend of $0.3125 per share to its shareholders.
For the fiscal third quarter ended Sept. 30, SPOK’s operating income was $3.54 million, up 199.5% year over year. Net income and net income per common share increased 217.1% and 215.4% from the prior quarter to $2.92 million and $0.15, respectively. Adjusted EBITDA improved 286.6% year over year to $4.66 million.
The consensus EPS estimate of $0.14 for the second quarter ending June 30, 2023, implies 40% year-over-year growth. The stock has gained 26% over the past six months to close last session at $8.97. It has gained 9.5% year to date.
SPOK’s strong outlook is reflected in POWR ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has an A for Development and Emotion and a B for Quality. Among 20 stocks in Telecommunications – Domestic industry, ranked #2. Click here to view additional SPOK (Value, Momentum and Stability) ratings.
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Shares of CMCSA were trading at $38.00 per share on Wednesday morning, up $0.16 (+0.42%). Year-to-date, CMCSA has gained 9.51%, versus a 4.34% gain for the benchmark S&P 500 over the same period.
About the Author: Shweta Kumari
Shweta’s deep interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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