Thanks to the encouraging data on fading inflationary pressures and steady economic growth, the Federal Reserve downshifted its rate hikes to 0.25 percentage points, marking a further deceleration in the central bank’s war on inflation.
Moreover, the U.S. job market outpaced expectations by adding an astonishing 517,000 jobs in January, crushing the Dow Jones estimate of 187,000. According to Janet Yellen, a recession is near impossible, given the historically low unemployment rate.
However, still being strongly committed to bringing inflation back to its 2% goal, Fed Chair Jerome Powell reiterated, “while recent developments are encouraging, we will need substantially more evidence to be confident that inflation is on a sustained downward path.”
Despite signs that inflation has peaked and hopes for an economic soft landing, asset manager Janus Henderson cautioned the investors as he predicted the corporate financial health to worsen. Seeing the market fall for most of the past year, investors are anxious about whether the Fed can navigate a so-called soft landing for the U.S. economy without tipping it into a recession.
Nonetheless, irrespective of the market conditions, investors should load up some winning stocks, Oracle Corporation (ORCL), CVS Health Corporation (CVS), and Halliburton Company (HAL), with solid fundamentals and promising growth prospects.
Oracle Corporation (ORCL)
ORCL provides products and services that address all aspects of corporate IT environments, including applications, platforms, and infrastructure worldwide. The company operates through cloud services and license support, cloud license, and on-premises license, hardware, and services segments.
Recently, Dominion Energy Virginia plugged into ORCL to implement Oracle Utilities Outage Management System and new advanced distribution management (ADMS) capabilities in Oracle Utilities Network Management System to help improve its network visibility, reliability, and outage management response.
Through the constant evolution of ADMS technologies, this collaboration should enable both companies to help utilities meet their most pressing DER, customer service, regulatory, and other business challenges.
On February 2, 2023, ORCL announced that Mizuho Bank, Ltd., one of Japan’s largest financial services organizations and the integrated retail and corporate banking unit of Mizuho Financial Group, Inc. (MFG), is modernizing its legacy banking system for international operations by integrating ORCL’s banking solutions to support critical functions.
With the ORCL foundation, the bank should be able to continue to evolve its services and products to best meet the needs of its clients and stakeholders worldwide, thereby boosting ORCL’s growth.
ORCL’s four-year average dividend yield is 1.59%, and its current dividend of $1.28 translates to a 1.45% yield on the current price level. Its dividends have grown at a 10.1% CAGR over the past three years and an 11% CAGR over the past five years. The company has a record of eight years of consecutive dividend growth.
In the fiscal second quarter that ended November 30, 2022, ORCL’s total revenue increased 18.5% year-over-year to $12.28 billion. Its non-GAAP operating income grew 4.8% year-over-year to $5.09 billion. The company’s net income came in at $1.74 billion compared to a net loss of $1.25 billion in the previous-year quarter. Its non-GAAP EPS remained flat year-over-year at $1.21.
Analysts expect ORCL’s revenue for the quarter ending February 2023 to increase 18.1% year-over-year to $12.42 billion. Its EPS for the current quarter is expected to increase 6.5% from the year-ago period to $1.20. Over the past nine months, the stock has gained 21% to close the last trading session at $87.74.
ORCL’s POWR Ratings reflect its solid prospects. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a B grade for Stability and Sentiment. In the Software - Application industry, it is ranked #31 of 136 stocks. Click here to see the other ratings of ORCL for Growth, Value, Momentum, and Quality.
CVS Health Corporation (CVS)
CVS is a health service provider operating through four segments: Health Care Benefits; Pharmacy Services; Retail/LTC; and Corporate/Other. Its offerings include health & wellness services, health plans, pharmacy services, and prescription drug coverage.
On January 24, 2023, CVS Accountable Care Organization, Inc., a division of the CVS Health family of businesses, announced a collaboration with RUSH University System for Health (RUSH) to expand access for Medicare patients to RUSH clinical services in the Chicago area.
This agreement reflects a strong commitment and establishes the new Accountable Care collaboration that emphasizes health equity, coordinated care, and improved access for patients.
On December 15, 2022, the company’s board of directors declared a quarterly dividend of $0.605 per share on its common stock, payable on February 1, 2023, reflecting an increase of 10% from the previous quarter.
CVS’ four-year average dividend yield is 2.76%, and its current dividend of $2.42 translates to a 2.84% yield on the current price level. Its dividends have grown at a 4.1% CAGR over the past three years and a 2.4% CAGR over the past five years.
In the same month, CVS announced the opening of its first MinuteClinic locations in northern Delaware. MinuteClinic would provide high-quality, affordable, and convenient care for acute and chronic conditions for patients aged 18 months and older.
“With only 16.4% of the primary care physicians needed currently available in Delaware, we are focused on expanding our presence to help increase access to high-quality, affordable health care for people in the communities where they live and work.”, said Creagh Milford, Senior Vice President of Retail Health at CVS.
CVS’ total revenue for the fiscal third quarter that ended September 30, 2022, increased 10% year-over-year to $81.16 billion. The company’s adjusted operating income grew 3.9% year-over-year to $4.23 billion, while its adjusted attributable net income rose 5.3% from the year-ago value to $2.76 billion. Also, its adjusted EPS increased 6.1% year-over-year to $2.09.
Street expects CVS’ EPS and revenue for the fiscal year 2022 to increase 2.8% and 7.7% year-over-year to $8.64 and $314.70 billion, respectively. It surpassed the EPS estimates in each of the trailing four quarters. The stock has lost 6.1% over the past month to close the last trading session at $85.98.
CVS’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Value, Stability, and Sentiment. It is ranked first out of four stocks in the B-rated Medical - Drug Stores industry. To see the other ratings of CVS for Momentum and Quality, click here.
Halliburton Company (HAL)
HAL provides energy, engineering, and construction products and services to the energy industry through its Completion and Production; and Drilling and Evaluation segments worldwide.
On January 24, the company increased the first quarter dividend by 33% to $0.16 per share on the common stock, payable to its shareholders on March 29, 2023. HAL’s four-year average dividend yield is 2.41%, and its forward annual dividend of $0.64 translates to a 1.67% yield on current prices.
On November 29, 2022, HAL successfully installed the industry’s first single trip, electro-hydraulic wet connect in deepwater for Petrobras in Brazil. This marks a significant achievement in downhole electric completion technology. It should enable the company to provide its customers autonomous capability to control and manage reservoirs across their wells and assets.
For the fourth quarter that ended December 31, 2022, HAL’s total revenue increased 30.5% year-over-year to $5.58 billion. Its operating income grew 77.5% year-over-year to $976 million, while adjusted net income attributable to HAL increased 105% year-over-year to $656 million. The company’s adjusted EPS increased 100% from its prior-year quarter to $0.72.
Analysts expect HAL’s EPS and revenue for the fiscal first quarter (ending March 31, 2023) to increase 92% and 28.4% year-over-year to $0.67 and $5.50 billion, respectively. The stock surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.
Shares of HAL have gained 40.5% over the past six months to close the last trading day at $39.03.
It is no surprise that HAL has an overall rating of B, which translates to Buy in our POWR Ratings system. It has an A grade for Momentum and a B for Growth, Sentiment, and Quality. Out of 43 stocks in the B-rated Energy – Services industry, it is ranked #8.
Beyond what we’ve stated above, we’ve also rated HAL for Value and Stability. Get all HAL ratings here.
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ORCL shares fell $0.24 (-0.27%) in premarket trading Wednesday. Year-to-date, ORCL has gained 7.45%, versus a 8.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound 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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