The red-hot inflation is increasing the odds of continued rate hikes by the Fed. Since the market is expected to remain under pressure on recession fears, it could be wise to invest in fundamentally sound stocks Comcast Corporation (CMCSA), GSK (GSK), and Masonite International (DOOR), which have been recently upgraded in our proprietary rating system. Read on….
The latest Consumer Price Index (CPI) report stoked wild swings in the market and has increased the prospects of further rate hikes by the Fed. An elevated inflation level for longer-than-expected could expand the effect of the Fed’s policy tightening, thus pushing the economy into a recession.
With inflation showing no signs of abating, the rate-setting Federal Open Market Committee lowered its GDP projections in the September meeting and now expects it to grow at an annualized pace of 0.2% in 2022 and 1.2% in 2023, significantly below the 2021 trend.
On the bright side, the third-quarter corporate earnings reports have been adequate so far and show no signs of a dramatic collapse, as investors anticipated. Of the 35 companies that have reported earnings, 68.5% have beaten their estimates, according to Refinitiv.
Given the backdrop, we think investors should consider buying fundamentally sound stocks Comcast Corporation (CMCSA), GSK plc (GSK), and Masonite International Corporation (DOOR) this week, as they have been recently upgraded in our proprietary POWR Ratings system.
Comcast Corporation (CMCSA)
CMCSA operates as a media and technology company worldwide through its Cable Communications; Media; Studios; Theme Parks; and Sky segments.
In October, CMCSA opened a new Xfinity store in Burlington to meet the needs of its local customers. The new store provides a complete line of Xfinity products and services ranging from smart home security solutions to Xfinity Mobile and Supersonic WiFi. This should help the company expand its revenue stream.
CMCSA’s revenue increased 5.1% year-over-year to $30.02 billion for the second quarter that ended June 30, 2022. Its operating income came in at $6.37 billion, up 15.6% year-over-year. Also, its adjusted net income came in at $4.51 billion, up 14.3% year-over-year, while its adjusted EPS stood at $1.01, up 20.2% year-over-year.
Street expects CMCSA’s revenue to increase 4.5% year-over-year to $121.59 billion in fiscal 2022, while its EPS is expected to grow 11% year-over-year to $3.59 in the same period. The company also surpassed EPS estimates in all four trailing quarters.
The stock has slumped marginally intraday to close the last trading session at $30.05.
CMCSA’s POWR Ratings reflect its promising outlook. On October 13, the stock’s overall rating was upgraded to an A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
It has a B grade for Value and Quality. Within the Entertainment – TV & Internet Providers industry, it is ranked first among nine stocks.
Click here for the additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for CMCSA.
GSK plc (GSK)
Headquartered in Brentford, United Kingdom, GSK engages in manufacturing, and marketing pharmaceutical products, vaccines, over-the-counter medicines, and health-related consumer products. It operates through four segments- Pharmaceuticals; Pharmaceuticals R&D; Vaccines; and Consumer Healthcare.
On September 22, 2022, GSK and Spero Therapeutics, Inc. announced an exclusive license agreement for Spero’s late-stage antibiotic asset, Tebipenem HBr, the first oral carbapenem antibiotic being developed for the treatment of complicated urinary tract infections (UTI).
Luke Miels, Chief Commercial Officer, GSK, said, “Tebipenem HBr complements GSK’s infectious disease strategy and is consistent with our commitment to find value-enhancing opportunities to build a strong late-stage portfolio.”
On July 27, GSK announced that the U.S. FDA approved Benlysta (belimumab) for treating active lupus nephritis (LN) in children aged 5 to 17 years. This first-ever FDA-approved treatment for pediatric LN marks a significant step in providing treatment to children at risk of early kidney damage.
For the fiscal second quarter of 2022, GSK’s continuing operations turnover increased 19% year-over-year to £6.93 billion ($7.10 billion). Its gross profit grew 15% from the year-ago value to £4.75 billion ($4.87 billion). Adjusted operating profit for the quarter stood at £2.01 billion ($2.06 billion), reflecting a 22% increase year-over-year.
GSK’s EPS for the fiscal year ending December 2023 is expected to come in at $3.23, reflecting an increase of 4.7% year-over-year. The consensus revenue estimate of $32.41 billion for the same period represents a 2.2% increase year-over-year.
The stock gained 2% intraday to close the last trading session at $31.32.
GSK’s overall rating was upgraded to A (Strong Buy) in our POWR Rating system on October 13. GSK also has an A grade in Value and a B in Quality and Stability. Out of the 163 stocks in the Medical – Pharmaceuticals industry, it is ranked #17.
Click here to access additional POWR Ratings for Sentiment, Growth, and Momentum for GSK.
Masonite International Corporation (DOOR)
DOOR designs, manufactures, markets, and distributes interior and exterior doors for new construction and repair, renovation, and remodeling sectors of the residential and non-residential building construction markets worldwide. The company offers its products under various brand names, including Masonite, Premdor, Masonite Architectural, Marshfield-Algoma, USA Wood Door, Solidor, Door-Stop International, and BWI.
On September 29, DOOR announced the expansion of its M-Pwr™ Smart Doors home builder portfolio with the addition of five new builder partners. M-Pwr™ Smart Doors is the first residential exterior door with LED welcome lights, a video doorbell, and a smart lock in the door system.
For the fiscal second quarter of 2022, DOOR’s net sales increased 15% year-over-year to $761.87 million. Its net income grew 64.5% from the year-ago value to $59.37 million, while its adjusted EBITDA stood at $118 million, reflecting a 6.8% increase year-over-year. Moreover, its adjusted EPS was $2.58, up 15.7% from the prior-year quarter.
Analysts expect DOOR’s revenue for the fiscal quarter ended September 2022 to come in at $694.93 million, indicating a 6.6% year-over-year increase. Its EPS is expected to improve 25.2% year-over-year to $2.49. DOOR beat the consensus EPS estimates in all the trailing four quarters, which is impressive.
DOOR’s shares have gained 4% intraday to close the last trading session at $70.32.
On October 10, DOOR’s overall rating was upgraded to A, which equates to a Strong Buy in our POWR Ratings system.
In addition, the stock has a B grade in Value, Sentiment, and Growth. In the 61-stock Home Improvement & Goods industry, DOOR is ranked #2.
Beyond what is stated above, we have also rated DOOR for Momentum, Stability, and Quality. Click here to get DOOR’s POWR Ratings.
CMCSA shares were trading at $30.81 per share on Monday afternoon, up $0.76 (+2.53%). Year-to-date, CMCSA has declined -37.16%, versus a -21.88% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal’s passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.