4 No-Brainer Stocks to Buy in July
Despite concerns related to the spread of the COVID-19 delta variant having of late been reflected in the stock markets, the major U.S. stock indexes...
Despite concerns related to the spread of the COVID-19 delta variant having of late been reflected in the stock markets, the major U.S. stock indexes closed at record highs on July 9. And considering the market's expectation of another strong earnings season, we think it is wise to bet now on quality stocks Stanley Black & Decker (SKW), ArcelorMittal (MT), POSCO (PKX), and Darden Restaurants (DRI). These names possess quality financials and solid growth prospects. Let's take a closer look.
A stock market rally in the first half of the year, driven primarily by strong corporate earnings and an economic recovery, led to lofty valuations of most stocks. While the spread of the COVID-19 delta variant is of concern to investors, the low interest rate environment and optimism about a solid economic recovery have been driving the stock markets higher.
Ahead of the second quarter earnings season, which is scheduled to start this week, the three major United States' stock market indexes rallied to record closing highs on July 9 as the financial and other economically focused sectors grabbed significant investor attention. Furthermore, according to Fundstrat's Tom Lee, the S&P 500 could surge 9% to 4,700 by the end of 2021.
Against this favorable backdrop, we think it is wise to bet on fundamentally strong stocks Stanley Black & Decker, Inc. (SWK), ArcelorMittal (MT), POSCO (PKX), and Darden Restaurants, Inc. (DRI) that are all expected to thrive this month and beyond. These four stocks have been rated Strong Buy in our POWR Ratings system and have significant dominance in their respective industries.
Stanley Black & Decker, Inc. (SWK)
SWK is in the tools and storage, industrial, and security businesses worldwide. Its Tools & Storage segment offers power tools and equipment, including professional products. Its Industrial segment provides engineered fastening systems and products to customers, and its Security segment designs, supplies, and installs commercial electronic security systems and provides electronic security services. SWK is based in New Britain, Conn.
On April 28,SWK's CEO, James M. Loree, said "Our option to acquire the remaining stake in MTD in July has the potential to create an exciting multi-year runway for growth and significant EPS and cash flow accretion."
The company's net sales increased 34.1% year-over-year to $4.20 billion for its fiscal first quarter, ended April 3, 2021. Its operating income grew 159.1% year-over-year to $711.4 million, while its net earnings increased 265.7% year-over-year to $486.8 million. Also, its EPS came in at $2.98, up 238.6% year-over-year.
For its fiscal year 2021, analysts expect SWK's EPS and revenue to increase 23.8% and 14.4%, respectively, year-over-year to $11.19 and $16.63 billion. It surpassed the Street's EPS estimates in each of the trailing four quarters. The stock has gained nearly 52.2% over the past year to close Friday's trading session at $208.53.
SWK's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. It has an A grade for Growth and Sentiment, and a B grade for Value.
Headquartered in Luxembourg City, Luxembourg, MT owns and operates steel manufacturing and mining facilities. The company's principal steel products include semi-finished flat products, and its mining products consist of iron ore lumps, fines, concentrates, pellets, and sinter feeds.
On June 18, MT completed its second share buyback program, which it announced in March. It also commenced a third share buyback program that day under its 2021 AGM Authorization for a $750 million aggregate amount.
The company's sales surged 9.1% year-over-year to $16.19 billion for its fiscal first quarter, ended March 31, 2021. MT's EBITDA grew 235.3% year-over-year to $3.24 billion. Its adjusted net income came in at $2.28 billion, which represents a 920.1% sequential increase. MT's EPS was $1.94, up 92.1% sequentially.
Analysts expect MT's EPS and revenue to increase 1,915.8% and 40.3%, respectively, year-over-year to $3.45 and $18.61 billion for the quarter ending September 30, 2021. It surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has gained 185.3% over the past year to close Friday's trading session at $31.18.
MT's POWR Ratings reflect solid prospects. The company has an overall A rating, which translates to Strong Buy in our proprietary ratings system. It has an A grade for Growth, and a B grade for Value, Momentum, Sentiment, and Quality.
Headquartered in Pohang, South Korea, PKX manufactures and sells steel rolled products and plates internationally. It operates through four segments: Steel, Construction, Trading, and Others. The company's offerings include hot and cold rolled steel, stainless steel, plates, wire rods, and silicon steel sheets, among others.
The company announced on March 31, 2021, that it will supply 26,000 tons of steel plates to the construction of commercial facilities built by Shinsegae Eng. & Construction Co., Ltd. This business win is expected to increase PKX's revenues.
PKX's revenue climbed 11.9% year-over-year to 16.07 billion KRW ($14.21 million) for the fiscal first quarter, ended March 31, 2021. Its operating income grew 13.9% year-over-year to 1.55 billion KRW ($1.37 million). The company's net income increased 161.8% year-over-year to 1.14 billion KRW ($1 million).
PKX's EPS and revenue are expected to increase 222.5% and 26.9%, respectively, year-over-year to $10.54 and $59.13 billion in 2021. The stock has gained 92.5% over the past year to close Friday's trading session at $75.04.
PKX's POWR Ratings reflect this promising outlook. The company has an overall A rating , which translates to Strong Buy in our proprietary ratings system.
The stock has an A grade for Growth, Sentiment, and Value, and a B grade for Momentum and Stability. Within the Steel industry, PKX is ranked #3. To see PKX's rating for Quality, click here.
Note that PKX is one of the few stocks handpicked by our Chief Value Strategist, David Cohne, currently in the POWR Value portfolio. Learn more here.
Darden Restaurants, Inc. (DRI)
DRI owns and operates roughly 1,804 full-service restaurants in the United States and Canada. The Orlando, Fla., company's portfolio of differentiated brands includes Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V's.
On June 24, the company's Chairman & CEO Gene Lee said, "Over the last 15 months, we have made numerous strategic investments in our business, while streamlining our operations and improving productivity. Given the business transformation work we have done, and the demand we are seeing from the consumer, we are well positioned to thrive in this operating environment."
DRI's sales increased 79.4% year-over-year to $41.70 billion for its fiscal fourth quarter, ended May 30, 2021. Its operating income came in at $323.40 million compared to a $592.10 million operating loss in the prior-year period. Its net earnings came in at $368.50 million compared to a $480 million net loss in the year-ago period. Its EPS came in at $2.78 for the quarter compared to a $3.86 loss per share in the prior-year quarter.
For the current quarter, ending August 31, 2021, analysts expect DRI's EPS to be $1.64, which represents a 192.9% year-over-year increase. It surpassed the Street's EPS estimates in each of the trailing four quarters. The company's revenue is expected to increase 30.7% year-over-year to $9.41 billion in its fiscal year 2022. The stock has gained 108.3% over the past year to close Friday's trading session at $148.58.
It's no surprise that DRI has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock has an A grade for Growth, and a B grade for Value, Momentum, Sentiment, and Quality.
SWK shares were trading at $208.93 per share on Monday afternoon, up $0.40 (+0.19%). Year-to-date, SWK has gained 17.84%, versus a 17.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock's price is the key approach that he follows while advising investors in his articles.4 No-Brainer Stocks to Buy in July appeared first on StockNews.com
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