According to the data released by the Labor Department last week, the U.S. nonfarm payrolls increased by 263,000 in November, much better than expected. Seema Shah, the chief global strategist at Principal Asset Management, said, “The labor market is hot, hot, hot, heaping pressure on the Fed to continue raising policy rates.”
However, the consumer price index (CPI) rose 7.7% year-over-year and 0.4% sequentially, lower than estimates. This led Fed Chair Jerome Powell to signal a slower pace of rate hikes starting this month. However, Powell has indicated that the final level of interest rates will be higher than previously expected.
Many experts believe that the economy might enter into a recession next year. Therefore, the stock market will likely remain under pressure. However, it is one of the best times to invest in quality stocks.
Therefore, investors looking to buy and hold quality stocks for the next decade could consider Cisco Systems, Inc. (CSCO) and Civeo Corporation (CVEO).
Cisco Systems, Inc. (CSCO)
CSCO designs, manufactures, and sells Internet Protocol-based networking and other communications and information technology products. In addition, it provides infrastructure platforms, including networking technologies of switching, routing, wireless, and data center products.
On November 29, 2022, the company launched new AppDynamics Cloud capabilities that allow organizations to achieve observability over cloud-native applications correlated to business context across the entire IT estate. The new capabilities will initially support cloud-native applications and digital services running on AWS as both companies continue to empower organizations on their journey to full-stack observability.
CSCO’s total revenue increased 5.7% year-over-year to $13.63 billion for the fiscal first quarter ended October 29, 2022. The company’s operating income grew 3% year-over-year to $3.54 billion, while its non-GAAP net income came in at $3.55 billion, representing a 2.1% year-over-year increase. Also, its non-GAAP EPS came in at $0.86, up 4.9% year-over-year.
The consensus EPS estimate of $0.86 for the second quarter ending January 31, 2023, represents a 1.8% improvement year-over-year. The consensus revenue estimate of $13.41 billion for the current quarter represents a 5.4% increase from the same period last year. The company has an excellent earnings surprise history, as it surpassed the consensus EPS estimates in each of the trailing four quarters.
It has gained 9.3% over the past three months to close the last trading session at $48.59.
CSCO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a 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 Quality and a B for Stability. Within the Technology - Communication/Networking industry, it is ranked #3 out of 48 stocks. Click here to see the other ratings of CSCO for Growth, Value, Momentum, and Sentiment.
Civeo Corporation (CVEO)
CVEO provides hospitality services to the natural resource industry in Canada, Australia, and the United States. The company develops lodges and villages and mobile accommodations. It offers food, housekeeping, maintenance services, laundry, facility management and maintenance, water and wastewater treatment, power generation, communication systems, security, logistics, and camp management services.
On November 15, 2022, CVEO announced a 5-year integrated services contract renewal to offer services at six villages in Western Australia. This renewal reaffirms the strength of the company’s customer relationships and high quality of hospitality services, along with expanding its scope in Australia.
In the fiscal third quarter ended September 30, 2022, CVEO’s revenues increased 18.8% year-over-year to $184.23 million. Its operating income grew 79.4% from the year-ago value to $10.78 million. Its net income attributable to common shareholders improved significantly year-over-year to $5.23 million, while its adjusted EBITDA came in at $35.03 million, registering an increase of 33.8% year-over-year.
Analysts expect CVEO’s EPS and revenue to increase 625% and 14.7% year-over-year to $0.21 and $681.72 million in fiscal 2022 (ending December 31, 2022). The stock has surpassed the consensus EPS estimates in three of the trailing four quarters.
CVEO’s shares have gained 4.7% over the past three months and 49.6% year-to-date to close the last trading session at $28.67.
CVEO’s POWR Ratings reflect solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Value and Sentiment and a B for Stability and Quality. In the B-rated Outsourcing - Business Services industry, it is ranked #2 of 44 stocks. Click here to see the other ratings of CVEO for Growth and Momentum.
CSCO shares were trading at $48.16 per share on Wednesday afternoon, down $0.43 (-0.88%). Year-to-date, CSCO has declined -21.62%, versus a -16.36% 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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