The surge in retail sales combined with January's ballooning jobs report exhibits a strong economy with positive momentum. Retail sales for January rose 3% from the prior month, beating expectations for a 1.9% increase and more than offsetting December's decline.
The resilience demonstrated by a tight labor market fueling a robust economy has prompted fears that the Fed might continue tightening monetary policy further than it had previously predicted. In addition, leading economic indicators, such as the inverted yield curve, point to a possible mild economic downturn ahead.
However, economists at Goldman Sachs Group, Inc. (GS) believe that the current extent of the yield-curve inversion might be short-lived. “A large part of the inversion seen in current US yield curves comes not from high recession odds or inflation normalization, but rather from low long-run real rate levels,” the economists stated.
Nonetheless, given how far inflation is from the Fed’s target range, investors should stick to stocks that proved themselves during last year’s turbulent market. Moreover, the potential for a more forceful Fed could be a catalyst for renewed volatility in the upcoming months.
Fundamentally strong stocks, Comcast Corporation (CMCSA) and Spok Holdings, Inc. (SPOK), with promising growth prospects, could help tide over the volatile market. Hence, these stocks that investors seem to be buying up this year might be ideal picks for one’s portfolio this year.
Comcast Corporation (CMCSA)
CMCSA is a global media and technology company operating through 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 an annualized basis, up 7.4% year-over-year. In accordance with the increase, CMCSA declared a quarterly dividend of $0.29 a share on its common stock, payable to its shareholders on April 26, 2023.
CMCSA’s four-year average dividend yield is 2.11%, and its current dividend of $1.16 translates to a 2.97% yield on the current price level. Its dividends have grown at an 8.7% CAGR over the past three years and an 11.4% CAGR over the past five years.
On December 12, 2022, CMCSA launched the world’s first live, multigigabit symmetrical internet connection powered by 10G and Full Duplex DOCSIS 4.0. 10G technology. This technology promises to offer customers next-level net speed and performance and is expected to boost CMCSA’s product portfolio significantly.
For the fiscal year 2022 that ended on December 31, 2022, CMCSA’s revenues increased 4.3% from the prior-year value to $121.43 million. The company’s adjusted net income grew 7.3% year-over-year to $16.15 million, while its adjusted EBITDA amounted to $3.02 billion, up 5% from the year-ago value. Also, its adjusted EPS increased 12.7% year-over-year to $3.64.
CMCSA’s EPS and revenue are expected to increase 11.5% and 2.9% year-over-year to $4.08 and $123.76 billion, respectively, in the fiscal year 2024 (ending December 2024). The company surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.
Shares of CMCSA have gained 10.2% over the past three months to close the last trading session at $37.84. It is up 8.2% year-to-date.
CMCSA’s POWR Ratings reflect its solid prospects. It has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It also has a B grade for Stability and Quality. Of the nine stocks in the Entertainment - TV & Internet Providers industry, it is ranked first. To see the other ratings of CMCSA for Growth, Value, Momentum, and Sentiment, click here.
Spok Holdings, Inc. (SPOK)
SPOK operates as a healthcare communication solution provider, offering a suite 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 its current dividend of $1.25 translates to a 13.9% yield on prevailing prices. Its dividends have grown at a 35.7% CAGR over the past three years and a 10.8% CAGR over the past five years. On December 9, the company paid a quarterly dividend of $0.3125 per share to its shareholders.
For the fiscal third quarter that ended September 30, SPOK’s operating income came in at $3.54 million, up 199.5% year-over-year. Its net income and net income per common share rose 217.1% and 215.4% from the prior-year 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, indicates a 40% increase year-over-year. The stock has gained 26% over the past six months to close the last trading session at $8.97. It has gained 9.5% year-to-date.
SPOK’s strong prospects are reflected in its POWR Ratings. It has an overall rating of B, which translates to Buy in our proprietary rating system.
It has an A grade for Growth and Sentiment and a B for Quality. Among 20 stocks in the Telecom - Domestic industry, it is ranked #2. Click here to see the additional ratings of SPOK (Value, Momentum, and Stability).
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CMCSA shares 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% 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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