POWR Ratings: Top 3 Stocks That Have the Best POWR Ratings for Long-Term Investors

Sticky inflation, rising interest rates, and banking collapses have taken a toll on market sentiments. Amid ballooning fears of an economic slump, let us look at some stocks, such as Valeo SE (VLEEY), SCOR SE (SCRYY), and Subaru Corporation (FUJHY), with an overall A (Strong Buy) rating in our proprietary POWR Ratings system.

The Fed’s interest rate hikes had a cumulative effect on the sky-high inflation since it eased to 5% in March 2023. But it remains well above the central bank’s 2% target. The Fed will likely deliver a 25-basis-point rate hike in May and hold it steady for the rest of 2023. Policymakers see rates rising to 5.1% by year-end.

The Conference Board's Leading Economic Index for the United States dropped for the 12th consecutive month in March, signaling that a recession is set to hit in the middle of 2023. Moreover, the global economy is also signaling weakness. International Monetary Fund’s (IMF) baseline forecast is for growth to fall from 3.4% in 2022 to 2.8% this year.

Against this backdrop, investors could opt for dividend stocks that ensure consistent returns to safeguard portfolios against such economic headwinds. Hence, quality stocks VLEEY, SCRYY, and FUJHY could be solid buys now.

Valeo SE (VLEEY)

Headquartered in Paris, France, VLEEY designs, produces, and sells components, systems, and services for automakers worldwide. The company operates through four segments: Comfort & Driving Assistance Systems; Powertrain Systems; Thermal Systems; and Visibility Systems.

On March 30, VLEEY announced that its SCALA 3 LiDAR had been chosen by a leading Asian manufacturer and a leading American robotaxi company. VLEEY has now registered orders worth more than €1 billion ($1.10 billion) for SCALA 3.

VLEEY’s annual dividend translates to a 2.1% yield on the current share price. Its four-year dividend yield is 2.39%.

In terms of forward EV/Sales, VLEEY’s 0.41x is 63% lower than the 1.11x industry average. Its forward EV/EBITDA multiple of 3.42 is 63.2% lower than the 9.30x industry average.

VLEEY’s original equipment sales for the fiscal first quarter of 2023 increased 17.9% year-over-year, €4.64 billion ($5.11 billion). Its total sales for the same quarter came in at €5.48 billion ($6.03 billion).

For the fiscal year that ended December 2022, its net income attributable to owners of the company increased 31.4% year-over-year to €230 million ($253.28 million). Moreover, its basic earnings per share came in at €0.95, representing a 30.1% increase from the prior-year quarter.

VLEEY’s EPS for the fiscal year 2023 is expected to increase 88.3% year-over-year to $0.95. Its revenue for the same year is expected to increase 15.8% year-over-year to $24.60 billion.

Over the past six months, the stock has gained 15.8% to close the last trading session at $9.75.

VLEEY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, 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 is ranked #6 out of 60 stocks in the A-rated Auto Parts industry. In addition, it has an A grade for Growth and a B for Value, Momentum, and Stability.

Beyond what we have mentioned above, we have also given VLEEY grades for Sentiment and Quality. Get all VLEEY ratings here.

SCOR SE (SCRYY)

SCRYY is a life and non-life reinsurance provider based in Paris, France. The company operates through two segments: SCOR Global P&C (Non-Life) and SCOR Global Life (Life), and three divisions: SCOR Global P&C; SCOR Global Life; and SCOR Global Investments.

SCRYY proposed a dividend of €1.40 per share for the fiscal year 2022. If approved during the 2023 Annual General Meeting, to be held on May 25, 2023, the dividend is set to be paid on June 1 to shareholders of record as of May 30.

Its annual dividend translates to a 7.79% yield on the current share price. Its four-year dividend yield is 5.20%. The company’s dividend payout has grown at a CAGR of 1.3% over the past five years.

In terms of forward EV/Sales, SCRYY’s 0.40x is 78.5% lower than the 1.84x industry average. Its forward EV/EBIT multiple of 7.52 is 29.5% lower than the 10.66x industry average.

During the fourth quarter of the fiscal year 2022, SCRYY’s gross written premiums increased by 7.7% year-over-year to €4.91 billion ($5.41 billion). During the same period, the group’s net income increased by 76.6% year-over-year to €208 million ($220.05 million), while its annualized ROE improved by 9.2 percentage points to 16.8%.

SCRYY’s revenue for the fiscal year 2023 is expected to increase 2.6% year-over-year to $21.45 billion. It surpassed consensus revenue estimates in each of the trailing four quarters.

The stock has gained 10.8% over the past month and 69.2% over the past six months to close the last trading session at $2.47.

It’s no surprise that SCRYY has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system.

SCRYY also has an A grade for Growth and B for Value, Momentum, Stability, and Sentiment. SCRYY tops the list of 27 stocks in the Insurance – Life industry.

Click here for all ratings of SCRYY.

Subaru Corporation (FUJHY)

Headquartered in Tokyo, Japan, FUJHY manufactures and sells automobiles and aerospace products worldwide. It operates through three segments: Automotive; Aerospace; and Others.

FUJHY’s annual dividend translates to a dividend yield of 1.78% on current prices. Moreover, its four-year dividend yield is 2.96%

In terms of forward EV/Sales, FUJHY’s 0.19x is 83% lower than the 1.11x industry average. Likewise, its 2.33x forward EV/EBIT is 81.7% lower than the 12.73x industry average.

FUJHY’s revenue for the nine months that ended December 31, 2022, increased 39.9% year-over-year to ¥2.81 trillion ($20.97 billion). The company’s gross profit increased 45% year-over-year to ¥552.11 billion ($4.12 billion).

Its profit for the period attributable to owners of the parent increased 145.6% year-over-year to ¥154.42 billion ($1.15 billion). Additionally, its EPS attributable to owners of parent came in at ¥201.34.

FUJHY’s revenue for the fiscal year ending March 2023 is expected to increase 138.4% year-over-year to $27.84 billion. Its EPS for the fiscal year 2023 is expected to increase 207% year-over-year to $1.09. It surpassed its revenue estimates in three of the four trailing quarters.

Over the past year, the stock has gained 4.1% to close the last trading session at $7.82.

FUJHY’s strong prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.

Within the B-rated Auto & Vehicle Manufacturers industry, it is ranked #5 out of 55 stocks. It has an A grade for Growth and Value and a B for Momentum, Stability, and Quality.

We have also given FUJHY grade for Sentiment. Get all FUJHY ratings here.

What To Do Next?

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VLEEY shares were trading at $9.75 per share on Wednesday morning, down $0.35 (-3.47%). Year-to-date, VLEEY has gained 10.54%, versus a 6.36% rise in the benchmark S&P 500 index during the same period.

The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.

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