With growing fears surrounding rising interest rates and the possibility of the United States slipping into a recession, value stocks have outperformed growth stocks over the past year. However, inflation eased for the third straight month in December, with CPI rising 6.5% year-over-year and declining 0.1% over the prior month.
As inflation is coming off 40-year highs but remains higher than the 2% target, Fed policymakers have signaled slower rate hikes, which could pave the way for a 25-basis-points hike at its next Fed meeting.
A slowdown in monetary policy tightening could lead to a recovery for growth stocks. Moreover, while investors jilted growth stocks and rotated into value stocks, the previously sky-high valuations among growth stocks have returned to earth, offering excellent buying opportunities for long-term investors.
Sysco Corporation (SYY)
SYY distributes food and related products primarily to the food service or food-away-from-home industry. It operates through four segments: U.S. Foodservice; International Foodservice; SYGMA; and Other. The company serves restaurants, healthcare, and educational facilities, lodging establishments, and other customers.
On December 7, 2022, SYY announced the launch of its 10th professional truck driver training facility since March 2022. The company now operates Commercial Driver’s License (CDL) training facilities at its sites throughout the United States. This industry-leading program should help increase the number of qualified drivers at the company’s disposal, thereby bolstering its robust supply chain.
SYY pays a $1.96 per share dividend annually, which translates to a 2.44% yield on the current price level. Its dividend payouts have increased at a 6.2% CAGR over the past three years and a 7.5% CAGR over the past five years. On November 17, 2022, SYY declared a quarterly dividend of $0.49 per share, payable to shareholders on January 27, 2023.
In the fiscal first quarter that ended October 1, 2022, SYY’s net sales increased 16.2% year-over-year to $19.13 billion. Its non-GAAP operating income increased 12.4% from the year-ago value to $770.27 million, while its non-GAAP net earnings grew 14.6% year-over-year to $492.60 million.
The company’s EPS came in at $0.97, representing a 16.9% year-over-year improvement. Also, its adjusted EBITDA increased 7.5% from the prior-year quarter to $916.87 million. Additionally, SYY’s revenue grew at a 5.8% CAGR over the past three years and a 4.9% CAGR over the past five years. Also, its total assets have grown at a 5.4% CAGR over the past three years.
Analysts expect SYY’s EPS and revenue to increase 48% and 13.9% year-over-year to $0.84 and $18.59 billion for the second quarter, which ended December 31, 2022. Over the past three months, the stock has gained 7.9% to close the last trading session at $80.33.
SYY’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an A grade for Growth and a B for Value and Stability. Out of 83 stocks in the B-rated Food Makers industry, it is ranked #4. Click here to see the other ratings of SYY for Momentum, Sentiment, and Quality.
Universal Logistics Holdings, Inc. (ULH)
ULH provides transportation and logistics solutions in the United States, Mexico, Canada, and Colombia. It offers truckload services; domestic and international freight forwarding, customs brokerage services; and final mile and ground expedite services.
On January 3, the company paid its shareholders a dividend of $0.105 per share of common stock. ULH’s four-year average dividend yield is 1.99%, and its forward annual dividend of $0.42 translates to a 1.20% yield on prevailing prices. Its dividend payouts have grown at an 8.5% CAGR over the past five years.
In the third quarter that ended October 1, 2022, ULH’s total operating revenue increased 13.5% year-over-year to $505.69 million. Its income from operations increased 317.4% from the year-ago value to $69.77 million, while its net income came in at $48.48 million, representing a 371.9% year-over-year improvement.
In addition, its EPS stood at $1.84, up 384.2% from the prior-year quarter. Also, its EBITDA increased 155.2% from the year-ago value to $84.37 million. Over the past three years, ULH’s EBITDA and net income grew at 18.7% and 58.7% CAGRs, respectively. Its EPS grew at a 62% CAGR over the same period.
The consensus EPS estimate of $6.40 for fiscal 2022 (ended December 31, 2022) represents a 90.3% improvement year-over-year. The consensus revenue estimate of $2.02 billion for the previous year represents a 15.4% increase from the prior-year period. ULH has a commendable earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 91.4% over the past nine months to close the last trading session at $35.12.
It is no surprise that ULH has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. Also, it has an A grade for Growth and a B for Value, Momentum, Stability, and Sentiment. Within the A-rated Air Freight & Shipping Services industry, it is ranked first among 16 stocks.
Beyond what we’ve stated above, we’ve also rated ULH for Quality. Get all ULH ratings here.
SYY shares were trading at $80.33 per share on Monday afternoon, up $0.08 (+0.10%). Year-to-date, SYY has gained 5.75%, versus a 4.20% 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.2 Growth Stocks to Buy Now That Could Soar in 2023 appeared first on StockNews.com