Stocks pulled back sharply last week as renewed inflation concerns sparked worries of extended rate hikes, erasing nearly all of 2023’s market gains. Tough talk from Fed Chair Jerome Powell during his testimony before Congress on Tuesday suggested that the course of interest-rate hikes could steepen and last longer than expected if inflation remains high. The three major indexes all sustained steep weekly losses of around 4.5%, and the S&P 500 fell to its lowest level since early January.
Market participants will be focused on the latest inflation readings in the coming days, starting on Tuesday with the Consumer Price Index (CPI) report for February, followed by the Producer Price Index (PPI) reading on Wednesday. These reports will follow January data that showed prices for consumers and producers remained high, fueling concerns that there’s no immediate end in sight when it comes to interest-rate hikes.
On paper, this week’s first featured company should be reeling from the pressures impacting the consumer economy, but its brand remains as powerful as ever. The stock is a favorite among hedge funds, and it garners a Strong Buy rating from the Wall Street pros.
Apple (AAPL)
Apple’s greatest strengths center on its operational dominance. For instance, its three-year revenue growth rate stands at 20%, beating out 85.62% of its competitors. Its net margin pings at 24.56%, outpacing 95.52% of rivals. Currently, Wall Street analysts peg AAPL as a consensus Strong Buy. Further, their average price target stands at $173, implying over 16% upside potential.
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Matador resources (MTDR)
2022 was a huge year for energy stocks, but so far, in 2023, the sector’s performance has been underwhelming. However, several Wall Street pros say the bull market for energy stocks still has room to run.
Anyone seeking to beef up their energy position would do well to consider Matador resources. Matador shareholders can take confidence from the fact that EBIT margins are up from 36% to 60%, and revenue is growing. Earnings are expected to grow by 6.21% per year over the next ten years. MTDR is a good value with a PE ratio of 5.4 times compared to the US Oil and Gas industry average of 7 times.
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Archer-Daniels-Midland (ADM)
Despite the challenging conditions in the stock market last year, ADM stock has gained over 6.4%. Stronger-than-anticipated results from South America have helped it post robust top and bottom-line numbers in recent quarters. In its fourth quarter, sales and operating profits were up 13.6% and 18%, respectively. Surprisingly, ADM stock trades at 0.4 times forward sales estimates, roughly 62% lower than the consumer staples sector average.
ADM has a yield of 2.21% and boasts an A-graded dividend profile, demonstrating dividend growth for 50 consecutive years. Moreover, its forward dividend per share growth of 7.4% is more than 40% higher than the sector average.
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