Despite the Federal Reserve’s aggressive policy tightening, the Consumer Price Index (CPI) hit a fresh 40-year high last month. Persisting macroeconomic headwinds are making economists believe that a mild recession has arrived.
However, a steady unemployment rate and resilient consumer spending restore faith in this corporate earnings season. Moreover, substantial investments and increased focus on encouraging domestic production should help growth-focused companies benefit.
Alphabet Inc. (GOOGL), FleetCor Technologies, Inc. (FLT), and Halliburton Company (HAL) possess solid growth attributes and broad market reach. So, these stocks could be wise additions to your watchlist.
Alphabet Inc. (GOOGL)
GOOGL provides web-based search, maps, software applications, mobile OS, consumer content, enterprise solutions, commerce, and hardware products worldwide. It operates through Google Services; Google Cloud; and Other Bets. It also provides performance and brand advertising services.
On March 8, 2022, GOOGL’s Google LLC technology company agreed to acquire Mandiant, Inc. (MNDT), a dynamic cyber defense and response leader, in a $5.4 billion all-cash transaction. As the need for advanced cybersecurity rises, MNDT’s acquisition should complement Google Cloud’s existing strengths in security and help organizations combat cybersecurity challenges.
For its fiscal year 2022 first quarter ended March 31, 2022, GOOGL’s revenues increased 23% year-over-year to $68.01 billion. The company’s income from operations came in at $20.09 billion, representing a 22.3% rise from its year-ago period. It had $20.89 billion in cash and cash equivalents as of March 31, 2022.
The consensus revenue estimate of $297.01 billion for fiscal 2022 ending December 31, 2022, indicates a 15.3% year-over-year improvement. It surpassed Street EPS estimates in three of the trailing four quarters. Its EPS is expected to grow at 14.3% per annum over the next five years.
GOOGL’s EBITDA has grown 52.1% over the past year, 856.2% above the industry average of 5.5%. Its forward ROE growth of 14.1% is 1898.4% higher than the 0.7% industry average. The stock has gained 2.6% over the past month to close the last trading session at $2280.41.
FleetCor Technologies, Inc. (FLT)
FLT is a global provider of digital payment solutions that help businesses control, simplify, and secure payment for fuel, general payables, tolls, gifts, lodging, and other expenses. It serves businesses, merchants, consumers, and payment networks.
On June 9, 2022, FLT signed a definitive agreement to acquire the Global Reach Group, a UK-based foreign exchange specialist providing international payments, risk management, and strategic hedging solutions.
Expected to close in the fourth quarter of 2022, this increases FLT’s cross-border payments scale and strengthens its position as one of the world's largest non-bank global cross-border providers.
For its fiscal 2022 first quarter ended March 31, 2022, FLT’s net revenues grew 29.7% year-over-year to $789.24 million. The company’s operating income was $317.72 million, indicating a 19.5% rise from the year-ago period.
Its adjusted net income came in at $289.66 million, up 19.6% from the prior-year period. MCK’s adjusted EPS increased 29.4% year-over-year to $3.65. As of March 31, 2022, the company had $1.30 billion in cash and cash equivalents.
The consensus EPS estimate of $15.70 for fiscal 2022 ending December 31, 2022, represents an 18.8% rise from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive.
Analysts expect FLT’s revenue to be $3.37 billion for the same fiscal year, indicating an 18.8% year-over-year improvement. The company’s EPS is expected to grow at a 16.5% rate per annum over the next five years.
FLT’s EBITDA has grown 23.4% over the past year, 8.7% above the industry average of 21.5%. Its forward ROE growth of 10.1% is 60.7% higher than the 6.3% industry average. Over the past month, the stock has lost 10.9% to close the last trading session at $211.37.
Halliburton Company (HAL)
HAL provides energy, engineering, and construction products and services to the energy industry through its Completion and Production; and Drilling and Evaluation segments worldwide. It offers services, products, and integrated solutions to customers in the exploration, development, and production of oil and natural gas.
On July 6, 2022, HAL introduced the new Hedron platform of fixed cutter polycrystalline diamond compact (PDC) drill bits, designed by using its Design at the Customer Interface (DatCISM) process, along with proprietary iBitS modeling and simulation software,
These drill bits incorporate Juggernaut cutters, Cerebro in-bit sensing insights, and Oculus advanced dull grading analytics that increase drilling performance through higher penetration rates and extended run lengths in applications. This should witness high demand in the coming months.
For its fiscal 2022 full year ended March 31, 2022, HAL’s total revenue increased 24.1% year-over-year to $4.28 billion. The company’s adjusted operating income came in at $533 million for the quarter, representing a rise of 44.1% from the year-ago period.
While its adjusted net income increased 84.7% year-over-year to $314 million, its adjusted EPS grew 84.2% to $0.35. The company had cash and equivalents of $2.15 billion as of March 31, 2022.
The consensus EPS estimate of $1.89 for fiscal 2022 ending December 31, 2022, indicates a 75% year-over-year improvement. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive.
Analysts expect the stock’s revenue to be $19.13 billion for the same fiscal year, representing a 25.1% rise from the prior-year period. Its EPS is expected to grow at 60.8% per annum over the next five years.
HAL’s EBITDA has grown 103.8% over the past year, 172.3% above the industry average of 38.1%. Its forward ROE growth of 42.7% is 2.5% higher than the 41.6% industry average. The stock has lost 29.4% over the past month to close the last trading session at $28.60.
GOOGL shares were trading at $2,229.32 per share on Wednesday afternoon, down $51.09 (-2.24%). Year-to-date, GOOGL has declined -23.05%, versus a -19.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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