Gold futures fell for a second session on Wednesday to settle at a fresh three-week low. The latest U.S. consumer price index data offered “little clarity” to the Federal Reserve’s policy outlook, said Han Tan, chief market analyst at Exinity. The uptick in core CPI may “keep bets of one more Fed rate hike alive, with such prospects capping gold’s potential upside in the interim,” he said. “As long as hopes for Fed rate cuts are kept at bay, bullion bulls should struggle to carve out meaningful gains for the precious metal.” December gold
GCZ23,
declined by $2.60, or 0.1%, to settle at $1,932.50 an ounce on Comex. Prices based on the most-active contract settled at their lowest since Aug. 22, according to Dow Jones Market Data.
C, ADBE, CTVA and more
David Wadhwani, senior vice president of digital media for Adobe, speaks during the launch of Adobe Creative Cloud and CS6 in San Francisco, April 23, 2012.
David Paul Morris | Bloomberg | Getty Images
Check out the companies making headlines in midday trading.
Redwire — The space infrastructure stock soared 14% Wednesday after Roth MKM initiated research coverage of the company with a buy rating. The firm said Redwire, which went public via a special purpose acquisition company in 2021, has “several billions worth of pipeline revenue opportunity.”
Corteva — The seed and crop protection solutions provider added 1.8% during midday trading after launching Reklemel, a new product that will help protect a variety of food and row crops from plant-parasitic nematode damage, according to a Wednesday press release from the company.
Moderna — Shares of the vaccine maker rose about 2.3%. The action comes a day after the Centers for Disease Control and Prevention cleared updated Covid vaccines from Pfizer and Moderna for Americans ages 6 months and up, following approvals from the U.S. Food and Drug Administration. The mRNA vaccines are designed to target a relatively new omicron subvariant called XBB.1.5.
Citigroup — Shares advanced 2% after the bank’s CEO Jane Fraser announced a corporate reorganization Wednesday amid a stock slump. The move will divide Citigroup into five main divisions, ridding the company of its two main divisions that catered to consumers and large institutional clients.
Airline stocks — American Airlines tumbled 4.7% after it slashed its third-quarter profit estimates due to higher fuel prices and costs from a new pilot labor agreement. Low-cost carrier Spirit Airlines fell 2.7% after it also cut its summer profit estimates due to higher costs.
Xpeng, Nio — U.S.-based shares of Chinese electric vehicle makers Xpeng and Nio dropped 2.1% and 3.6%, respectively, after the European Commission said it is launching an investigation into subsidies given to electric vehicle manufacturers in China.
Adobe — Stock in the software company added about 2% in midday trading ahead of quarterly results Thursday. Analysts polled by FactSet forecast an adjusted $3.98 per share on $4.866 billion in revenue. Traders have also signaled bullish sentiment toward the stock ahead of earnings, due to the continued excitement over artificial intelligence.
Ford Motor, General Motors — The auto stocks advanced after UBS said both were buys. Ford added 2.8%, while General Motors climbed 1.3%. The firm noted that Ford’s pro business, its commercial segment, should show stronger-than-expected resiliency.
— CNBC’s Alex Harring, Hakyung Kim, Brian Evans, Samantha Subin and Tanaya Macheel contributed reporting.
Mitt Romney says he won’t run for re-election to Senate
Utah Republican Sen. Mitt Romney said Wednesday he won’t run for re-election next year. “I have spent my last 25 years in public service of one kind or another,” he said in a video message to Utah residents. “Frankly, it’s time for a new generation of leaders.” Romney was the GOP presidential nominee in 2012 and voted twice to convict former President Donald Trump in impeachment trials.
…
3 Low-Beta Dividend Stocks to Reduce Portfolio Volatility
Investors need to be aware of the volatility of their stocks. Owning too many high-volatility positions can create a scenario in which your portfolio loses more than the S&P 500 index during bear markets.
The higher the beta, the more volatile the stock is expected to be relative to the S&P 500 index. Low-beta stocks generally decline less than the broader market in a downturn. For example, a stock with a beta value of 0.5 will decline 0.5% for every 1% decline in the S&P 500.
Typically, low-beta stocks are heavily concentrated in industries such as food and beverages or utilities. These sectors hold up well during recessions, as consumers need products and services like food and electricity, even during economic downturns.
These three low-beta dividend stocks have all increased their dividends for over 25 years and could outperform in a bear market.
Hormel Corporation (HRL)
Source: viewimage / Shutterstock
- Five-year average monthly beta: 0.19
Hormel Foods (NYSE:HRL) is a diversified food producer with about $12.5 billion in annual revenue. Hormel has kept its core competency as a processor of meat products for well over a hundred years but has also grown into other business lines through acquisitions. The company sells its products in 80 countries worldwide, and its brands include Skippy, SPAM, Applegate, Justin’s and more than 30 others.
Hormel posted third-quarter earnings on Aug. 31, and results were weaker than expected on both the top and bottom lines. Adjusted earnings-per-share came to 40 cents, which missed estimates by a penny. Revenue fell 2.3% year-over-year to $2.96 billion, which missed consensus by $90 million.
Retail segment volume was up 1%, while net sales fell 2%, and segment profit was down 7%. Foodservice volume was up 2%, while net sales fell 3%, but segment profit rose 14%. The international segment saw volume decline 10%, while net sales fell 6%, and segment profit was cut in half. We expect forward earnings growth of 4% annually in the next five years.
Hormel has increased its dividend for 57 consecutive years. The dividend payout ratio is just over 60% of earnings, and we expect that it will remain near this level for the foreseeable future. Hormel’s main competitive advantage is its roughly 40 products that are either no. 1 or no. 2 in their category. Hormel has brands that are proven. That leadership position is difficult for competitors to supplant.
HRL stock has a five-year average monthly beta value of 0.19. This means that for every 1% decline in the S&P 500 index, HRL stock can be expected to decline by just 0.19%.
Consolidated Edison (ED)
Source: BrandonKleinPhoto / Shutterstock.com
- Five-year average monthly beta: 0.36
Consolidated Edison (NYSE:ED) is a holding company that delivers electricity, natural gas and steam to its customers in New York City and Westchester County. The company has annual revenues of more than $14 billion.
In the 2023 second quarter, revenue decreased 13.8% to $2.94 billion. Adjusted earnings of $210 million, or 61 cents per share. That’s compared to adjusted earnings of $228 million, or 64 cents per share, in the previous year. As with prior quarters, higher rate bases for gas and electric customers were the primary contributors to results in the CECONY business, which accounts for the vast majority of the company’s assets. Average rate base balances are expected to grow by 6% annually over the next three years.
Consolidated Edison provided updated guidance for 2023 as well. The company now expects adjusted EPS in a range of $4.85 to $5 for 2023. That’s up from $4.75 to $4.95 previously. At the new midpoint, this would be a 7.9% increase from the prior year.
Thanks to steady growth from rate hikes and population growth, the company has been able to raise its dividend for nearly five decades. ED stock currently yields 3.7%.
Just like most other utilities, Consolidated Edison is typically allowed by regulatory authorities to raise its rates. As a result, it enjoys reliable cash flows and can thus service its debt. One key competitive advantage for Consolidated Edison is that consumers do not curtail their electricity consumption even during the roughest economic periods, so the stock is resilient during recessions.
J.M. Smucker (SJM)
Source: JHVEPhoto / Shutterstock.com
- Five-year average monthly beta: 0.22
J.M. Smucker (NYSE:SJM) is a global packaged food and beverage products company with iconic brands like Smucker’s, Jif and Folgers, along with pet food brands like Milk Bone, Meow Mix, Kibbles ‘n Bits and 9Lives. The company generated $8 billion in sales last year.
In late August, Smucker’s reported financial results for the first quarter of fiscal 2024. Currency-neutral organic sales grew 21% over the prior year’s quarter thanks to strong volume sales of peanut butter and coffee products as well as price increases.
Adjusted EPS grew 32%, from $1.67 to $2.21, and exceeded the analysts’ estimates by 17 cents, as price hikes more than offset the increased costs of commodities, ingredients, manufacturing and packaging costs.
Thanks to better-than-expected results, material price hikes and sustained positive business trends, Smucker’s improved its already positive outlook for fiscal 2024. The company still expects comparable sales growth of 8.5%-9.5% but raised its guidance for adjusted EPS from $9.20-$9.60 to $9.45-$9.85.
Smucker’s iconic brands continue to enjoy recognition, but this moat is eroding somewhat as consumers look for fresher and healthier alternatives. During the last recession, Smucker’s held up exceptionally well, growing both earnings and dividends during this time.
SJM has increased its dividend for 26 consecutive years. Shares currently yield 3%. With a forward dividend payout ratio of 52%, the current payout is highly secure, with room for continued dividend increases each year.
On the date of publication, Bob Ciura did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
How To Sell Stocks With Cash App Investing
Bank of America waiving $4.95 fee for SafeBalance customers with $500 or more in their account
Bank of America Corp.
BAC,
said Wednesday it will waive the $4.95 monthly fee of its SafeBalance checking account program for accounts with a minimum daily balance of $500 starting in November. Bank of America also said SafeBalance customers will also see the $4.95 monthly fee waived for account holders under age 25, with the elimination of the requirement for being enrolled in school. Bank of America said the SafeBalance account program, which helps customer avoid overdraft fees, has now topped five million accounts, including two million students. The move by Bank of America comes as banks continue to slash fees in some areas for consumer banking services. Bank of America’s stock was up 0.2% in premarket trades.
Buy the Dip: 3 Consumer Stocks to Snag Now for Supercharged Gains
Amid a backdrop of mounting market uncertainty, many are betting on a potential crash fueled by recession whispers. Others are more hopeful, expecting a soft landing. Regardless, the U.S. Federal Reserve’s chess moves aim for a stable economic touchdown, even if interest rate cuts seem off the table. Hence, for those looking to navigate these uncertain tides, there lies an anchor in the best consumer stocks to buy on the dip.
Navigating the market’s waters became trickier post the stellar first half of 2023; August brought a pause to equities, influenced by China’s economic hiccups, Ukraine’s unrest and mixed corporate earnings. However, consumer stocks, known for their resilience during turbulent times, stand as reliable bulwarks against market storms. With that said, here are three of the most attractive consumer stocks to buy on the dip.
Procter & Gamble (PG)
Procter & Gamble (NYSE:PG) usually makes it to the top of the list of stalwart consumer staples. Housing iconic brands such as Tide, Crest, Gillette and others under its vast umbrella, Procter & Gamble’s portfolio is virtually synonymous with everyday essentials. Globally, consumers place their trust in the firm, fueling a staggering annual sales figure that has blown past the $80 billion mark. That trust was notably evident during the pandemic, as households, in their quest for comfort and hygiene, stockpiled Procter & Gamble offerings.
However, its recent earnings shed light on a curious trend. Though its revenues dipped, the average pricing of its staple products observed a significant 10% spike year-over-year. Moreover, it wasn’t just limited to one or two products; the trend spanned across brand leaders, including Gillette and Bounty. This strategic price elevation played a critical role in Procter & Gamble’s recent financial wins, as it outpaced Wall Street predictions, infusing PG stock with renewed vigor.
Furthermore, the firm continues to ace the dividend game, boasting a staggering 66-year track record of consistent payout growth, yielding 2.46%. Additionally, with a modest 0.30% uptick year-to-date, now might be the opportune moment for investors to seize the stock on a dip.
General Mills (GIS)
Consumer goods giant General Mills (NYSE:GIS) recently made headlines by boosting its quarterly dividend payout for stockholders by an impressive 9%. This increment translates to almost 60 cents per share payout every quarter, propelling GIS stock to a solid 3.60% forward yield.
General Mills’ legacy, characterized by an array of iconic brands, enthralls its global consumer base. With a strong historical performance showcasing strong single-digit sales and profitability metrics, General Mills emerges as an excellent wealth multiplier for its investors. It delivered nearly a 37% return on its stock over the past half-decade, which speaks volumes about its prowess.
Yet, the road hasn’t been without its bumps. Come the end of June, its second-quarter results showed how it grappled with quarterly sales unaligned with Wall Street’s expectations. Consequently, the financial miss nudged the stock southward. However, with its massive portfolio stretching over 100 branded products, the results will likely be a temporary blip.
Coca-Cola (KO)
Few brands exemplify resilience quite like Coca-Cola (NYSE:KO). With a lineage that’s stood the test of time, it’s no wonder this food and beverage titan is one of the top recession-proof stocks. Amidst prevailing economic turbulence, Coca-Cola leveraged its unparalleled brand strength, affecting price hikes that fueled impressive revenue growth.
Delving into the details, the company’s second-quarter results dazzled many. Surpassing analysts’ predictions on revenue and profit fronts while lifting its financial outlook for the year, Coca-Cola once again asserted its market dominance. At a forward earnings multiple of 23.40, KO stock appears attractively priced, particularly when one factors in its consistently strong financial showings, adept pricing strategies and unwavering demand.
With the stock witnessing a 7% dip year-to-date, opportunity beckons. For those seeking a robust blue-chip asset with an illustrious legacy of rewarding shareholders, Coca-Cola emerges as a compelling buy-the-dip prospect.
On the date of publication, Muslim Farooque did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
3 Oil Stocks to Sell in September Before They Crash & Burn
As many remember, both in their minds and pockets, Brent crude prices reached a decade-high last year, impacting oil prices globally. In 2023, global crude prices thankfully moderated in the first half. But with both Saudi Arabia and Russia extending their oil production cuts until the end of the year and U.S. oil reserve figures slipping downward, prices are back on the upward trend. That could be great for investors holding oil stocks, but not all oil stocks benefit from the trend. Some companies face operational challenges and financial difficulties that could limit their upside potential.
Below are three oil stocks investors should sell before they crash and burn.
NCS Multistage Holdings (NCSM)
NCS Multistage Holdings (NASDAQ:NCSM) provides products and services for horizontal and directional drilling. The company’s main product is the Multistage Unlimited system, which enables operators to stimulate multiple zones in a single wellbore.
NCS Multistage has been struggling to generate profitable growth in recent years. In 2022, the company’s revenue experienced its largest year-over-year (YoY) increase in a number of years, but the drilling company was still unable to generate net income. Last year, oil prices hit record highs; however, in 2023, prices have largely moderated. Still, quarterly net losses only seemed to widen.
In its first-quarter earnings report, net losses increased to $15 million due to ongoing litigation against NCS for a faulty product. Similarly, the company’s financial situation worsened in the second quarter of 2023, when it reported a net loss of $32.2 million on revenues of $25.4 million, compared to a net loss of $5.5 million on revenue of $27.5 million in the same period last year. Again, increasing litigation costs were to blame.
NCS Multistage will face significant challenges in the competitive and cyclical oilfield services industry if it cannot control operating costs and atypical expenses like legal action. These could severely hurt the company’s earnings in the future, convincing investors to look elsewhere for yield. Current investors should sell before operating costs continue to balloon.
Drilling Tools International (DTI)
Drilling Tools International (NASDAQ:DTI) is another company exposed to drilling operations related to the oil and gas industry. The company manufactures downhole drilling tools for horizontal and directional drilling. The company’s product portfolio includes drill collars, stabilizers, reamers, hole openers, subs, jars, shock tools and motors.
The drilling company went public via a SPAC merger in June 2023, but shares have fallen 36% since then. The reason is not only due to a lackluster SPAC IPO market but also because investors doubt the company’s ability to grow sustainably in the near and medium term. In its second-quarter earnings report, Drilling Tools’ revenue increased by 25% year-over-year, but its net income declined by $5 million over the same period. That was primarily due to higher operating costs.
The company’s balance sheet is another cause for worry. The capital-intensive company only reported $7.2 million in cash on its balance sheet. These types of businesses require healthy cash flow and cash balances in order to follow through with large projects efficiently. While Drilling Tools International has access to a $60 million revolving line of credit, it’s difficult to say how the company can use enough capital without falling victim to high-interest payments. The revolver is, after all, floating interest.
With shares dipping as low as they are and future profitability in question, investors should steer clear.
ProFrac Holding (ACDC)
ProFrac Holding (NASDAQ:ACDC) provides hydraulic fracturing and other well-completion services for oil and gas producers. The company operates from various locations across North America, offering pressure pumping, wireline logging, perforating, coiled tubing, cementing, acidizing, nitrogen pumping, sand mining, proppant transportation and storage, water management and disposal services.
ProFrac Holding has been pursuing an aggressive acquisition strategy in recent years, buying several companies in the oilfield services sector, such as U.S. Well Services and FTS International. The company’s revenue increased by 216% in 2022, mainly due to higher demand and pricing in its core products coupled with the contribution of the acquired businesses.
However, ACDC’s profitability has been declining as a result of the integration costs, asset impairments and goodwill write-offs associated with the acquisitions. The company reported a net loss of $4.6 million in its second-quarter report, much lower than the $67.4 million net income figures from the same period last year.
While ProFrac generated $709 million for Q2, ballooning operating costs seem to have taken their toll on overall profitability. Along with acquisition-related costs, the company has $1.2 billion in debt on its balance sheet while only sporting $26.9 million in cash. The oversized debt burden has resulted in recurring high-interest payments, which have also dragged on net margins.
On the date of publication, Tyrik Torres did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Cracker Barrel’s stock bounces off 3-year low after profit beats expectations, while revenue misses amid ‘recent traffic challenges’
Shares of Cracker Barrel Old Country Store Inc.
CBRL,
bounced 1.0% off a more than three-year low in premarket trading Wednesday, after the family restaurant chain reported fiscal fourth-quarter profit that beat expectations by revenue that missed amid “recent traffic challenges.” Net income for the quarter to July 28 rose to $37.5 million, or $1.68 a share, from $33.4 million, or $1.47 a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share of $1.79 beat the FactSet consensus of $1.61. Revenue grew 0.8% to $836.7 million, below the FactSet consensus of $841.6 million. Same-restaurant sales rose 2.4%, but missed the FacSet consensus of 3.1% growth, while same-store retail sales fell 6.8% but beat expectations of an 8.1% decline. For the first quarter, the company expects revenue of $800 million to $850 million, compared with the FactSet consensus of $842 million. The company’s traffic challenges followed a consumer backlash for its diversity, equity and inclusion campaign. Chief Executive Susan Cochran also announced in July her plan to retire after 12 years in the role, effective Nov. 1. The stock, which closed Tuesday at its lowest price since April 3, 2020, has tumbled 20.9% over the past three months while the S&P 500
SPX,
has gained 2.1%.
U.S. stocks dip, yields and dollar climb after release of August inflation report
U.S. stock futures dipped while Treasury yields and the U.S. dollar climbed Wednesday following the release of the August inflation report. Futures on the S&P 500 were marginally lower after the data, paring gains from earlier in the morning, although trading was volatile across markets. The yield on the 10-year Treasury note initially jerked higher, rising as much as 10 basis points to more than 4.360% before paring its gains. Bond yields move inversely to prices. The euro initially rose against the dollar to trade at $1.075 before turning lower, FactSet data showed. While a gauge of broad consumer prices showed an increase of 0.6% for August, just as economists polled by The Wall Street Journal had expected, another measure of so-called core prices, which excludes volatile food and energy prices, rose by 0.3%, a bigger jump than the 0.2% that had been expected. Analysts were quick to interpret the data as slightly hotter than expected. That could increase the pressure on the Federal Reserve to deliver at least one more interest-rate hike before the end of 2023, they said. “August saw a gain in core inflation, while increased gasoline prices helped push headline inflation even higher compared to the prior month. The Fed is likely to keep the federal funds rate unchanged at this month’s meeting, but today’s report keeps alive the potential for another interest rate hike in coming months,” said Phillip Neuhart, director of market and economic research at First Citizens Bank, in emailed commentary. Meanwhile, consumer prices rose 3.7% year-over-year, the biggest such increase in 14 months.