Visa Inc (V): Visa is one of the few mega-cap companies to post an unequivocally positive earnings report so far this season. Despite this huge headline numbers on its report, Visa stock didn’t move up that much. As investors digest the impressive results, Visa shares should move higher.
The company’s fiscal second-quarter earnings leapt to $1.79 per share from $1.38 per share for the same period a year earlier. Importantly, this was miles ahead of analyst expectations at $1.65.
Payment volumes also jumped, surging 17% year over year, with all-important cross-border transactions up a sizzling 38%. Those international payments are vital, since Visa gets to keep a much higher take rate on that class of purchases. While the tech sector is having a downbeat earnings season, the consumer is still strong and international travel is back on the upswing. With Visa stock still down sharply from its 52-week highs, opportunity lurks.
Waters Corp. (WAT): Waters is a leading laboratory equipment maker. It specializes in mass spectrometry devices and other related software, services and supplies. This industry boomed recently as research institutions and biotech companies bulked up their capabilities to address threats such as COVID-19. There’s been an assumption, however, that there would be a post-pandemic retreat for the sector as funding for things such as vaccine research dropped off.
However, there’s little evidence of this in practice yet. Waters hasn’t reported earnings this quarter yet, though last quarter it beat expectations on both the top and bottom line. However, key equipment-making rival Thermo Fisher Scientific Inc. (TMO) reported a massive quarter April 28, with organic revenue growth in the double digits. TMO stock leapt 7% on the news.
Waters could enjoy a similar surge in coming weeks. Meanwhile, shares are still about 20% off their 52-week highs.
Citigroup Inc. (c): Citigroup is one of America’s largest banks. It has a strong franchise in both investment banking and the consumer side, giving it a diverse stream of revenue. It also has a broad geographical footprint covering various international markets, which gives it some optionality that most American banks lack. Citigroup shares have gotten punished this year due to that international exposure as traders fear the worst due to the geopolitical conflict in Eastern Europe. However, Citigroup’s direct exposure to the region is limited.
Historically, Citigroup has lagged behind most of its immediate peers, but results have vastly improved over the past two years. Assuming that management has successfully improved operations, Citigroup looks like a serious bargain here at just 7 times forward earnings and with a 4.1% dividend yield.
Comcast Corp. (CMCSA): April was a nasty month for the cable industry, with multiple players plunging to new 52-week lows. Of the bunch, Comcast may be best positioned for a near-term comeback. The company reported soft subscription growth numbers in its latest quarterly earnings report, leading to the big sell-off in shares recently. However, it should be noted that Comcast’s churn rate continues to fall, meaning its existing customers are increasingly loyal. This speaks to the strong economics in Comcast’s business. Growth may be a touch slow at the moment, as is true of many at-home services in the economic reopening environment, but there is little sign that the core business is eroding.
Comcast trades at just 12 times forward earnings and throws off tons of free cash flow, giving management many strategic options. Additionally, Morningstar’s Michael Hodel sees shares worth $60 each, implying more than 30% upside from current levels, with shares closing at $44.16 on May 27.
Verizon Communications Inc. (VZ): Verizon stock slipped from $55 to under $50 during the second half of April. Although the price has risen above $50, this put the large telecom company squarely into value stock territory. Shares are now going for less than 10 times earnings, and the dividend yield has advanced to 5.3% as the stock price declined.
Verizon slipped following a mixed earnings report that showed strong momentum in its business segment but weaker spending on the consumer side. There is also some cost pressure as inflation is taking its toll on many industries lately. Still, for investors wanting a stable income stream with an outsize starting yield, Verizon should be on the radar here at 52-week lows. In addition to the income, there is some possibility for capital gains if VZ stock sentiment turns higher with catalysts such as the 5G rollout starting to drive improved results.