This year has been tough for investors. The inflation numbers may have been down in October, but it was still 7.7% compounded on last October’s 6.2%, and that’s too high. Interest rates are rising fast in response, making capital more expensive, and the available cash is chasing goods constrained by tight supply chains and continued COVID lockdowns in China. Food and energy prices are high, and likely to rise, as Russia’s war in Ukraine puts a major clamp on global supplies of natural gas, wheat, and cooking oils. It’s no wonder that stock markets have been highly volatile, making it ever more difficult for investors to predict what’s coming next.
But even with all of those headwinds, there are stocks we can be thankful for this Thanksgiving holiday season. These are the market’s proven performers, the stocks that have brought sound returns to investors despite all the challenges that 2022 has through at the markets.
The positive attributes of these winning stocks are reflected in their Smart Scores. The TipRanks Smart Score takes the collected data on every stock and collates it by 8 separate categories, each of which is known to correlate with positive stock performance going forward. The Smart Score gives each stock a single-digit score, on a scale of 1 to 10, making it easy to tell at a glance the shares’ main chance in the coming months.
Generally, stocks that get a ‘Perfect 10’ on the Smart Score will show solid results in each of the 8 factors, but that’s not a hard and fast rule. Pulling up the Smart Score data on two stocks that have hit that goalpost, we find that they offer investors a solid foundation and a good combination of strengths. Let’s take a closer look.
We’ll start in the energy industry, where ConocoPhillips is one of the sector’s largest legacy names. ConocoPhillips boasts a market cap of $158 billion, along with operations in 13 countries and production on the order of 1.5 million barrels of oil equivalent daily. Annual revenues hit $46 billion last year, and has already beaten that total this year; the top line for the first 9 months of the year hit $60.5 billion.
In the last reported quarter, 3Q22, revenue came in at $21.14 billion, up 79% year-over-year. Net income was $4.53 billion, for a 90% y/y; on a per-share basis, the adjusted EPS of $3.60 represented a 103% gain from the year-ago quarter.
In addition to solid financial results, ConocoPhillips finished the quarter with $10.7 billion in cash and liquid assets on hand – after distributing $4.3 billion to shareholders through a combination of $1.5 billion in dividends and $2.8 billion in share repurchases. During the quarter, the company increased its repurchase authorization going forward by $20 billion and announced an 11% increase in the quarterly dividend payment.
With that in the background, it’s no wonder that shares in COP are up 83% so far this year, far outpacing the 16% year-to-date loss on the S&P 500.
Truist’s 5-star analyst Neal Dingmann couldn’t help but sing the praises of ConocoPhillips, noting that the company has is resting on a truly solid foundation.
“Conoco finds itself in the enviable financial and operational positions with nearly no debt, record production, and sizeable, quality inventory. While we have received some investor pushback that has focused on the company’s stock hitting a recent all-time high, we point out that the valuation still looks very reasonable with the shares trading at a ~15% FCF yield and ~4.4x earnings basis; both 20%+ discounts to its closest peers,” Dingmann opined.
“Further,” the analyst added, “we believe the company’s three tier returns on its capital program is one of the better in the industry as it returns more capital to investors than the majors, yet retains more financial optionality than a number of the large independent operators. We believe this combination gives investors what they currently want…”
Against this backdrop, it’s no wonder that Dingmann rates COP as a Buy, and his price target of $167 implies it has a one-year upside potential of ~32%. (To watch Dingmann’s track record, click here)
Dingmann represents the bullish view on COP, which is held by 15 of the 18 analysts who have recently filed reviews on the shares. Overall, the stock gets a Strong Buy from the analyst consensus. (See COP stock analysis on TipRanks)
CECO Environmental (CECO)
Next up, CECO Environmental, is ‘green’ firm, working on the development and installation of new technologies in environmental air pollution control technologies, energy technologies, and fluid handling and filtration. The company has found customers in sectors and industries as varied as aerospace, automotive, brick making, cement, chemicals, fuel refining, and even glass manufacturing.
CECO’s revenues have been growing fairly steadily – with 5 sequential increases since the beginning of 2001. In 3Q22, the last quarter reported, the company showed a top line of $108.4 million, up 36% year-over-year. Revenues were supported by a 10% increase in business orders, to $101.7 million, and the company’s backlog, an important metric indicating future business and income, rose by 27% to $277.7 million. In an important turnaround, the net income came in at $1.9 million, a gain of $3.1 million from the $1.2 million net loss in the year-ago quarter.
Reflecting these sound metrics, CECO published full-year 2022 revenue guidance of $410 million or better, forecasting a y/y top-line gain of 25%.
Overall, investors have been pleased with CECO over the course of this year, and this is another stock that has far outperformed the broader markets, posting solid share gains even during the bearish turns we’ve seen throughout the year. CECO shares are up 83% year-to-date.
Looking at CECO from Craig-Hallum, analyst Aaron Spychalla is impressed by what he sees, noting: “CECO is seeing the benefits of a strategic transformation from a business primarily focused on longer-cycle, cyclical, and project-based Energy markets to one more diversified by product and vertical, with a shorter cycle profile, and end-markets that are benefiting from ESG tailwinds for clean air and clean water. With solid fundamentals and growing visibility, a combination of company-specific and secular growth drivers, and modest valuation, we reiterate our Buy rating.”
That Buy rating comes with a $17 price target, which suggests room for 48% growth by the end of next year. (To watch Spychalla’s track record, click here)
Overall, there are 5 recent analyst reviews on this stock – and they are unanimous, it’s one to buy. This gives CECO shares their Strong Buy rating. (See CECO stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.