This year has been rough so far for the U.S. stock market. Equities have been under immense pressure lately amid 40-year high inflation, the Fed Reserve’s aggressive interest rate hike, a resurgence in COVID-19 cases in China, and a geopolitical crisis. Last month, the three major equity indices entered bear territory. Over the past month, the S&P 500 Index and NASDAQ Composite Index have plunged 7.7% and 11.6%, respectively.
Furthermore, U.S. GDP declined 1.4% in the first quarter of 2022. And following the negative GDP growth, the U.S. economy seems to be heading toward recession. Amid the possibility of a recessionary environment, investors have been opting for fundamentally sound stocks because they are considered attractive investments owing to their solid financials and long-term growth potential. In addition, these stocks have high resilience to market turbulence, historically.
Given these factors, we think it could be wise to invest in popular stocks FedEx Corporation (FDX) and Micron Technology, Inc. (MU) that could potentially thrive in the risk-off environment.
FedEx Corporation (FDX)
FDX in Memphis, Tenn., offers transportation, e-commerce, and business services in the U.S. and internationally. The company operates through five segments: FedEx Express; FedEx Ground; FedEx Freight; FedEx Services; and Corporate, Other, and Eliminations. It provides freight transportation services, e-commerce technology, and e-commerce transportation services, business services, including sales, marketing, communications, IT, customer service, and back-office function services.
This March, FedEx Office, a provider of state-of-the-art printing and shipping services and a subsidiary of FDX, formed an alliance with Notarize to launch FedEx Office Online Notary. This new service will make fully digital notarization services available to customers, small businesses, and owners. It is expected to boost the company's revenue streams.
FDX's board of directors declared a $0.75 per share quarterly cash dividend on its common stock in February. This reflects the company's strong financial position and commitment to delivering value to shareholders.
In its fiscal 2022 third quarter, ended Feb. 28, 2022, FDX's revenue grew 9.8% year-over-year to $23.60 billion. The company's operating income rose 37.4% from its year-ago value to $1.46 billion. And its net income and earnings per share came in at $1.22 billion and $4.59, respectively, registering an increase of 29.6% and 32.3% from the prior-year period.
The $24.53 billion consensus revenue estimate for its fiscal 2022 fourth quarter, ending May 31, 2022, represents an 8.5% increase from the same period in 2021. FDX has surpassed the consensus revenue estimates in each of the trailing four quarters. The $6.85 consensus EPS estimate for the next year indicates a 36.6% year-over-year rise.
The stock has declined 22.9% in price year-to-date and closed yesterday's trading session at $199.44.
FDX's POWR Ratings reflect this promising outlook. It has an overall B grade, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
FDX has a grade of B for Value and Quality. Within the A-rated Air Freight & Shipping Services industry, it is ranked #4 of 17 stocks.
To see additional POWR Ratings (Stability, Momentum, Growth, and Sentiment) for FDX, click here.
Micron Technology, Inc. (MU)
MU designs, manufactures, and sells memory and storage products worldwide. The New York City-based company operates through four segments: Compute and Networking Business Unit; Mobile Business Unit; Storage Business Unit; and Embedded Business Unit. It provides memory and storage technologies, memory products for the cloud server, enterprise, graphics, networking, and mobile-device markets.
Last month, MU introduced its latest 16Gb GDDR6X memory that features twice the capacity and up to 15% higher performance. These enhanced capabilities allow users to experience sharp visuals, higher frame rates, and superior performance in memory-intensive applications like gaming and content creation. The introduction is expected to extend the company's customer reach and revenues.
On March 23, MU partnered with Idaho Power to advance solar-powered renewable energy in Idaho. Idaho will facilitate the construction of a new 40-megawatt (MW) solar project. MU might promote sustainability and boost its profitability and business growth with this solar project.
MU's revenue has increased 24.9% year-over-year to $7.79 billion in its l 2022 second quarter, ended March 3, 2022. Its non-GAAP gross margin improved 81.3% year-over-year to $3.72 billion. Its non-GAAP operating income grew 118.8% from the year-ago value to $2.75 billion. And the company's non-GAAP net income increased 116.7% year-over-year to $2.44 billion, while its non-GAAP earnings per share rose 118.4% from the prior-year period to $2.14.
Analysts expect MU's revenue for its fiscal 2022 third quarter, ending May 30, 2022, to come in at $8.70 billion, representing a 17.2% rise year-over-year. The Street expects the company's EPS for the current quarter to be $2.46, representing a 30.9% increase year-over-year. It is no surprise that the company has surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of MU have gained 5.2% in price over the past five days and closed yesterday's trading session at $71.26.
MU's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A grade, which translates to Strong Buy in our proprietary rating system.
MU has an A grade for Value. It has a B grade for Growth, Sentiment, and Quality. It is ranked #7 of 95 stocks in the A-rated Semiconductor & Wireless Chip industry. Click here to see MU's POWR Ratings for Stability and Momentum.
Click here to checkout our Semiconductor Industry Report for 2022
FDX shares were trading at $202.21 per share on Wednesday afternoon, up $2.77 (+1.39%). Year-to-date, FDX has declined -21.55%, versus a -11.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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