For immediate release
Chicago, IL – May 9, 2022 – Today’s Zacks Investment Ideas feature highlights Tesla TSLA, Apple AAPL, Devon Energy Corp. DVN, ZIM Integrated Shipping Services ZIM and Eagle Bulk Shipping Inc. EGLE.
Defense Wins Ball Games: 3 Actions to Protect Your Wallet from Bullets
It’s no secret that 2022 has been tough on the market. Supply chain bottlenecks, soaring energy prices, geopolitical issues and a hawkish Fed have soured investors, slashing valuations for many companies.
When navigating rough waters, investors need to build a higher level of defense into their portfolios to prevent their vessels from taking on water. Believe it or not, there have been plenty of stocks throughout 2022 that have delivered huge gains for investors while easily outpacing the broader market.
Typically, companies that do well during pullbacks aren’t the exciting, high-flying tech companies that investors are clamoring for. But what’s exciting is the fact that it’s still possible to find prosperity in dark times by putting your hard-earned money into businesses that have proven their ability to generate gains in adverse market conditions.
The three companies we’ll discuss have all easily outperformed the general market and investor favorites such as Tesla and Apple throughout 2022.
These stocks all carry a coveted #1 Zacks rank (strong buy) or #2 Zacks rank (buy); Zacks Rank is an absolute way for top investors to find real winners in the market. Simply put, it’s one of the most powerful market tools out there.
We can see how powerful the Zacks ranking is by creating a graph that shows the year-to-date performance of the three companies against the S&P 500 and the widely known companies mentioned above (TSLA, AAPL, GOOGL) .
Quite the difference, isn’t it? In addition to strong stock performance, all three companies have respectable dividend yields above 5%. Let’s see why these companies are a formidable defensive bet.
Devon Energy Corp. is an independent energy company principally engaged in the exploration, development and production of oil and natural gas. The Company’s operations are primarily concentrated in land areas of North America.
DVN likes to reward its shareholders; its dividend metrics are robust. The company’s dividend yield sits at 5.9%, with a very sustainable payout ratio of 13% of earnings. What strikes me is its dividend growth – the company has increased its dividend tenfold over the past five years, giving it a five-year annualized dividend growth rate of almost 32%.
The evaluation measures are also excellent. Its current price-to-earnings ratio of 7.9X is nearly half of its 2021 high of 14.6X. Additionally, the forward earnings multiple is currently at a steep 57% discount to the value of the S&P 500.
The company’s next quarterly publication looks very strong. Over the past 60 days, the consensus estimate trend for the quarter rose 42% to $2.22 per share, boosted by eight positive analyst estimate revisions. In addition, there were no negative revisions to estimates during this period. The quarterly estimate reflects a whopping 270% profit growth from the year-ago quarter.
DVN is currently a Zacks Rank #1 (Strong Buy) with an overall VGM score of B.
ZIM Integrated Shipping Services
ZIM Integrated Shipping Services provides its customers with innovative shipping and logistics services covering the world’s major trade routes, focusing on selected markets with competitive advantages that allow the company to maximize its market position.
ZIM has an excellent dividend yield of 29.7%, with a sustainable payout ratio of 26% of earnings. The company went public in January 2021 and has since increased its dividend twice.
The real spike in the dividend yield happened on March 9and when the company announced that shareholders of record as of March 22, 2022 would receive a dividend of $17 per share, well above the previous dividend of $2.50 per share. Clearly, ZIM is dedicated to rewarding its shareholders.
ZIM has very strong valuation metrics; its current forward earnings multiple of 1.8X screams undervalued and is well below its May 2021 high of 4.8X. In fact, the stock represents a staggering 90% discount to the S&P 500 forward P/E of 18.5X.
For the next quarterly release, the Zacks Consensus Estimate trend has edged up to $12.65 per share over the past 60 days, reflecting massive earnings growth of nearly 150% over the quarter. of the previous year.
ZIM is a Zacks Rank #2 (buy) with an overall VGM score of an A.
Bulk Eagle Shipping
Eagle Bulk Shipping Inc. is a fully integrated owner-operator engaged in global shipping, focusing exclusively on the mid-size dry bulk carrier segment. It has one of the largest fleets of Supramax/Ultramax ships in the world.
EGLE’s dividend yield is also in the double digits at 12.2%, with a rather high payout ratio at 63% of earnings. Additionally, the company has increased its dividend twice in the past five years, although it recently began dividend payments in 2021.
EGLE’s current forward earnings multiple sits at a very respectable 4.1X, a fraction of its high of 10.3X in May 2021 and just above its low of 3.1X earlier this year in January. Additionally, the forward earnings multiple reflects a massive 78% discount to the S&P 500.
For the quarterly report due out in August, the consensus estimate trend climbed 11%, boosted by two positive analyst estimate revisions. The quarterly estimate reflects a considerable 40% growth in profits compared to the previous quarter.
EGLE is a Zacks Rank #2 (Buy) with an overall VGM score of an A.
Investors need to pile a layer of defense into their portfolios to limit declines in the broader market. These three stocks have shown immense relative strength in 2022, significantly increasing their valuations.
Sometimes it’s hard not to get caught up in all the high-flying tech stocks; they are exciting, fun and innovative investments to park money. However, the market is much broader than technology and high-growth companies. Using the Zacks Ranking, we can find these winners quite easily.
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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. To visit https://www.zacks.com/performancefor more information on the performance figures displayed in this press release.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.