The recent bull market has been driven by a combination of economic, fiscal, and market-specific factors, such as upbeat economic data, robust corporate earnings, technological advancements, and rising expectations of rate cuts amid easing inflation.
Amid this backdrop, quality stocks The Progressive Corporation (PGR), Energy Transfer LP (ET), and The Williams Companies, Inc. (WMB) have demonstrated solid growth potential and momentum lately, making them noteworthy choices in a bullish market environment.
Stocks have soared to record highs this year, backed by an unexpectedly resilient U.S. economy, strong corporate earnings, and an ongoing AI boom. The S&P 500 index has surged more than 15% year-to-date, while the tech-heavy is up roughly 18% as Big Tech continues to get bigger.
Despite fears surrounding high interest rates and elevated inflation, the economy continues to perform well in the short term, driven by strength in the job market, consumer spending, and exports. Employers added a robust 272,000 jobs in May, accelerating from April and higher than economists’ expectations of 190,000 job additions.
Despite missing economists’ estimates, retail sales grew 0.1% last month after a downwardly revised 0.2% decline in April, as reported by the Commerce Department. There is some encouraging news on manufacturing, indicating that a revival is currently underway. Manufacturing output surged by 0.9% in May following a downwardly revised 0.4% drop in April.
Meanwhile, fresh data in May revealed that inflation is easing and getting closer to the Federal Reserve’s 2% target. The Consumer Price Index (CPI) rose 3.3% year-over-year, slowing from April’s 3.4% rate.
The new backdrop of cooling inflation and anticipated interest rate cuts is encouraging investors to increase their bullish bets. Goldman Sachs increased its year-end target for the S&P 500 from 5,200 to 5,600, citing a solid outlook for corporate profits. Also, Evercore ISI raised its price target for the benchmark index to 6,000, a reversal from its prior target of 4,750.
Therefore, it is an opportune time to invest in momentum stocks, as they are likely to benefit significantly from the ongoing bullish trends and positive economic outlook. Let’s discuss the fundamentals and growth prospects of quality stocks PGR, ET, and WMB, which are witnessing solid momentum.
The Progressive Corporation (PGR)
PGR is an insurance holding company that offers personal and commercial auto, personal residential and commercial property, business-related general liability, and other specialty property-casualty insurance products. The company operates in three segments: Personal Lines; Commercial Lines; and Property.
On January 29, PGR’s Progressive Insurance®, a prominent Commercial Auto insurer in the U.S., was renamed Progressive Fleet & Specialty Programs (Progressive Fleet), aiming to benefit agents and customers with a nationally recognized brand.
The new name highlights the integration of businesses and captures Progressive's enhanced capabilities in large fleet transportation and niche insurance programs tailored for the transportation and delivery sectors.
For the first quarter that ended March 31, 2024, PGR’s net premiums earned increased 19.3% year-over-year to $16.10 billion. Its total revenues grew 20.3% from the prior year’s quarter to $17.20 billion. The company’s net income came in at $2.33 billion, or $3.94 per common share, up 417.8% and 425.3% year-over-year, respectively.
Street expects PGR’s revenue for the second quarter (ending June 2024) to increase 16.8% year-over-year to $17.18 billion. The consensus EPS estimate of $2.22 for the current quarter indicates a 432.9% year-over-year improvement. Moreover, the company surpassed consensus EPS estimates in three of the trailing four quarters.
PGR’s stock has gained 35.1% over the past six months and 62.8% over the past year to close the last trading session at $210.75. The stock is currently trading above its 50-day and 200-day moving averages of $209.18 and $178.44, respectively, indicating an uptrend.
PGR’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Momentum and a B for Growth and Quality. It is ranked #16 out of 56 stocks in the B-rated Insurance – Property & Casualty industry.
Click here to see additional ratings of PGR for Value, Stability, and Sentiment.
Energy Transfer LP (ET)
ET provides energy-related services worldwide. It owns and operates natural gas transportation pipeline and natural gas storage facilities in Texas and Oklahoma; and nearly 20,090 miles of interstate natural gas pipeline. Also, it sells natural gas to electric utilities, independent power plants, local distribution and other marketing companies, and industrial end-users.
In June, ET submitted its premerger notification filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in connection with its previously announced acquisition of WTG Midstream Holdings LLC (WTG). WTG owns and operates the largest private Permian Basin gas gathering and processing business with assets in the core of the Midland Basin.
Additionally, Energy Transfer stated that the 20% stake in the BANGL pipeline, subject to a right of first offer, will not be included in the transaction. Consequently, the revised purchase price for WTG is around $3.075 billion. This acquisition is expected to close in the third quarter of 2024 and enhance ET’s Permian operations and downstream businesses.
On April 24, ET announced an increase in its quarterly cash distribution to $0.3175 per common unit for the first quarter of fiscal 2024. This cash distribution reflects a rise of 3.3% compared to the first quarter of 2023 and was paid on May 20, 2024, to unitholders of record as of the close of business on May 13, 2024.
ET pays an annual distribution of $1.27 per unit, which translates to a yield of 8.29% on the prevailing share price. Its four-year average dividend yield is 9.73%. Moreover, the company’s dividend payouts have grown at a CAGR of 18.1% over the past three years.
During the first quarter that ended March 31, 2024, ET’s revenues increased 13.9% year-over-year to $21.63 billion. Its operating income rose 15.4% year-over-year to $2.38 billion. The company’s net income was $1.69 billion, up 16.9% from the previous year’s quarter. Its adjusted EBITDA grew 13% from the year-ago value to $3.88 billion.
In addition, the company’s distributable cash flow came in at $2.87 billion, an increase of 15.8% year-over-year. As of March 31, 2024, its current assets were $15.02 billion, compared to $12.43 billion as of December 31, 2023.
Analysts expect ET’s revenue and EPS for the second quarter (ending June 2024) to increase 16.8% and 39.9% year-over-year to $21.39 billion and $0.35, respectively. Further, the company’s revenue and EPS for the fiscal year 2024 are expected to grow 11.8% and 36.8% year-over-year to $87.87 billion and $1.49, respectively.
ET’s shares have surged 11.8% over the past six months and 21.4% over the past year to close the last trading session at $15.48. Moreover, the stock is currently trading above its 200-day moving average of $14.49, indicating an uptrend.
ET’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
ET has an A grade for Momentum and a B for Growth, Stability, and Value. It is ranked #7 of 80 stocks in the Energy – Oil & Gas industry.
Click here to access ET’s ratings for Sentiment and Quality.
The Williams Companies, Inc. (WMB)
WMB is an energy infrastructure company. It operates through Transmission & Gulf of Mexico; Northeast G&P; West; and Gas & NGL Marketing Services segments. It engages in midstream gathering, processing, and fractionation activities; gas gathering and treating operations; and offers wholesale marketing, trading, storage, and transportation of natural gas.
On April 30, WMB’s Board of Directors approved a regular dividend of $0.4750 per share, or $1.90 annualized, on the company’s common stock, payable on June 24, 2024, to holders of record at the close of business on June 7, 2024. The dividend represents a 6.1% increase from The company’s second-quarter 2023 dividend of $0.4475 per share.
WMB’s annual dividend translates to a yield of 4.60% on the current share price. Its four-year average dividend yield is 5.89%. The company’s dividend payouts have grown at a CAGR of 5.1% over the past five years. Williams has paid a common stock dividend every quarter since 1974.
WMB’s service revenues increased 12.5% year-over-year to $1.91 billion in the first quarter that ended March 31, 2024. Its adjusted EBITDA rose 7.7% from the year-ago value to $1.93 billion. Its adjusted net income and adjusted earnings per share were $719 million and $0.59, up 3.7% and 5.4% from the prior year’s period, respectively.
Furthermore, the company’s available funds from operations were $1.51 billion, an increase of 4.3% from the previous year’s quarter.
Analysts expect WMB’s revenue for the fiscal year (ending December 2025) to increase 6.7% year-over-year to $11.52 billion. The company’s EPS for the same period is expected to grow 11.6% year-over-year to $1.84. Further, the company surpassed the consensus revenue estimates in each of the trailing four quarters.
WMB’s stock has soared 20.5% over the past six months and 36.5% over the past year to close the last trading session at $41.81. Also, the stock is currently trading above its 50-day and 200-day moving averages of $39.90 and $36.45, respectively, indicating an uptrend.
WMB’s robust outlook is reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has an A grade for Momentum and a B for Sentiment. WMB is ranked #18 among 80 stocks in the Energy - Oil & Gas industry.
In addition to the POWR Ratings we’ve stated above, we also have other ratings of WMB for Quality, Growth, Value, and Stability. Get all WMB ratings here.
What To Do Next?
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PGR shares were trading at $210.75 per share on Wednesday morning, up $2.51 (+1.21%). Year-to-date, PGR has gained 33.04%, versus a 15.75% 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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