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The 3 Most Stable Stocks to Hold During Market Volatility

Fundamentally sound stable stocks such as Stantec (STN), ComfortDelGro Corporation (CDGLY), and Ituran Location and Control (ITRN), which offer steady returns, could help you stay afloat amid the persisting market volatility. Hence, these stocks could be ideal buy-and-hold options. Read on…

With consumer spending softening in recent months, market experts believe the U.S. economy is likely at an inflection point. Simultaneously, as recession fears are mounting and consumers turn pessimistic about the future, investing in stable dividend-paying stocks could help navigate the prevailing market uncertainties.

Therefore, looking at the strong fundamentals of Stantec Inc. (STN), ComfortDelGro Corporation Limited (CDGLY), and Ituran Location and Control Ltd. (ITRN), these stocks could be ideal buy-hold options for your portfolio.

In the face of a year’s worth of aggressive interest rate hikes, inflation rose again in March, according to economic data released Friday that is closely watched by the Federal Reserve. The Personal Consumption Expenditures (PCE) price index rose 0.3% in March, in line with economist expectations.

Although inflation rates have downgraded from the 2022 peak, they remain well above the central bank’s 2% target, reflecting that price increases are proving stickier than policymakers had anticipated. Market participants are widely expecting another quarter-percentage-point increase at next week’s meeting.

Adding to the gloom, the growth in the U.S. economy wobbled in the first three months of 2023 as higher interest rates and a banking crisis dragged down activity across sectors. Gross Domestic Product (GDP) rose at a 1.1% annualized pace in the first quarter, below the 2% estimate.

Weakness in the economy continues to emerge as the Fed’s rate hiking cycle, and an expected credit crunch ahead is likely to tilt the economy into recession later this year. According to Statista, there is a 57.8% probability that the United States will fall into economic recession by March 2024, an increase from the 54.5% projection of the preceding month.

With uncertainty hanging in the air, let’s take a closer look at the featured stocks to evaluate their fundamentals.

Stantec Inc. (STN)

STN is a provider of professional services in infrastructure and facilities. Its services include engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics. It is headquartered in Edmonton, Canada.

On April 17, on the backs of strong financials, the company paid a dividend of $0.195 per share to its shareholders, representing an 8.3% increase. STN’s four-year average dividend yield is 1.31%, while its annual dividend translates to a 0.97% yield on prevailing prices.

Its dividend has grown at a 7.6% CAGR over the past three years and a 6.4% CAGR over the past five years. Also, it has a record of seven years of consecutive dividend growth.

STN’s net revenue increased 27.7% year-over-year to C$1.51 billion ($1.11 billion) in the fourth quarter (ended December 31, 2022). Its adjusted net income grew 42.8% from the year-ago value to C$91.10 million ($67.47 million), while its adjusted EBITDA increased 34.9% year-over-year to C$191.70 million ($140.75 million). The company’s adjusted EPS increased 43.9% from the prior-year quarter to C$0.82.

The consensus EPS estimate of $0.54 for the first quarter (ended March 31, 2023) represents a 15.2% improvement year-over-year. The consensus revenue estimate of $866.43 million for the next year represents a 7.2% increase from the same period last year. The company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters.

The stock has gained 28.4% over the past year to close the last trading session at $59.62. Also, it has a five-year beta of 0.71, indicating comparative stability than the broader market.

STN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

STN is also rated an A in Stability and Sentiment and a B in Growth and Quality. Within the B-rated Outsourcing - Business Services industry, it is ranked #2 of 40 stocks.

To see additional POWR Ratings for Value and Momentum for STN, click here.

ComfortDelGro Corporation Limited (CDGLY)

CDGLY, based in Singapore, is an investment holding company that provides public transport services through Public Transport Services, Taxi, Automotive Engineering Services, Inspection and Testing Services, Driving Centres, Car Rental and Leasing, and Bus Station segments.

On January 25, the company announced that it had invested €4 million ($4.41 million) in Shift4Good, a global independent venture capital impact fund dedicated to sustainable mobility.

Describing the latest investment as part of its strategy of future-proofing itself, CDGLY’s Managing Director/Group CEO, Mr. Cheng Siak Kian, said, “We look forward to gaining access to promising start-ups with ground-breaking solutions for the future of mobility through this very innovative investment fund.”

In the same month, CDGLY also invested $4 million in Ottopia, an Israeli software company that develops teleoperation software for Autonomous Vehicles (AVs). This investment should enable the adoption of AV technology in smart urban mobility while strengthening its operational capabilities.

CDGLY’s four-year average dividend yield is 3.57%, while its annual dividend of $1.25 translates to a 7.25% yield on prevailing prices.

During the fiscal year 2022 that ended December 31, CDGLY’s revenue increased 7.9% year-over-year to $3.78 billion. Its operating profit rose 35.1% from the year-ago value to $270 million, while its EBITDA amounted to $590.90 million in the same period. Net profit attributable to shareholders and EPS increased 40.7% year-over-year to $173.10 million and $7.99, respectively.

CDGLY is expected to witness revenue growth of 4.9% for the fiscal year 2023 and 0.7% for 2024 to $2.94 billion and $2.96 billion, respectively. Over the past month, the stock has gained marginally to close the last trading session at $17.30. It has a five-year beta of 0.78.

CDGLY’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system. It also has an A grade for Stability and Quality and a B for Growth and Value. Among the 15 stocks in the B-rated Railroads industry, it is ranked first.

Click here to see the additional POWR Ratings for CDGLY (Momentum and Sentiment).

Ituran Location and Control Ltd. (ITRN)

ITRN is a location-based telematics services and machine-to-machine telematics products provider. The company, based in Azor, Israel, operates through the segments of Telematics services and Telematics Products.

On April 4, the company paid a quarterly dividend of $0.14 per share, totaling approximately $3 million, net of taxes at the rate of 25%. This reflects upon the company’s ability in cash generation.

The company’s four-year average dividend yield is 3.16%, while its annual dividend of $0.56 per share translates to a 2.68% yield on the current prices. Its dividend has grown at a 3.1% CAGR over the past five years.

For the fiscal fourth quarter that ended December 31, 2022, ITRN’s revenues increased 6.5% year-over-year to $74.95 million. The company’s operating income increased 7.9% year-over-year to $15.30 million, while its gross profit grew 6% from the year-ago value to $35.85 million.

Also, net income attributable to the company came in at $9.57 million. Additionally, EPS attributable to the company’s stockholders came in at $0.47, representing a 2.2% increase from the prior-year quarter.

Analysts expect ITRN’s EPS to increase 11.6% year-over-year to $0.48 for the fiscal first quarter that ended March 2023, while its revenue estimate of $72.60 million for the same quarter indicates a marginal improvement from the prior-year period. Additionally, the stock surpassed consensus revenue estimates in three out of the trailing four quarters.

ITRN’s shares lost marginally intraday and year-to-date to close the last trading session at $20.90. It has a 24-month beta of 0.69.

It is no surprise that ITRN has an overall rating of A, equating to a Strong Buy in our proprietary rating system. Out of 60 stocks in the A-rated Auto Parts industry, it is ranked #8. It has an A grade for Stability and a B for Growth, Value, and Quality.

Beyond what we stated above, we have also given ITRN grades for Momentum and Sentiment. Click here to access the additional ratings of ITRN.

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STN shares were trading at $60.04 per share on Friday afternoon, up $0.42 (+0.70%). Year-to-date, STN has gained 25.55%, versus a 8.80% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.


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