The Federal Reserve raised the U.S. inflation forecast to 3.4% in 2021. This, along with a 5.4% increase in the Consumer Price Index over the past 12 months, as of June 2021, is raising investor concerns about the potential for a stock market crash in the near term. Also, rising COVID-19 cases worldwide with the spread of the Delta variant of the COVID-19 virus could put pressure on the stock market in the near term. Therefore, we think that betting on fundamentally sound stocks could be the ticket to hedge current downside risk in an investment portfolio.

Consumer-focused goods, steel, and medical devices industries are poised to grow substantially from demand driven by the economic recovery. So, we believe Sysco Corporation (SYY), ArcelorMittal (MT), Darden Restaurants, Inc. (DRI), Whirlpool Corporation (WHR), and MKS Instruments, Inc. (MKSI) could be ideal additions to one’s  portfolio now. 

Their expanded market reach and stable financials make them well-positioned to deliver significant returns in the coming months, dodging the market’s short-term fluctuations.

Sysco Corporation (SYY)

Houston, Tex.-based SYY markets and distributes a range of food and related products primarily to restaurants, healthcare, and educational facilities. The company also distributes personal care guest amenities, housekeeping supplies, room accessories, and textiles to the lodging industry.

On May 20, 2021, SYY agreed  to acquire Greco and Sons, an independent Italian specialty distributor of food products. Greco and Sons will operate as a standalone division within SYY’s portfolio of specialty companies. This should  enable SYY to better serve Italian-focused customers by establishing a new cuisine-focused selling platform and gain expanded market reach over time.

SYY’s net sales for its fiscal first quarter, ended March 27, 2021, increased 2.3% sequentially to $11.82 billion. The company’s gross profit came in at $2.12 billion, up 1.2% from the prior quarter. Its non-GAAP operating earnings have been reported at $256.23 million for the quarter, representing a 9.5% rise from the prior quarter. SYY’s non-GAAP net earnings increased 33.7% sequentially to $114.81 million. Its non-GAAP EPS increased 29.4% sequentially to $0.22. And the company had $4.90 billion in cash and cash equivalents as of March 27, 2021.

A $0.84 consensus EPS estimate for the current quarter, ending September 30, 2021, represents a 146.6% improvement year-over-year. SYY surpassed consensus EPS estimates in three of the trailing four quarters. The $14.95 billion consensus revenue estimate for the current quarter represents a 26.9% gain from the prior-year period. Analysts expect the stock’s EPS to grow at a 28.4% rate per annum over the next five years.

In terms of non-GAAP forward EV/Sales, SYY is currently trading at 0.91x, which is 56.6% lower than the 2.09x industry average. Regarding its forward Price/Sales, the stock is currently trading at 0.74x, 53% lower than the 1.57x industry average. The stock has gained 31.1% over the past year and closed Friday’s trading session at $71.58. 

SYY’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong 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 a B grade for Value, Growth, Momentum, and Quality. Click here to see the additional ratings for SYY (Sentiment and Stability). 

SYY is ranked #6 of 80 stocks in the B-rated Food Makers industry. 

ArcelorMittal (MT)

Based in Luxembourg, MT owns and operates steel, iron ore manufacturing, and coal mining facilities worldwide. The company serves the automotive, appliance, engineering, construction, energy, and machinery industries through a centralized marketing organization and distributors.

On July 13, 2021, MT signed a memorandum of understanding (MoU) with the Spanish Government, which will see a €1 billion ($1.18 billion) investment in decarbonization technologies at MT’s Asturias’ plant in Gijón. MT will introduce new manufacturing processes that contribute to a considerable reduction of CO2 at its Spanish operations by up to 4.8 million tonnes over the next five years. It will also further intensify its R&D capabilities in Spain to support the new project and innovation requirements.

For the fiscal first quarter, ended March 31, 2021, MT’s sales increased 9.1% year-over-year to $16.19 billion. The company’s operating income came in at $2.64 billion, compared to a $353 million loss  in the prior-year period. Its adjusted net income has been reported at $2.29 billion, versus a $571 million loss  in the year-ago period. MT's EPS  came in at $1.93 for the quarter, versus a $1.11 loss per share in the prior-year period. As of March 31, 2021, the company had $5.47 billion in cash and cash equivalents and restricted funds.

Analysts expect MT’s EPS to improve 1915.8% in the current quarter, ending September 30, 2021, to $3.45. It surpassed the Street’s EPS estimates in three of the trailing four quarters. Analysts expect its revenue to be $18.61 billion for the current quarter, representing a 40.3% rise year-over-year. Its EPS is expected to grow at a 272.2% rate per annum over the next five years.

In terms of non-GAAP forward EV/Sales, MT’s 0.54x is 69.9% lower than the 1.79x industry average. Regarding its forward Price/Sales, the stock is currently trading at 0.43x, which is 70% lower than the 1.42x industry average. The stock has gained 153.4% over the past year and 106.9% over the past nine months. It ended Friday’s trading session at $29.52. 

It’s no surprise that MT has an overall A rating, which equates to Strong Buy in our POWR Ratings system.

The stock has an A grade for Growth and Momentum, and a B grade for Value, Sentiment, and Quality. Click here to see the additional ratings for MT’s Stability.

MT is ranked #5 of 35 stocks in the A-rated Steel industry.  

Darden Restaurants, Inc. (DRI)

DRI owns and operates full-service restaurants. The company operates a variety of seafood and Italian restaurants under a multitude of brand names. DRI is based in Orlando, Fla.

As part of its ongoing efforts to fight hunger, DRI partnered with Feeding America on January 27, 2021, to enhance mobile food pantry programs in areas with higher levels of food insecurity. Through a $500,000 grant from the DRI Foundation and additional support from Penske Truck Leasing and Lineage Logistics partners, five Feeding America food banks will receive a refrigerated box truck to help increase access to nutritious food and address transportation needs. DRI’s sales for its fiscal fourth quarter, ended May 30, 2021, increased 79.5% year-over-year to $2.28 billion. The company’s operating income has been reported at $323.40 million, versus a $592.10 million versus a $592.10 loss in the prior-year period. DRI’s adjusted net income came in at $269.30 million, compared to a $154.60 million loss  in the year-ago period. Its adjusted EPS has been reported at $2.03 for the quarter, compared to a $1.24 loss in the prior-year period. As of May 30, 2021, the company had $1.21 billion in cash and cash equivalents.

For the current quarter, ending August 31, 2021, analysts expect DRI’s EPS to be $1.64, up 193.7% from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Its revenue is expected to be $2.24 billion for the current quarter, representing a 46.6% rise from the prior-year period.

DRI’s 12.51x forward Price/Cash Flow  is 8.8% lower than the 13.71 industry average. DRI has gained 84.8% over the past year to close Friday’s trading session at $141.74. 

DRI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. 

The stock has an A grade for Growth, and a B grade for Value, Momentum, Quality, and Sentiment. We have also graded DRI for Stability. Click here to access all DRI’s ratings. 

DRI is ranked #2 of 46 stocks in the A-rated Restaurants industry. 

Whirlpool Corporation (WHR)

WHR is a manufacturer and marketer of home appliances and related products. The Benton Harbor, Mich. company sells its products to retailers, distributors, dealers, builders, and directly to consumers.

In an announcement dated May 25, 2021, WHR confirmed that it is  enhancing its voice-command capabilities as a launch collaborator for Alphabet, Inc.’s (GOOGL) Google Assistant voice notifications. Google Assistant voice notifications will be coming later this year with select connected Maytag and Whirlpool brand washers and dryers and JennAir and KitchenAid brand products. Unlike traditional voice-command features that require direct questions, these voice notifications will proactively alert appliance users with updates. WHR’s net sales for its fiscal first quarter, ended March 31, 2021, increased 23.9% year-over-year to $5.36 billion. The company’s gross profit has been reported at $1.15 billion, representing a 63.3% year-over-year improvement. Its operating profit came in at $618 million, up 135% from the prior-year period. While its net earnings increased 181.2% year-over-year to $433 million, its EPS increased 178% year-over-year to $6.81. The company had $2.45 billion  in cash and cash equivalents as of March 31, 2021.  

A $5.57 billion consensus revenue estimate  for the current quarter, ending September 30, 2021, represents a 5.2% rise from the prior-year period. Analysts expect the stock’s EPS to grow at a 7.7% rate per annum over the next five years.

In terms of non-GAAP forward EV/Sales, the stock is currently trading at 0.84x, which is 44.2% lower than the 1.51x industry average. Regarding its forward Price/Sales, the stock is currently trading at 0.63x, 50% lower than the 1.26x industry average.

WHR has gained 52.4% over the past year and 21.8% year-to-date. It closed Friday’s trading session at $219.86. 

WHR’s POWR Ratings reflect its solid prospects. The company has an overall B rating, which translates to Buy in our proprietary ratings system. 

WHR has an A grade for Momentum, and a B grade for Growth and Value. In addition to the POWR Ratings grades we’ve just highlighted, one can see WHR ratings for Quality, Sentiment, and Stability here. 

WHR is ranked #23 of 64 stocks in the A-rated Home Improvement & Goods industry. 

MKS Instruments, Inc. (MKSI)

MKSI develops, manufactures, and supplies instruments and components to control and analyze gases in semiconductors and similar industrial manufacturing processes. The company serves the semiconductor, industrial technologies, life and health sciences, research, and defense markets. MKSI is based in Andover, Mass.

Click here to checkout our Semiconductor Industry Report for 2021

MKSI completed the acquisition of Photon Control Inc. in an all-cash transaction valued at approximately CAD387 million ($303.29 million) on July 15, 2021. Photon’s acquisition should further advance MKSI strategy to enhance its Surround the Chamber offering by adding optical sensors for temperature control for critical etch and deposition applications in semiconductor wafer fabrication.

MKSI’s net sales for its fiscal first quarter, ended March 31, 2021, increased 31.2% year-over-year to $605 million. The company’s gross profit came in at $322.10 million, up 34.4% from the prior-year period. Its non-GAAP income from operations has been reported at $179 million for the quarter, representing a 62.7% rise year-over-year. MTSI’s non-GAAP net earnings increased 68.1% year-over-year to $142.70 million. Its non-GAAP EPS increased 66.2% year-over-year to $2.56. And the company had $699.80 million in cash and cash equivalents as of March 31, 2021.

A $2.73  consensus EPS estimate for the current quarter, ending September 30, 2021, represents a 41.5% improvement year-over-year. MKSI surpassed consensus EPS estimates in each of the trailing four quarters. The $732.49 million consensus revenue estimate  for the current quarter represents a 24.2% gain from the prior-year period. Analysts expect the stock’s EPS to grow at a 21.3% rate per annum over the next five years.

In terms of non-GAAP forward EV/Sales, MKSI’s 3.05x is 25.3% lower than the 4.08x industry average. Regarding its forward Price/Sales, the stock is currently trading at 3x, which is 23.3% lower than the 3.92x industry average. The stock has gained 35.9% over the past year and closed Friday’s trading session at $157.59. 

MKSI’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. 

The stock has a B grade for Value, Growth, Momentum, and Sentiment. Click here to see the additional ratings for MKSI (Quality and Stability). 

MKSI is ranked #16 of 184 stocks in the Medical - Devices & Equipment industry. 

Note that MKSI is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.

Click here to checkout our Healthcare Sector Report for 2021

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