Zacks Analyst Blog Features RMR Group, Nippon Yusen Kabushiki Kaisha and Petroleo Brasileiro SA
For immediate release
Chicago, IL – June 30, 2022 – Zacks.com announces the list of stocks featured in the analyst blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Stocks recently featured in the blog include: The RMR Group, Inc. RMR, Nippon Yusen Kabushiki Kaisha NPNYY and Petroleo Brasileiro SA – Petrobras PBR.
Here are highlights from Wednesday’s analyst blog:
Should investors consider dividend-paying stocks?
With inflation nearing 40-year highs, the possibility of a recession looming in the not-too-distant future, and ever-decreasing portfolio values, many of us are losing our appetite to spend.
From the Conference Board to the University of Michigan, consumer surveys tell the same story: Americans are increasingly cautious about the near future, job prospects, revenue growth and the business environment.
According to the university, “consumers of all levels of income, age, education, geographic region, political affiliation, shareholding and ownership status all posted large declines” (in sentiment). Food and gas inflation in particular seems to be “eroding the standard of living”.
According to the Conference Board, “purchase intentions for cars, homes and major appliances have remained relatively stable, but intentions have cooled since the start of the year and this trend is expected to continue as the Fed increases interest rates aggressively to tame inflation. Meanwhile, holiday plans have softened further as rising prices have taken their toll.”
The council notes that consumer sentiment on the current situation has changed slightly (the current situation index fell from 147.4 in May to 147.1 in June). But it was their expectations for the future (ie the next six months) that changed dramatically: the expectations index continued its downward trajectory from 73.7 to 66.4 from May to June. This is the lowest level since the 63.7 recorded in March 2013.
Rising inflation for basic necessities and rising interest rates to combat it will certainly keep sentiment under pressure.
But if we all enter this uncertainty together, we will not all come out of it in the same way. Some will reduce all their expenses and accumulate money. Some will invest in commodities and commodities, as they tend to remain relatively stable in bear markets. And some will look for bargains in the stock market.
Equities have outperformed most other asset classes in recent history, and given the cheap valuations many of them have sunk to, they are certainly worth strategizing about.
Today, I focus on investors looking for income-generating stocks. These are stocks that pay a dividend. The main reason a company pays a dividend is to generate more profit than it can reinvest in the business.
This is usually because it is a mature player, but it could also be because it operates in an industry where further growth in the near future is limited for some reason. It supports its stock price and investor interest by paying dividends. During a bear market or recession, companies that pay dividends therefore have an incentive to pay more dividends.
However, some things should be kept in mind when investing in these stocks.
First, make sure the company’s growth prospects are healthy, although they are likely to be impacted by current uncertainties. This can be done by choosing stocks in the 50% of industries ranked by Zacks. Our research shows that the top 50% outperform the bottom 50% by a factor of 2 to 1. This will steer you toward industries that seem to deal with uncertainty better than others.
Second, revenue growth is the true indicator of quality revenue. This ensures that profit growth actually comes from more activities and not just from production efficiency or accounting juggling. Therefore, it is worth checking what is happening with the income, if possible. Analyst earnings forecasts for up to two years are generally available. Although these are moving numbers and subject to change as analysts update their expectations, they are worth checking out.
Third, to reduce your risk, make sure the debt to total equity ratio is low, say below 40-50%. If a company is going through a very difficult time, it will still have to pay its debts. So the lower the better.
Fourth, check the dividend yield and how much the dividend has increased over the past few years. It gives you an idea of what to expect.
Fifth, be sure to choose stocks that have Zacks ranks #1 (Strong Buy) or #2 (Buy), as our research has consistently shown that this is where most of the short action will take place. term.
Finally, be sure to buy low. For example, the price based on earnings potential should be relatively lower than last year (say) and also preferably lower than a benchmark, say the S&P 500.
Here are some actions that meet the above criteria:
The RMR Group, Inc.
This provider of commercial and real estate management services in the United States is among the 37% of industries ranked by Zacks. It also carries a Zacks No. 1 rank. RMR’s current dividend yield is 5.63%, while dividend growth over the past five years is 11.6%.
The company’s revenue growth forecasts are 22.6% and 2.9% for the current and subsequent fiscal years (ending September). RMR has no long-term debt. The shares are also trading at 12.5X earnings, which is below their median level last year and 16.4X of the S&P 500.
Nippon Yusen Kabushiki Kaisha
This provider of worldwide sea, land and air transportation services is among the 18% of industries ranked by Zacks. Additionally, he carries a Zacks rank of No. 2. These two factors combined are normally enough to indicate a rise in stocks.
But since we’re concerned about the potential for dividend growth, it’s worth looking at Nippon Yusen’s other numbers as well. And so, we see that analysts expect the company to grow revenue by 25.2% in the current year ending March 2023, followed by growth of 17.4% l ‘Next year.
Nippon Yusen pays a dividend yielding 22.17%. Its dividend has increased by 125.9% over the past five years. The Debt/Cap of 32.0 is totally manageable. At 1.3 times earnings, stocks are well below their yearly highs.
Petroleo Brasileiro SA – Petrobras
Ranked number 1 by Zacks, Petrobras explores, produces and sells oil and gas in Brazil and abroad. The industry he belongs to is in the top 25%. In addition, its dividend which currently pays 25.92% has increased by 104.04% over the past five years.
Petrobras revenue is expected to rise 32.1% this year. While a decline is currently forecast for the following year, the direction of analysts’ estimate revisions is encouraging. Debt/Cap of 34.9% is not concerning. The P/E of 2.9X is below its median value over the past year.
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From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.
It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could step in at any time.
This company could rival or surpass other recent Zacks stocks which are expected to double, such as Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in one. year.
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Petroleo Brasileiro SA Petrobras (PBR): Free Stock Analysis Report
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