This year has been difficult for investors. Inflation rates may have been lower in October, but they were still 7.7% compared to last October’s 6.2%, which is too high. In response, interest rates are rising rapidly, making capital more expensive, and available money is chasing commodities constrained by tight supply chains and ongoing COVID lockdowns in China. Food and energy prices are high and likely to rise as the Russian war in Ukraine puts a heavy strain on global supplies of natural gas, wheat and cooking oil. It’s no wonder stock markets have been highly volatile, making it increasingly difficult for investors to predict what’s to come.
But even with all those headwinds, there are stocks we can be thankful for this holiday season of Thanksgiving. These are the market’s proven performers, the stocks that have provided investors with good returns despite all the challenges 2022 has in store for the markets.
The positive attributes of these winning stocks are reflected in their Smart Scores. The TipRanks Smart Score takes the collected data on each stock and aggregates it into 8 separate categories, each of which is known to correlate with positive stock performance going forward. The Smart Score gives each stock a single-digit score, on a scale of 1 to 10, making it easy to see at a glance the stock’s top opportunity in the coming months.
In general, stocks with a “Perfect 10” on the Smart Score will show solid performance in each of the 8 factors, but that’s not a hard and fast rule. When we pull the Smart Score data from two stocks that have achieved that goal, we see that they provide investors with a solid foundation and a good combination of strengths. Let’s take a closer look at that.
We start in the energy sector, where ConocoPhillips is one of the biggest legacy names in the industry. ConocoPhillips has a market capitalization of $158 billion, operates in 13 countries and produces in the range of 1.5 million barrels of oil equivalent per day. Annual revenue was $46 billion last year and has already surpassed that total this year; sales for the first 9 months of the year reached $60.5 billion.
In the last reported quarter, 3Q22, revenue was $21.14 billion, up 79% year-over-year. Net income was $4.53 billion, 90% y/y; on a share basis, adjusted earnings per share of $3.60 represented a 103% gain over the same quarter last year.
In addition to solid financial results, ConocoPhillips ended the quarter with $10.7 billion in cash and cash equivalents – after returning $4.3 billion to shareholders through a combination of $1.5 billion in dividends and $2.8 billion in share repurchases. During the quarter, the company increased its going-forward buyback license by $20 billion and announced an 11% increase in its quarterly dividend payment.
With that in mind, it’s no wonder shares in COP are up 83% year-to-date, much faster than the 16% loss on the S&P 500 since the start of the year.
Truist’s 5-star analyst Neal Dingmann couldn’t help but sing the praises for ConocoPhillips, noting that the company rests on a truly solid foundation.
“Conoco is in enviable financial and operational positions with almost no debt, record production and extensive quality inventory. While we’ve had some investor headwinds aimed at the company’s shares reaching a recent all-time high, we point out that valuation still looks very reasonable as the shares trade at ~15% FCF yield and ~4.4x earnings base; both 20% + discounts for his closest colleagues,” Dingmann opined.
“Furthermore,” the analyst added, “we believe the company’s triple return on capital program is one of the better in the industry as it returns more capital to investors than the majors, yet more financial optionality.” then retains some of the major independent operators. We believe this combination gives investors what they currently want…”
Against this backdrop, it’s no wonder Dingmann rates COP a buy, and his $167 price target implies it has a one-year upside potential of ~32%. (To view Dingmann’s track record, click here)
Dingmann represents the bullish view on COP held by 15 of the 18 analysts who recently submitted reviews on the stock. Overall, the stock is getting a strong buy based on analyst consensus. (See COP stock analysis on TipRanks)
CECO Environment (CECO)
Next, CECO Environmental, is a “green” company working to develop and install new technologies in air pollution control technologies, energy technologies, and fluid handling and filtration. The company has found customers in sectors and industries as diverse as aerospace, automotive, brick making, cement, chemicals, fuel refining and even glass manufacturing.
CECO’s revenues have grown fairly steadily – with 5 consecutive increases since the beginning of 2001. In 3Q22, its last reported quarter, the company posted revenues of $108.4 million, up 36% year-over-year. Revenues were supported by a 10% increase in business orders to $101.7 million, and the company’s backlog, a key measure of future business and revenue, rose 27% to $277.7 million. In a major turnaround, net income came in at $1.9 million, a gain of $3.1 million from the net loss of $1.2 million in the same quarter last year.
Reflecting these solid metrics, CECO released a full-year 2022 revenue forecast of $410 million or better, forecasting a 25% annual revenue gain.
Overall, investors have been pleased with CECO over the course of this year, and this is another stock that has far outperformed the broader markets, with solid market share gains even during the bearish turns we’ve seen all year. CECO shares are up 83% year-to-date.
Looking at Craig-Hallum’s CECO, analyst Aaron Spychalla is impressed with what he sees, noting: “CECO sees the benefits of a strategic transformation from a company primarily focused on longer-cycle, cyclical and project-based energy markets to one more diversified by product and vertically, with a shorter cycle profile, and end markets that benefit from ESG support for clean air and clean water. With solid fundamentals and growing visibility, a combination of company-specific and long-term growth drivers and a modest valuation, we reiterate our Buy rating.”
That Buy rating comes with a $17 price target, suggesting room for 48% growth by the end of next year. (To view Spychalla’s track record, click here)
Overall, there are 5 recent analyst reviews on this stock – and they are unanimous, it’s one to buy. This gives CECO stock their Strong Buy rating. (See CECO stock analysis on TipRanks)
Keep up to date with the better than TipRanks Smart Score has to offer.
disclaimer: The opinions expressed in this article are solely those of the named analysts. The content is for informational purposes only. It is very important to do your own analysis before making an investment.