3 Stocks That Can Outlast a Bumpy Market

In its quest to bring down the skyrocketing inflation, the Federal Reserve raised benchmark interest rates by another 75 basis points on Wednesday. The central bank projects economic growth of just 0.2% this year and 1.2% in 2023.  

Following legendary technician Larry Williams’ charts analysis, CNBC’s Jim Cramer said inflation could soon decline. “The charts, as interpreted by Larry Williams, suggest that inflation could soon cool down substantially soon if history’s any guide,” Cramer said. 

However, analysts at Charles Schwab Corp. (SCHW) are expecting more volatility in the stock market for the rest of the year. Hence, Johnson & Johnson (JNJ), Oracle Corporation (ORCL), and The Kroger Co. (KR) might be ideal investments now, given their fundamental strength and impressive dividend payout history.

Johnson & Johnson (JNJ)  

JNJ researches, develops, manufactures, and sells various products in the healthcare field worldwide. The company operates through the broad segments of Consumer Health; Pharmaceuticals; and MedTech.  

On September 20, JNJ announced the opening of its San Francisco Bay campus, a research and development facility in the bay area. The new facility is expected to increase the company’s R&D presence in the area. JNJ further plans to integrate into the bay area innovation ecosystem to strengthen and increase collaborations with innovators to accelerate growth. 

On September 15, JNJ announced that its Board of Directors had authorized the repurchase of up to $5 billion of its common stock. Joaquin Duato, Chief Executive Officer, said, “With our strong cash flow and lowest level of net debt in five years, we have the ability to invest in innovation, grow our dividend, execute strategic acquisitions, and take this action to deliver shareholder returns and drive long-term growth.” 

On July 18, JNJ declared a quarterly dividend of $1.13 per common share, payable to shareholders on September 6. Its annual dividend of $4.52 yields 2.75% on prevailing prices. The company’s dividend payouts have increased at a 5.8% CAGR over the past three years and a 6% CAGR over the past five years.  The company has a record of 59 years of consecutive dividend growth. 

JNJ’s gross profit increased 2.4% year-over-year to $16.10 billion in the second quarter that ended June 30. Its sale to customers grew 3% from the year-ago value to $24.02 billion, while its adjusted net earnings improved 4.3% year-over-year to $6.91 billion. The company’s adjusted net earnings per common share increased 4.4% from its year-ago value to $2.59.  

The consensus EPS estimate of $10.08 for the fiscal year ending December 2022 indicates a 2.8% improvement year-over-year. Its revenue is expected to increase 1.9% year-over-year to $95.53 billion for the same year. Additionally, JNJ has topped consensus EPS estimates in each of the trailing four quarters, which is impressive. 

The stock has gained 1.8% intraday to close its last trading session at $166.18.  

JNJ’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. 

JNJ is rated an A in Stability and a B in Growth, Value, and Quality. Within the Medical - Pharmaceuticals industry, it is ranked #1 out of 164 stocks. 

Beyond what we’ve stated above, we have also given grades for Momentum and Sentiment for JNJ. Get all the JNJ ratings here.  

Oracle Corporation (ORCL) 

ORCL offers products and services for enterprise IT environments, including applications, platforms, and infrastructure. The company offers its cloud, license, hardware, support, and services offerings directly to businesses in various industries.  

On September 20, ORCL announced the availability of Java 19, the latest programming language and development platform version. The Java ecosystem is expected to be able to meet developer and enterprise needs better through the update.  

On September 16, ORCL declared a quarterly dividend of $0.32 per share of outstanding common stock, payable to stockholders on October 25. Its annual dividend of $1.28 yields 1.94% on prevailing prices. The company’s dividend payouts have increased at a 14.2% CAGR over the past three years and a 13.5% CAGR over the past five years. The company has a record of seven years of consecutive dividend growth.

For the fiscal first quarter ended August 31, 2022, ORCL’s total revenue increased 17.7% year-over-year to $11.45 billion. Its non-GAAP operating income increased 3.3% year-over-year to $4.48 billion. The company’s net cash provided by operating activities rose 18.6% from its previous-year quarter to $6.39 billion, while non-GAAP EPS amounted to $1.03.  

Analysts expect ORCL’s revenue for the third fiscal quarter ending February 2023 to rise 17% from the same quarter last year to $12.30 billion. The company’s EPS is expected to be $1.23 for the same quarter, representing a 9.3% improvement year-over-year. 

The stock declined marginally over the past three months to close the last trading session at $66.03.  

ORCL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary rating system. 

It has a B grade for Growth and Stability. Within the Software – Application industry, it is ranked #22 out of 149 stocks.   

In addition to the POWR Rating grades I’ve just highlighted, you can see the ORCL ratings for Value, Momentum, Sentiment, and Quality here.    

The Kroger Co. (KR) 

KR is a retailer in the United States that operates combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses. The company offers various products.

On September 16, KR announced the official opening of a new spoke in Birmingham, Alabama.  The new spoke is expected to operate as a seamless extension of the regional fulfillment center in Atlanta, making Kroger Delivery available to more customers in the greater Birmingham area. The expansion should drive up the revenue of the company 

On September 15, KR declared a quarterly dividend of 26 cents per share, payable to shareholders on December 1. Its annual dividend of $1.04 yields 2.29% on prevailing prices. The company’s dividend payouts have increased at a 15.3% CAGR over the past three years and a 12.9% CAGR over the past five years. The company has a record of 15 years of consecutive dividend growth.

KR’s sales increased 9.3% year-over-year to $34.64 billion in the fiscal second quarter that ended on August 13. Its operating profit increased 13.7% year-over-year to $954 million. The company’s adjusted EBITDA grew 10.9% from the year-ago value to $7.63 billion, while its adjusted EPS improved 12.5% year-over-year to $0.90. 

Analysts expect KR’s revenue for the fiscal year ending January 2023 to come in at $148.49 billion, indicating an increase of 7.7% year-over-year. The company’s EPS is expected to grow 10.1% year-over-year to $4.05 in the same year. 

KR has gained 13.5% over the past year to close the last trading session at $45.50. The stock has gained 0.5% intraday. 

The stock has an overall rating of A, translating to a Strong Buy in our POWR Rating system. 

KR has a B grade in Quality, Growth, and Value. It is ranked #4 of 38 stocks in the A-rated Grocery/Big Box Retailers industry. 

Click here to see the additional POWR Ratings for KR (Momentum, Stability, and Sentiment).

JNJ shares were trading at $165.93 per share on Friday afternoon, down $0.25 (-0.15%). Year-to-date, JNJ has declined -1.09%, versus a -22.27% rise in the benchmark S&P 500 index during the same period.

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.

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