Major stock indices rallied last week despite concerns about high inflation and anticipation that the Fed will reduce its asset-buying activities earlier than expected. As the economy gradually recovers, we think it would be wise to add the following large-cap quality stocks to one’s portfolio: Intuit (INTU), Starbucks (SBUX), The TJX Companies (TJX), and Align Technology (ALGN) . Each of the names is expected to generate significant returns in the coming months. Let’s discuss.
Major stock indices ended in green last week despite COVID-19 omicron fears and high inflation concerns. According to data from the Bureau of Labor Statistics, consumer price inflation rose 6.8% in November 2021. Investors are also expecting an earlier-than-expected rise in interest rates from the Fed in the short term. However, claims for unemployment benefits in the United States recently fell to a 52-year low.
JPMorgan Chase & Co. (JPM) provided a positive outlook for 2022. JPM Global Research Leader Marko Kolanovic said: “Our view is that 2022 will be the year of a full global recovery, the end of the pandemic and the end of the return to normal economic and market conditions that we had before the COVID-19 outbreak. “And according to a Factset report, a record net profit margin is expected in 2022. In this context, investor interest in Growth stocks have been on the rise, as evident in the SPDR Portfolio S&P 500 Growth ETF (SPYG) 3.2% returns over the past month compared to the 1.5% gains of the SPDR S&P 500 Trust ETF (SPY) during the same period.
Therefore, we think it would be wise to go for fundamentally strong large-cap stocks Intuit Inc. (INTU), Starbucks Corporation (SBUX), The TJX Companies, Inc. (TJX), and Align Technology, Inc. (ALGN). given its strong growth attributes.
Intuit Inc. (INTU)
INTU in Mountain View, California, provides financial management and compliance products and services. The company operates through three segments: small businesses and the self-employed; consumer; and strategic partner. Also, it provides TurboTax, QuickBooks, Mint, Credit Karma, and Mailchimp. It has a market capitalization of $ 191.97 billion. On November 1, 2021, INTU announced the acquisition of Mailchimp, which provides a customer engagement and marketing platform for growing small and medium-sized businesses. INTU and Mailchimp are expected to work together to deliver innovation and help address the challenges faced by small and medium-sized businesses.
INTU’s non-GAAP revenue for its fiscal first quarter, which ended October 31, 2021, increased 51.7% year-over-year to $ 2 billion. The company’s non-GAAP operating income increased 66% year-over-year to $ 555 million, while its non-GAAP EPS was $ 1.53, up 63% year-over-year. Its revenue and EPS have increased at a CAGR of 18.9% and 13.5%, respectively, over the past three years.
Analysts expect INTU’s EPS for the quarter ending January 31, 2022 to increase 177.9% year-over-year to $ 1.89. Its revenue for fiscal 2022 is expected to increase 27.4% year-over-year to $ 12.27 billion. Over the past year, the stock has gained 87% to close Friday’s trading session at $ 677.95.
INTU’s strong fundamentals are reflected in its POWR ratings. It has an overall B rating, which is equivalent to a Purchase on our proprietary rating system. POWR ratings are calculated considering 118 different factors, with each factor weighted to an optimum degree.
It has an A grade for Sentiment and Quality and a B grade for Growth. It is ranked number 19 out of 168 stocks in the software and applications industry. Click here to check INTU’s other ratings for Value, Momentum, and Stability.
Click here for our Software Industry Report for 2021
Starbucks Corporation (SBUX)
With a market capitalization of $ 136.94 billion, SBUX, based in Seattle, Washington, operates 33,000 stores as a leading specialty coffee roaster, marketer and retailer worldwide. The company operates in three segments: Americas; International; and channel development. In addition, it offers coffee and tea beverages, roasted and ground coffee, ready-to-drink and single-serving beverages, iced tea and various food products.
On November 18, 2021, SBUX announced the opening of its new store in collaboration with Amazon Go in New York. The new store has integrated the digital and physical retail experience for its customers by uniting the convenience of an SBUX coffee and the convenience of Amazon Go’s ‘Just Walk Out’ shopping experience. With more store openings planned in 2022, this is expected to help expand the company’s reach.
For the fiscal fourth quarter, which ended October 3, 2021, SBUX’s revenue increased 31.3% year-over-year to $ 8.14 billion. Its non-GAAP operating income increased 95.3% year-over-year to $ 1.59 billion, while its non-GAAP EPS was $ 1, up 96.1% year-over-year. Its revenue and EPS have increased at a CAGR of 5.5% and 3%, respectively, over the past three years.
For the quarter ending December 31, 2021, SBUX earnings per share and revenue are expected to increase 29.5% and 15.2%, respectively, year-over-year to $ 0.79 and $ 7. , 98 billion. It exceeded Street’s EPS estimates in each of the final four quarters. The stock has gained 10.7% in price over the past year to close Friday’s trading session at $ 116.73.
It’s no wonder SBUX has an overall B rating, which equates to a Purchase on our proprietary rating system. The stock has a grade A for quality and a grade B for sentiment. It is ranked No. 9 out of 45 stocks in the B-rated restaurant industry. Click here to view additional POWR ratings for SBUX (value and stability).
The TJX Companies, Inc. (TJX)
TJX, based in Framingham, Massachusetts, is a discount and home fashion retailer. The company operates in Marmaxx; Household items; TJX Canada; and TJX International segments. It sells family clothing, fine jewelry, accessories, home fashion, such as home essentials, furniture, rugs, lighting products, and table tops. It has a market capitalization of $ 89.14 billion.
On November 17, 2021, TJX announced that it was well positioned to capitalize on holiday season demand as product supply remained stable with gradual supply mismatch. CEO Ernie Herrman said: “We are in an excellent inventory position, with most of the product needed for the holiday season on hand or scheduled to arrive in our stores and online in time for the holidays.”
TJX’s net sales for its fiscal third quarter, which ended October 30, 2021, increased 20% year-over-year to $ 12.50 billion. The company’s net income increased 18% year-over-year to $ 1.02 billion. Additionally, their EPS increased 18.3% year-over-year to $ 0.84. Its revenue and total assets have increased at a CAGR of 5.5% and 26%, respectively, over the past three years.
TJX’s EPS and revenue for its fiscal year 2022 is expected to increase 858.1% and 52%, respectively, year-over-year to $ 2.97 and $ 48.84. It has exceeded consensus EPS estimates in three of the last four quarters. Over the past six months, the stock has gained 15.3% in price to close Friday’s trading session at $ 74.73.
TJX’s strong fundamentals are reflected in its POWR ratings. It has an overall B rating, which is equivalent to a Purchase on our proprietary rating system. It has an A grade for Sentiment and a B grade for Growth and Quality.
It is ranked 24th out of 63 A-rated fashion and luxury stocks. To see TJX’s other ratings for value, momentum and stability, click here.
Align Technology, Inc. (ALGN)
ALGN is a medical device company with a market capitalization of $ 52.68 billion. The San Jose, California-based company designs, manufactures and markets Invisalign clear aligners and iTero intraoral scanners and services for orthodontists, general medicine dentists, and cosmetic and restorative dentistry. It operates in the Clear Aligner and Scanners and Services segments.
On October 28, 2021, ALGN announced the findings of a multicenter clinical study. Yuvaf Shaked, Senior Vice President and General Manager, iTero Scanner and Services Business, ALGN, said, “When combined with ease of use and a comfortable experience for a wide patient population, the iTero 5D Imaging System powered by NIRI is an essential tool for any doctor’s office. “
For its fiscal third quarter, ended September 30, 2021, ALGN’s revenue increased 38.4% year-over-year to $ 1.01 billion. The company’s non-GAAP net income was $ 228.57 million, an increase of 28.5% year-over-year. Its non-GAAP EPS increased 27.5% year-over-year to $ 2.87. And its revenue and EPS have increased at a CAGR of 26.5% and 34.3%, respectively, over the past three years.
Analysts expect ALGN’s earnings per share and revenue for its fiscal year 2021 to increase 111.6% and 59.6%, respectively, year-over-year to $ 11.11 and $ 3.95 billion. It exceeded Street’s EPS estimates in each of the final four quarters. The stock has gained 31.4% in price over the past year to close Friday’s trading session at $ 668.12.
ALGN’s POWR ratings reflect this promising outlook. The stock has an overall B rating, which is equivalent to a Buy on our proprietary rating system. It has a B grade for Feeling and Quality. Within the medical device and equipment industry, it ranks 41st out of 170 values. Click here to see ALGN’s other ratings for growth, value, momentum, and stability.
Click here for our Health Sector Report for 2021
INTU shares were trading at $ 680.87 a share on Monday morning, an increase of $ 2.92 (+ 0.43%). So far this year, INTU has gained 80.46%, compared to a 26.60% increase in the benchmark S&P 500 over the same period.
Author Bio: Dipanjan Banchur
Since he was in elementary school, Dipanjan was interested in the stock market. This led him to obtain a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a keen interest in reading and analyzing emerging trends in financial markets.
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