- These are companies I expect to post an interesting performance on the back of solid earnings and sectorial macroeconomic headwinds
- Among them, there are three U.S.-based companies: General Dynamics, Myers Industries, and Marathon Oil
- The other two are Spain-based: Ferrovial and Acciona Energy
Today we look closely at my top five stock picks for August. These are companies that I expect to post an interesting performance on the back of solid earnings and sectorial macroeconomic headwinds.
Three of these stocks are from the U.S.: General Dynamics (NYSE:GD), Myers Industries (NYSE:MYE), and Marathon Oil (NYSE:MRO). The other two are European: Ferrovial (BME:FER) and Acciona Energy (BME:ANE). Let's dive in.
1. GENERAL DYNAMICS
General Dynamics is a conglomerate of American companies belonging to the aerospace and military industry. The West Falls Church, Virginia-based giant is one of the largest defense contractors and one of the world's largest producers of combat aircraft.
The F16, F111, BGM109, Tomahawk missile, M1 Abrams battle tank, and Atlas ballistic missiles are in its roster. The company also produces ships and submarines for the U.S. Navy.
Second-quarter 2022 net earnings increased to $766 million, or $2.75 per share, from a previous $737 million or $2.61 per share. Revenues are expected to increase in the coming years due to increased military spending globally driven by the conflict in Ukraine. It pays a dividend yield of 2.23%.
2. Ferrovial
Ferrovial is one of the world's largest transport infrastructure and urban services companies. Recently, the Spanish-listed giant acquired the controlling stake in Texas-based Webber Group for roughly $220 million and will participate in the renewal of New York's JFK airport Terminal 1.
It posted a net income of €50 million in the first half, compared with a loss of €184 million for the same period last year. Sales rose by 6.2% to 3,465 million euros and gross operating profit (Ebitda) by 11.3%.
One of the main reasons was the recovery of traffic on its highways and airports due to the lifting of COVID-related restrictions and general mobility limitations. There are some factors that invite continued confidence in Ferrovial. For example, its solid and firm financial position and consistent investment capacity in American infrastructure.
It is also worth highlighting its exposure in the United States, which allows the company to benefit from the current strength of the dollar when posting earnings in euros.
3. Myers Industries
Myers Industries is an American company that primarily manufactures polymer products for the agricultural, automotive, and consumer markets.
In the second quarter, the Akron, Ohio-based corporation beat market forecasts by posting $0.45 earnings per share compared to the forecast of $0.38. That comes after an even better Q1 performance, when the company smashed EPS expectations of $0.34 by roughly 49%, posting an actual EPS of $0.50.
Since hitting a long-term low in March 2020, its shares have rallied more than +225%. In the current fiscal year, it's up by double digits.
The key to the company's success lies in the fact that despite the macroeconomic context in which we find ourselves, its products continue to enjoy healthy demand from the international market.
Furthermore, Myers distributes solid dividends—currently yielding +2.40%.
4. Acciona Energía
Acciona Energía, Acciona's (BME:ANA) renewable energy subsidiary, is up around 30% since its stock market debut. It has the honor of being one of the two European clean energy companies to be in the green in the last 12 months.
In favor of the stock are a number of catalysts such as the increase in energy prices and the energy crisis caused by Russia's military conflict in Ukraine. This fact ratifies once again the importance of targeting clean energies.
Its shares are up double digits in 2022, consolidating the company as a top-ten performer in the Ibex 35 so far this year.
5. Marathon Oil Corporation
Marathon Oil is an oil and natural gas exploration and extraction company with activity in many parts of the globe. Most of its revenue comes from the United States, Norway, Equatorial Guinea, Angola, and Canada.
The company has racked up no less than seven straight quarters of revenue gains. In its second-quarter earnings report, the Houston-based company posted revenues of $2.3 billion, up from the first quarter's $1.75 billion; year-on-year, the number was up 48%.
Currently, the company distributes attractive dividends with a 1.4% yield. In addition, share buybacks have accounted for $1.6 billion since the last quarter of 2021.
Disclosure: The author does not own any of the securities mentioned in this article.
***
Interested in finding your next great idea? InvestingPro+ gives you the chance to screen through 135K+ stocks to find the fastest growing or most undervalued stocks in the world, with professional data, tools, and insights. Learn More »