Kalkine Media explores top US stocks to watch after inflation data

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  • US CPI advanced 8.3 per cent in August.
  • The PXD stock rose 61 per cent YoY.
  • Phillip Morris International Inc. (NYSE: PM) revenue increased more than three per cent YoY in Q2 FY22.

The market participants appeared to be struggling for direction after US inflation data by the Labor Department showed that it remained strong in August.

However, companies like Lumen Technologies, Inc. (NYSE: LUMN), Pioneer Natural Resources Company (NYSE: PXD), AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ), and Phillip Morris International Inc. (NYSE: PM), among others, could be explored amid an uncertain investing environment in the market.

The reason is that investors might shift their focus to dividend-paying stocks amid a flurry of macroeconomic headwinds.

The consumer price index or CPI data, a preferable gauge of Fed to measure inflation, rose 0.1 per cent last month on a monthly basis, while in July, it remained unchanged.

The CPI advanced 8.3 per cent in August, down from 8.5 per cent in July. Meanwhile, June's CPI reading was at the highest pace in four decades.

The core CPI, for all items excluding food and energy, ticked up 0.6 per cent last month after increasing 0.3 per cent in the previous month. However, due to the decreasing gasoline prices, the energy costs fell sharply last month, offsetting gains in other areas.

So, let's discuss the stocks in detail with Kalkine Media® after the inflation data changed the course of the market on Tuesday, September 13.

Lumen Technologies, Inc. (NYSE: LUMN)

As the name suggests, Lumen is a technology-focused platform that provides several services like communications, security, cloud-based services, and other related solutions.

Although the stock slipped nearly seven per cent in the intraday session after the CPI report, its dividend yield was 10.03 per cent. The US$ 9.73 billion market cap firm holds a P/E ratio of 4.86.

The LUMN stock noted a decline of around 23 per cent YTD, and it also witnessed a similar percentage drop on a YoY basis. Its current RSI was about 32, per Refinitiv data, indicating that the LUMN stock could be in a highly volatile zone.

The Monroe, Louisiana-based company appointed Kate Johnson as its President, CEO, and a member of its board, with the transition date expected to be November 7 this year. According to the September 13 announcement, Kate Johnson would succeed Jeff Storey, who had announced his retirement after a 40-year journey in the telecommunications and technology segment.

Lumen Technologies' latest quarter net income declined significantly to US$ 344 million, from US$ 506 million in Q2 FY21.

Pioneer Natural Resources Company (NYSE: PXD)

Pioneer Natural Resources is an energy firm with a dividend yield of 1.84 per cent. Meanwhile, the energy sector benefited from the higher energy costs this year. Pioneer Natural Resources had a P/E ratio of 10.13.

Meanwhile, the PXD stock saw over 37 per cent gains through September 13 while adding over 12 per cent QTD and 61 per cent YoY. It holds a market cap of US$ 59.20 billion.

The elevated energy prices amid strong demand also reflect its financial results. The Irving, Texas-based company noted a significant gain in its second-quarter revenue of US$ 6.92 billion in fiscal 2022, from US$ 3.41 billion in the year-ago period.

The net income available to common stockholders of the hydrocarbon exploration company was US$ 2.37 billion in Q2 FY22, a notable increase from US$ 380 million in Q2 FY21.

AT&T Inc. (NYSE: T)

AT&T is one of the leading telecommunications firms with a market cap of over US$ 121.67 billion. The mobile telecommunication services offering firm had a dividend yield of 6.52 per cent.

The T stock slipped nearly eight per cent YTD while falling more than 17 per cent YoY and about 18 per cent QTD.

The Texas-based firm noted a 17.1 per cent YoY drop in its latest quarter revenue of US$ 29.6 billion. However, the net income of the telecommunication firm was US$ 4.53 million in Q2 FY22, significantly up from US$ 1.87 billion in the year-ago quarter.

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Verizon Communications Inc. (NYSE: VZ)

Verizon is another leading communication firm with a dividend yield of 6.06 per cent. The US$ 177.91 billion market cap company had a P/E ratio of 8.48.

Verizon's stock also witnessed volatile trading in 2022, dropping nearly 19 per cent YTD and 22 per cent YoY. In the running quarter, the VZ stock decreased by about 17 per cent. It had touched its 52-week low of US$ 40.71 on September 8 this year.

Meanwhile, the New York-based company announced a quarterly dividend of 65.25 cents per outstanding share, a surge of 1.25 cents from the prior quarter on September 6.

The dividend would be payable on the first date of November. Notably, Verizon has increased its dividend for 16 straight years.

The revenue of the wireless network operator was US$ 33.8 billion, relatively flat on an annual basis in Q2 FY22. Verizon's net income decreased by 10.7 per cent YoY to US$ 5.3 billion in the latest quarter.

Phillip Morris International Inc. (NYSE: PM)

Philip Morris is a tobacco company with a dividend yield of 5.15 per cent. Meanwhile, the US$ 147.38 billion market cap company had business in several international markets.

The PM stock has traded flat this year while losing nearly three per cent QTD and over six per cent YoY. The tobacco firm had an RSI of 45, according to Refinitv data.

The total revenue of Philip Morris grew by 3.1 per cent YoY to US$ 7.83 billion in Q2 FY22, while its net earnings surged 2.1 per cent YoY to US$ 2.34 billion.

Bottom line:

The market participants, who were eagerly waiting for the CPI data for cues on the future moves of the central bank's monetary plans, appeared to be taking a break after four days of rallying. The investors now bet on another jumbo hike at Fed's September meeting.

All three major indices witnessed a sharp decline after the Labor Department released the CPI data, indicating the increasing worries in the market.

So, investors should closely evaluate the assets in the wake of several macroeconomic concerns before putting their bets on the stocks.



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