US jobs data: Stocks to watch as unemployment rate declines to 3.5% - Kalkine Media

August 05, 2022 07:46 AM PDT | By Rupam Roy
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  • United Parcel Service, Inc. (NYSE: UPS) revenue rose over five per cent YoY in Q2 FY22.
  • 3M Company (NYSE: MMM) had updated its sales outlook for fiscal 2022, citing the impact of the strong US dollar.
  • Republic Services, Inc. (NYSE: RSG) revenue increased by over 21 per cent YoY in Q2 FY22.

The Labor Department reported strong job data on Friday, August 5. It said that the total nonfarm payroll employment increased by 528,000 in the prior month, bouncing back to its pre-pandemic level. The unemployment rate fell to 3.5 per cent.

The data indicated that the businesses are on track with their hiring despite the previous week's data showing that the US GDP had retreated for the year's first two quarters. According to Commerce Department's data last week, US GDP fell by 0.9 per cent annually, following a slump of 1.6 per cent in the starting quarter of the year.

Meanwhile, industrial stocks like United Parcel Service, Inc. (NYSE: UPS), Union Pacific Corporation (NYSE: UNP), 3M Company (NYSE: MMM), Paychex, Inc. (NASDAQ: PAYX), and Republic Services, Inc. (NYSE: RSG), among others, could be explored after robust job data.

Let's take a closer look at the recent stock and financial performance of the companies with Kalkine Media®.

United Parcel Service, Inc. (NYSE: UPS)

The shipping and supply chain management firm, United Parcel Service, had a dividend yield of 3.14 per cent. Its annualized dividend is US$ 6.08. The dividend yield is the division of the annual income or dividend generated from any investment by the asset's current price.

UPS stock grew nearly two per cent year-over-year (YoY) while gaining over six per cent this year. However, the stock fell at a rate of about nine per cent this year.

United Parcel's consolidated revenue was US$ 24.8 billion in the fiscal 2022 second quarter, representing an increase of 5.7 per cent from US$ 23.42 billion in Q2 FY21.

For fiscal 2022, the firm reaffirmed its consolidated revenue guidance of around US$ 102 billion.

Union Pacific Corporation (NYSE: UNP)

The railroad operating firm, Union Pacific Corporation, holds an annualized dividend of US$ 5.20, and its dividend yield was 2.3 per cent. UNP stock surged by nearly four per cent in the last 12 months while soaring over six per cent in the ongoing quarter.

At its current price, it traded about 16 per cent above its 52-week low of US$ 195.67, noted on September 20, 2021. It notched a 52-week high of US$ 278.94 on March 31, 2022.

The US$ 142.78 billion market cap firm declared its third-quarter dividend of US$ 1.30 (payable on September 30, 2022) on July 28.

Union Pacific noted an operating revenue of US$ 6.3 billion in Q2 FY22, representing a surge of 14 per cent YoY. Its net income improved by two per cent to US$ 1.83 billion from US$ 1.79 billion in Q2 FY21.

3M Company (NYSE: MMM)

MMM stock fell 25 per cent YoY while falling about 17 per cent YTD. However, on a quarter-to-date (QTD) basis, it showed gains of 13 per cent. The conglomerate firm with interests in worker safety, healthcare, and other related services, had a dividend yield of 4.15 per cent.

MMM had a Relative Strength Index (RSI) of about 68. RSI between 50 and 70 indicates that the stock could be in a stable state.

3M Company's sales tumbled three per cent YoY to US$ 8.7 billion in the second quarter of fiscal 2022. It said it had returned US$ 0.8 billion to the firm's shareholders as dividends.

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The firm has updated its total sales growth outlook to be between 0.5 per cent and 2.5 per cent, from its previous guidance range of one per cent to four per cent. The company cited the pressure of the strong US dollar along with other uncertainties in the market for its guidance update.

Paychex, Inc. (NASDAQ: PAYX)

The human resource and payroll services provider had a dividend yield of 2.45 per cent, and its market cap is US$ 46.28 billion. PAYX stock grew over 11 per cent YoY while soaring 12 per cent QTD. Paychex announced a regular quarterly dividend of US$ 0.79 per share (payable on August 25, 2022) on July 14.

The Rochester, New York-based firm reported an operating income of US$ 394 million on revenue of US$ 1.14 billion in Q4 FY22. Both its operating income and total revenue grew 11 per cent YoY. Its diluted EPS rose 12 per cent YoY to US$ 0.82 per diluted share.

For fiscal 2022, its total revenue jumped 14 per cent YoY to US$ 4.61 billion, and its operating income rose 26 per cent YoY to US$ 1.84 billion.

Republic Services, Inc. (NYSE: RSG)

The waste disposal firm holds a market cap of US$ 44.72 billion, and the RSG stock grew nearly 20 per cent YoY. It also showed gains of one per cent YTD.

It had an RSI of about 72. RSI between 70 and 100 suggests that the stock is currently overbought.

Republic Services posted a 21.4 per cent growth YoY in its second quarter revenue of US$ 3.41 billion. Its net income was US$ 371.8 million, or US$ 1.17 per diluted share in Q2 FY22, against US$ 331.1 million, or US$ 1.03 per diluted share in Q2 FY21.

Bottom line:

The increasing interest rates by the central bank in the wake of the decades-high inflation has raised concerns among investors over a possible recession.

The closely watched positive job data of August 5 might lift the market sentiment. But, given the persisting volatility in the market, investors should tread cautiously with their spending portfolio.


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