Equity markets have been having a good year so far, with the S & P 500 benchmark crossing 5,000 this month. However, ongoing political tensions and uncertainty over when the U.S. Federal Reserve will cut interest rates have raised questions about which sectors will perform strongly â leading a number of market players to say 2024 is a stock picker’s year . Morningstar’s chief markets strategist, David Sekera, agrees. He said it’s “always a stock picker’s market,” but that this is even more pertinent this year. “We can look at individual stocks across several themes over the past couple of years to see which stocks have really been the ones that have outperformed the broader market,” he told CNBC Pro on Feb. 2. “In my opinion, it always comes down to individual stock selection.” Sekera is bearish on the consumer defensive sector, given that it is “probably fully valued” right now. However, one name stands out to him as a good play: U.S. food company Kraft Heinz . Morningstar gives the company a five-star rating, and according to Sekera it has a healthy dividend yield and is trading at a 34% discount to Morningstar’s fair value. The financial services firm gives stocks a rating of between one and five stars, with a five-star rating indicating that the shares are undervalued. “The company’s individual costs went up over the past couple of years as inflation was running at a very high rate in the United States. And, to some degree, it lagged in its own price increases,” Sekera said. “As inflation now is moderating, we do think that their price increases can catch up to their costs and get back towards more normalized to historical margins.” Shares in Kraft Heinz dipped last week after it posted fourth-quarter revenue of $6.86 billion, below LSEG consensus estimates . However, its adjusted earnings per share of 78 cents was better than the 77 cents forecast. Over the last 12 months, shares in the Kraft Heinz are down nearly 13%. Of the 23 analysts covering the…
2024-02-19 19:28:00
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