Citi, J&J, Charles Schwab: Wolfe names stocks to buy in a volatile market

Wolfe Research has highlighted companies that have consistently beaten Wall Street forecasts and raised their estimates for this year's estimated earnings. These securities, according to analysts, can show stable dynamics even in conditions of market uncertainty. Eight companies on the list are priced cheaper than the average S&P 500 index member - Barron's suggests paying attention to them. 

As part of the corporate reporting season, Wolfe Research screened and identified companies that have beaten analysts' expectations for both earnings and revenue over the past two quarters and have seen their stock prices rise on the back of those results, wrote Barron's. Another factor in the selection process was the companies' own earnings forecast increases for 2025. Wolfe's list included nearly 30 stocks.

"We expect them to perform well despite conflicting signals from the U.S. economy," explained Chris Senyek, chief investment strategist at the research firm.

Of the players Wolfe selected, Barron's has identified eight that trade at a price-to-earnings multiple below the S&P 500 average. The index now has a multiple of 21.8 and is near all-time highs, so these stocks can't really be called "price finds," the publication says. Nevertheless, the relatively low cost means that losses on them - if the market goes down - may be less painful than those of their more overvalued counterparts, Barron's explains.

- Aptiv, a supplier of automotive components and solutions for electric vehicles. The company's stock is showing moderate growth since the beginning of the year by 7%, with its multiple of only 9, one of the lowest on the list. Aptiv has a dividend yield of 0.3%.

- Citigroup, one of the largest U.S. banks, is trading at a 12.2 multiple, with its stock yielding 30% YTD and a dividend yield of 2.4%.

- Biotech company Incyte, which develops drugs to treat cancer and autoimmune diseases, is also trading at a 12.2 multiple, and its value is up 12.5% YTD. Unlike other list members, it does not pay dividends.

- Pharmaceutical giant Johnson & Johnson is offering a 3% dividend with the stock up 18% YTD and a multiple of 15.4.

- Electricity supplier American Electric Power has one of the highest dividend yields on the list - 3.2%. The multiplier is 19.3, and  the growth of quotations this year amounted to 23%.

- Lock and security systems maker Allegion PLC has shown steady growth since the beginning of the year - its shares have added 27% with a forward P/E of 20.4 and a dividend yield of 1.2%.

- Financial giant Charles Schwab, which specializes in brokerage and asset management, is up 30% this year. Its dividend yield is 1.1% and its multiple is close to the S&P 500 s average of 20.6. 

- Another major energy company, WEC Energy, trades at the highest multiple of the eight players selected by Barron's, at 21.1. It is up 17% YTD and yields a dividend yield of 3.1%.

The US economy is looking increasingly unstable, Barron's notes. A series of weak macroeconomic data, especially the labor market report published on Friday, August 1, noticeably undermined investor confidence. Against this backdrop, the S&P 500 index ended five consecutive trading sessions in the negative. On Wednesday, August 6, its futures rose 0.2%. 

Meanwhile, profits at companies in the index continue to grow at a stronger-than-expected 11%, Barron's cites LSEG data.  

This article was AI-translated and verified by a human editor