Broader US stock market averages were mixed on Friday, with the S&P gaining nearly 2% for the week. Energy and materials names led the way higher.
Inflationary pressures will likely continue to persist in 2022 and drive higher interest rates.
Turning to economic activity, IHS Markit reported that U.S. manufacturing and services activity was stronger than expected in March. Elsewhere, new and pending home sales were reported to have fallen more than expected in February. The same was true for durable goods orders.
The week ahead
The first quarter of 2022 ends this Thursday. There may be some volatility as investors clean up decks ahead of the next earnings season.
Micron (MU) and Walgreens Boots Alliance (WBA) will headline the reporting calendar next week.
On the economic front, US consumer confidence will be released on Tuesday. This will be followed by the final fourth quarter GDP reading, 24 hours later. The PCE price index, the key gauge of inflation tracked by the Federal Reserve, will also be announced on Thursday.
The main event will take place on Friday, in the form of the March employment data. Economists call for the addition of 475,000 nonfarm jobs in the United States and a drop in the overall unemployment rate to 3.7%.
Following the rapid recovery in equities in recent quarters from pandemic lows, we believe investment gains will be harder to come by in 2022 given the slowing growth outlook and the outlook for interest rates. higher interest. Therefore, deciding what and when to buy can be difficult for any investor. However, the fact remains that attractive investments are available if you are willing to dig a little deeper.
One of these energy names deserves a closer look and is our action of the week.
Stock of the Week: Enterprise Products (DEP)
The company operates midstream energy assets across the United States, including approximately 50,000 miles of pipeline.
The stock gained more than 5% last week. We believe this outperformance can continue into the first half of 2022. Here’s why:
Energy prices have surged in recent months, most recently when the battle between Russia and Ukraine disrupted the global supply chain.
That said, Enterprise Products can thrive regardless of commodity prices because 85% of its operations are paid for. Management says it can be paid up to seven different times as oil and natural gas move through the production cycle.
The company’s operational momentum showed in January, when it reported 61% revenue growth in the fourth quarter of 2021 and beat expectations.
Another key part of the corporate product story is its 7.3% dividend yield. The company increased the payout earlier this year and can comfortably cover the dividend with its steady cash flow.
In the meantime, the title displays a Smart Score of 10/10 on TipRanks. This proprietary score uses Big Data to rank stocks based on 8 key factors that have historically been a precursor to future outperformance.
In addition to the positives already mentioned, the Smart Score indicates that stocks have seen insider buying, in addition to improving sentiment among analysts, investors and financial bloggers.
For your information: this is just one of the 20 stocks selected for the Smart Investor portfolio. This is where we share more detailed information about our weekly title picks.
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