An impressive earnings season has fueled substantial gains in the Nasdaq 100, and the index continues to hover near its all-time high. Although rising COVID-19 cases in several parts of the world and tensions related to the collapse of the government in Afghanistan could spur a decline, analysts expect the tech-heavy equity benchmark to continue gaining.
Furthermore, investors will likely remain upbeat with weekly unemployment claims falling for the third week in a row and the Fed’s continued assurance that inflation is transitory.
Given this backdrop, we think it could be wise to bet on prominent Nasdaq 100 stocks Intel Corporation (INTC) and Starbucks Corporation (SBUX) because they possess strong growth attributes and have been rated an A (Strong Buy) by our proprietary POWR Ratings system.
Intel Corporation (INTC)
INTC is a global technology company that develops, produces, and distributes cloud, smart, and connected device technologies for retail, industrial, and consumer applications. DCG; IOTG; Mobileye; NSG; PSG; CCG; and All Other are the company’s operational segments. In addition, it has established a strategic relationship with MILA to develop and use artificial intelligence technologies for improving drug discovery. INTC is based in Santa Clara, Calif.
This month, SADA, a leading global business and technology consultancy, announced a pilot initiative with INTC to guarantee its customers' Google Cloud Platform (GCP) environments function well while being cost-effective. Through this collaboration, the companies will work on workload placement, cost and performance benchmarking, and GCP setup to see how its technology can assist customers in lowering their total cost of ownership and enhancing their return on investment.
Last month, INTC released a thorough process and packaging technology roadmap, highlighting a succession of core advancements that will power devices well into the future. In addition to announcing RibbonFET, its first new transistor architecture in more than a decade, the company emphasized its intention to quickly adopt next-generation extreme ultraviolet lithography (EUV), also known as High Numerical Aperture (High NA) EUV.
INTC’s gross margin increased 6.7% year-over-year to $11.21 billion in the second quarter, ended June 26, 2021. The company reported $5.55 billion in operating income, while its net income came in at $5.06 billion over this period. Its EPS totaled $1.24 over this period.
The company’s EPS is expected to grow at a 10% rate over the next five years. The stock has gained 9.4% over the past year and 15.8% over the past nine months.
INTC’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
INTC has an A grade for Value, and a B for Quality and Sentiment. Within the B-rated Semiconductors & Wireless Chip industry, it is ranked #9 of 99 stocks.
To see additional POWR Ratings for Stability, Growth, and Momentum for INTC, click here.
Click here to checkout our Semiconductor Industry Report for 2021
Starbucks Corporation (SBUX)
SBUX is a specialty coffee retailer with locations in more than 82 countries. The Seattle, Wash.-based concern operates through three segments: Americas; International; and Channel Development. It provides goods and services under various brands, including Teavana, Seattle's Best Coffee, Evolution Fresh, Ethos, Starbucks Reserve, and Princi, in addition to its iconic Starbucks Coffee brand.
Last month, SBUX and Nestle formed a partnership to deliver Starbucks Ready-to-Drink (RTD) coffee drinks to certain countries in Southeast Asia, Oceania, and Latin America. SBUX aims to strengthen its partnership with Nestle while also expanding its market footprint globally.
During its fiscal third quarter, ended June 27, 2021, SBUX’s net revenues increased 77.6% year-over-year to $6.67 billion. The company reported $1.49 billion in operating income, versus a $703.9 million operating loss in the prior-year quarter. Its net income came in at $1.15 billion for this period, compared to a $678.4 million net loss in the third quarter of 2020. The company’s EPS totaled $0.97, compared to a $0.58 loss per share in the prior-year period.
SBUX’s EPS is expected to grow 176.9% year-over-year to $3.24 in the current year. Furthermore, SBUX has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Analysts expect SBUX's revenue to increase 24.1% year-over-year to $29.19 billion in its fiscal year 2021. Also, the stock’s price has surged 50% over the year and 20.2% over the past nine months.
SBUX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has a B grade for Growth, Sentiment, and Quality. In the A-rated Restaurants industry, it is ranked #1 of 45 stocks.
In total, we rate SBUX on eight distinct levels. Beyond what we’ve stated above, we have also given SBUX grades for Stability, Momentum, and Value. Get all the SBUX ratings here.
INTC shares were trading at $52.64 per share on Tuesday morning, down $0.83 (-1.55%). Year-to-date, INTC has gained 8.28%, versus a 19.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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