The Conference Board recently reported that American consumer confidence improved again in July, reaching its highest level in two years despite economist concerns about rising inflation. Specifically, the business organization’s consumer confidence index was at 110.1 in June and now is at 117. The present situation index, measuring current economic and labor market conditions, rose from 115.3 in June to 160.
Analysts and economists become increasingly optimistic about the economy with a growing consensus that a recession is increasingly unlikely for the current year. Additionally, there were expectations that the Federal Reserve might conclude its series of interest rate hikes in response to the positive economic indicators, proving well for stock-oriented companies. Notably, these three companies are dominants in their respective industries and have positioned themselves for groundbreaking returns.
Delta Air Lines Incorporated (DAL)
Delta Air Lines Incorporated (NYSE:DAL) is the second largest airline in the United States. The company differentiates itself with its average plane being 6 years older than that of its competitors, higher fares overall, and a focus on dominating airports such as New York, Atlanta, and Detroit. Additionally, DAL stock is up roughly 48% year-to-date as a result of pent-up demand from the COVID-19 pandemic along with a slight decrease in oil prices.
Delta significantly beat even high earnings estimates for Q2 2023. Such financials include an adjusted EPS of $2.68 compared to an expected $2.40, adjusted revenue of $14.61 billion compared to $14.49 billion, and net income at $1.83 billion representing an increase of $735 million YoY. This is the highest earnings since Q4 2013, and a sign of great optimism for the company as it noted in its earnings call with expectations for a $7 EPS.
In 2022, the airline industry was valued at approximately $513.5 billion. The industry is forecasted to grow at 3.10% CAGR to $635.8 billion by 2030. Delta has made strategic growth-oriented moves to profit from pent-up pandemic demand in the mid and long-term. Specifically, Delta has bought significant positions in several international airlines including Latam (OTCMKTS:LTMAY) and Aeromexico. These airlines were hit especially hard during the pandemic and are rebounding especially well. Additionally, these holdings give Delta a wide range of markets that the company can nimbly pivot between, taking advantage of global developments.
Analysts are extremely bullish for DAL stock, having predicted a 12-month median price target of $60.80 and a range spanning from $53.00 to $77.00. This makes sense as the combination of macroeconomic conditions, Delta and its holdings’ positioning indicates Delta’s post-pandemic rally will be extreme. Overall, it seems like Delta stock is set to take off for all of the reasons covered above.
Cisco Systems Incorporated (CSCO)
Cisco Systems Incorporated (NASDAQ:CSCO) is a global technology company that specializes in designing, manufacturing, and selling networking hardware, software, and telecommunications equipment. The company is well known for its wide variety of networking devices including routers, switches, security appliances, wireless access points, and more.
Amidst the pandemic’s impact, Cisco focused on strengthening its Webex video conferencing platform to compete with Microsoft (NASDAQ:MSFT) and Zoom Video Communications (NASDAQ:ZM). As part of this effort, Cisco made a recent acquisition of Socio Labs to enhance its Webex events capabilities. By integrating Socio Labs into Cisco’s Webex portfolio, Cisco will provide event organizers with a single platform to host nearly any type of event. Hosting hybrid events and inclusive experiences for both virtual and in-person attendees will soon be available as a result. Looking ahead, the company is also investing in the development of holographic communications technology.
Cisco’s reputation as a value stock has been closely associated with its consistently impressive financial performance. According to its latest financial report, Cisco demonstrated a remarkable 11.53% year-over-year increase in net profit, reaching an astounding $11.81 billion. The stock’s EPS also reached a record high of $2.82 which is a 12.70% increase from its EPS back in 2021. Remaining a leading player in the U.S. communications equipment industry, Cisco exceeded the industry by achieving a remarkable return of 18.7% over the last year. These achievements reflect Cisco’s ongoing commitment to delivering value to its investors and solidifying its superior position in the technology and communications sectors.
Based on insights from analysts at Yahoo Finance, CSCO stock emerges as a highly favorable investment choice, with a 1-year price target of $55.31 and overwhelming “buy” consensus. The company even received an upgrade as recent as July 19. Cisco’s dedication to pioneering innovative networking devices and its ambitious vision of developing holographic communication systems make it an excellent choice to invest in for the long term.
Qualcomm Incorporated (QCOM)
Qualcomm Incorporated (NASDAQ:QCOM) is a leader in wireless technology, creating semiconductors and software services while holding many integral patents relating to 4G, 5G, and other wireless standards. Furthermore, Qualcomm is a dominant player in the application processor space, holding a 44% market share by revenue in Q2 2022 and beating dominant players in the sector such as Apple (NASDAQ:APPL) and MediaTek.
QCOM stock is up roughly 16% year-to-date. The global semiconductor manufacturing market size was valued at $527.88 billion in 2021, and analysts are projection it to grow at a 12.2% CAGR to $1,380.79 billion in 2029. Qualcomm’s financials have been recovering thus far, as management reported Q2 revenue of $9.72 billion down 16.9% YoY. This is particularly due to the macroeconomic conditions leaving less demand than expected over the past year, but demand will increase again, boosting Qualcomm’s financials, as economies such as China and the United States are start to recover.
Qualcomm’s processor line Snapdragon has been considered the most powerful mobile processor and is present in notable devices such as the Samsung Galaxy S23 Plus, Meta Quest Pro, and Razer Edge. In the past year, there have been concerns that Qualcomm will not be Apple’s exclusive supplier for 5G chips after the iPhone 15. However, with recent issues with Apple’s in-house 5G processors, Qualcomm will be providing chips for the iPhone 16. Leadership has also recently acquired Autotalks in a $350 to $400 million deal, bolstering vehicle-to-everything (V2X) technologies and communications-enhanced safety solutions to automotive and transportation vehicles.
Lastly, Wall Street has been particularly bullish on QCOM stock, as Yahoo Finance has reported. An impressive 27 analysts predict a mean 1-year price target of $134.78 and the range spanning from $95.00 to $183.00. Qualcomm’s strong presence in its industry and heavy market share demonstrates how strong its economies of scale are. Thus, the product potential from acquisitions and recovering financials will bolster strong growth in the coming years.
On the date of publication, Michael Que did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
