Do you ever wonder how large companies keep posting solid numbers despite the fact the economy is slowing and the consumer price index has hung right near the 5% year-over-year level? They keep raising prices, and for the most part, consumers have absorbed the constantly rising cost of products and services. Many of the biggest companies in the world say they will continue the increases to prop up corporate profits.
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There will of course be a point where income does not keep up with inflation (which has actually already started), and demand will start to slow. That is a likely scenario for the second half of 2023. Pepsi raised its snack prices by 16% in the first quarter, and while demand slowed some, the price increases were more than enough to hold profit margins intact.

We screened our 24/7 Wall St. research value and income database for companies that typically do not feel as much pressure from rising input costs and found seven that make good sense for growth and income investors. All have stocks rated Buy at major Wall Street firms, but it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Cisco

Investors who are more conservative may want to consider this mega-cap tech leader, which recently posted outstanding quarterly results. Cisco Systems Inc. (NASDAQ: CSCO) designs, manufactures and sells internet protocol (IP) based networking products and services related to the communications and information technology industry worldwide.

Cisco provides switching products, including fixed-configuration and modular switches, and storage products that provide connectivity to end users, workstations, IP phones, wireless access points and servers, as well as next-generation network routing products that interconnect public and private wireline and mobile networks for mobile, data, voice and video applications.

Its cybersecurity products give clients the scope, scale and capabilities to keep up with the complexity and volume of threats. Putting security above everything helps corporations innovate while keeping their assets safe.

The networking giant posted solid results for the first quarter of fiscal 2023, solidly beating earnings expectations and offering positive forward guidance.

Investors receive a 3.14% dividend. Raymond James has a $64 target price on Cisco Systems stock. The $55.76 consensus target is closer to Friday’s close of $50.02 a share.

CMS Energy

This utility offers a product that is always in demand. CMS Energy Inc. (NYSE: CMS) operates as an energy company primarily in Michigan. It serves 1.9 million electric and 1.8 million gas customers, including residential, commercial and diversified industrial customers.
CMS’s Electric Utility segment is involved in the generation, purchase, transmission, distribution and sale of electricity. This segment generates electricity through coal, wind, gas, renewable energy, oil and nuclear sources. Its distribution system comprises 208 miles of high-voltage distribution overhead lines, four miles of high-voltage distribution underground lines, 4,428 miles of high-voltage distribution overhead lines, 19 miles of high-voltage distribution underground lines, 82,474 miles of electric distribution overhead lines, 9,395 miles of underground distribution lines, 1,093 substations and three battery facilities.
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The Gas Utility segment engages in the purchase, transmission, storage, distribution and sale of natural gas, which includes 2,392 miles of transmission lines, 15 gas storage fields, 28,065 miles of distribution mains and eight compressor stations.

The Enterprises segment is involved in independent power production and marketing, including the development and operation of renewable generation.

Shareholders receive a 3.40% dividend. The BofA Securities target price is $66, and CMS Energy stock has a consensus target of $67.46. The closing share price on Friday was at $58.36.

Coca-Cola

This is a top Warren Buffet holding, as he owns a massive 400 million shares. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands. It has an incredibly strong worldwide brand, with 40% overseas sales.

The company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the number one provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.

Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola beverages at a rate of more than 1.9 billion servings a day. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers.

Coca-Cola stock comes with a 3.07% dividend. The $73 Barclays target price compares with a $70.01 consensus target and Friday’s close at $61.16.

Exxon Mobil

This mega-cap energy leader trades at a reasonable valuation and still offers investors an excellent entry point. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.
Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.
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Top Wall Street analysts expect Exxon to remain a key beneficiary in this higher oil price environment, and most remain strongly positive about the company’s sharp positive inflection in capital allocation strategy, upstream portfolio, and leverage to a further demand recovery, with Exxon Mobil offering greater downstream/chemicals exposure relative to peers.

The dividend yield here is 3.52%. Piper Sandler has set its price target at $145. The consensus target is just $127.79, and Exxon Mobil stock closed at $105.76 on Friday.

Genuine Parts

When the going gets tough in the economy, consumers looking to save money turn to do-it-yourself, and buying and installing replacement car parts is huge. Genuine Parts Co. (NYSE: GPC) distributes automotive replacement parts, as well as industrial parts and materials.

The company distributes automotive replacement parts for hybrid and electric vehicles, trucks, sport utility vehicles, buses, motorcycles, recreational vehicles, farm vehicles, small engines, farm equipment, marine equipment and heavy-duty equipment. It offers accessory and supply items used by various automotive aftermarket customers, such as repair shops, service stations, fleet operators, automobile and truck dealers, leasing companies, bus and truck lines, mass merchandisers, farms, industrial concerns and individuals.

Genuine Parts also distributes industrial replacement parts and related supplies, such as bearings, mechanical and electrical power transmission products, industrial automation and robotics, hoses, hydraulic and pneumatic components, industrial and safety supplies, and material handling products for original equipment manufacturer, as well as maintenance, repair and operation customers in equipment and machinery, food and beverage, forest product, primary metal, pulp and paper, mining, automotive, oil and gas, petrochemical, pharmaceutical, power generation, alternative energy, governments, transportation, ports and other industries.

In addition, the company provides various services and repairs comprising gearbox and fluid power and process pump assembly and repair, hydraulic drive shaft repair, electrical panel assembly and repair, hose and gasket manufacture and assembly, and other value-added services.

Genuine Parts stock investors receive a 2.55% dividend. The BofA Securities target price of $189 is well above the $176.33 consensus target. The stock closed almost 3% higher on Friday at $153.35.

Mondelez

This consumer sector giant makes good sense for conservative investors. Mondelez International Inc. (NASDAQ: MDLZ) manufactures and markets snack food and beverage products worldwide. It offers biscuits, including cookies, crackers and salted snacks; chocolates, and gums and candies; powdered beverages and coffee; and cheese and other grocery products.
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The primary Mondelez brand portfolio includes LU, Nabisco and Oreo biscuits; Cadbury, Cadbury Dairy Milk and Milka chocolates; Trident gum; Jacobs Kaffee; and Tang powdered beverages.

Mondelez sells its products to supermarket chains, wholesalers, supercenters, club stores, mass merchandisers, distributors, convenience stores, gasoline stations, drug stores, value stores and other retail food outlets through direct store delivery, company-owned and satellite warehouses, distribution centers and other facilities, as well as through independent sales offices and agents.

Shareholders receive a 2.09% dividend. Mondelez International stock has an $86 price target at Jefferies. The consensus target is $81.33, and shares closed on Friday at $74.27.

This remains a leading health care stock for conservative investors. Merck & Co. Inc. (NYSE: MRK) offers therapeutic and preventive agents to treat cardiovascular, type 2 diabetes, asthma, nasal allergy symptoms, allergic rhinitis, chronic hepatitis C virus, HIV-1 infection, fungal infections, intra-abdominal infections, hypertension, arthritis and pain, inflammatory, osteoporosis, male pattern hair loss and fertility diseases.

Merck also provides neuromuscular blocking agents for use in surgery, antibacterial products for skin and skin structure infections, cholesterol modifying medicines, non-sedating antihistamine and vaginal contraceptive products.

The dividend yield is 2.64% dividend. The $130 target price at Citigroup tops the consensus target of $124.21. On Friday, Merck stock closed at $112.52 a share.

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Inflation has almost been cut in half over the past year as the Federal Reserve has raised interest rates from 0% to 5.15%, and there is a better than 50/50 chance that it may have one or even two more rate hikes before this cycle is over. While the recent rally has been solid, especially if you own AI stocks, the reality is the entire move higher in the major indexes has been the result of 10 stocks leading the way. That cannot last forever, and these inflation-fighting stocks likely will still be standing years from now.

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