During the past three months, volatility continued amid rising interest rates and global and political uncertainty with the S&P 500 Index dipping 0.5%. The following high-quality stocks all generated 9% or better gains during the same period.  
 

F5 NETWORKS CASH-RICH, DEBT-FREE (FFIV)

F5 Networks reported second fiscal quarter sales increased 3% to $533 million with EPS up 24% to $1.77.During the quarter, F5 Networks generated $175 million in free cash flow, up 6% year-over-year, adding to the company’s cash stash which totaled $1.4 billion as of 3/31/2018 on its debt-free balance sheet. During the quarter, F5 Networks repurchased 1.1 million shares for $150 million, or at a cost of about $140.82 per share. F5 Networks’ stock connected with an 18% gain during the past three months. Hold.  

TRACTOR SUPPLY INCREASED DIVIDEND 15% (TSCO)

Tractor Supply reported first quarter revenues rose 8% to $1.7 billion with net income roaring 18% higher to $71.4 million and EPS up 24% to $.57. Comparable store sales grew 3.7% in the quarter despite an unseasonably cool spring and the broad-based growth was across all geographic regions.  
 
During the quarter, the company opened 15 new Tractor Supply stores, including its 1700th location, and four Petsense stores. For the full year, the company plans to open 80 new Tractor Supply stores and 20 Petsense stores. Tractor Supply recently increased its dividend 15%, marking the 8th consecutive year of dividend hikes. Management expects full year 2018 EPS to increase 20%26%. During the past three months, Tractor Supply’s stock plowed up a 13% gain. Buy.
 

ADP INCREASED DIVIDEND 10% (ADP).

Automatic Data Processing’s recent 10% dividend increase represents a return to shareholders of a portion of the benefits from the Tax Cuts and Jobs Act of December 2017. The Board of Directors anticipates consideration of another dividend increase in November 2018 consistent with ADP’s historical pattern throughout its 43-year track record of annual dividend increases. Over the last two years, ADP has processed a 56% total return. Hold.

MASTERCARD FREE CASH FLOW UP 44% (MA)

MasterCard rang up a 31% increase in first quarter sales to $3.6 billion with EPS up 41% to $1.41. During the first quarter, MasterCard generated $953 million in free cash flow, up 44% from the prior year period. MasterCard returned $1.6 billion to shareholders during the quarter through dividends and share repurchases.MasterCard’s stock has charged up a 160% total return over the last four years. Hold.

UPS DELIVERING DOUBLE-DIGIT GROWTH (UPS)

UPS delivered double-digit growth in revenues and earnings in the first quarter with revenues up 10% to $17.1 billion and EPS up 17% to $1.55. Management reaffirmed its full year 2018 outlook for adjusted EPS of $7.03-$7.37 per share, representing 17%-23% growth over last year’s adjusted earnings as the overall economy remains strong. Global GDP is expected to be 3.5% in 2018, the fastest growth seen since 2010. UPS’s stock delivered a 9% gain over the last three months. Buy.

BOOKING HOLDINGS NEW $8 BILLION BUYBACK (BKNG)

Booking Holdings (formerly Priceline) reported first quarter revenues rose 21% to $2.9 billion while booking a 35% increase in EPS to $12.34. The company expanded its share buyback program by $8 billion and has $10 billion remaining authorized for future share repurchases which they expect to complete in the next two to three years. Booking Holdings’ stock price has more than tripled over the last six years. Buy.  

TJX INCREASED DIVIDEND 25% (TJX)

The TJX Companies reported first quarter revenues rose 12% to $8.7 billion with EPS up a dressy 38% to $1.13. Comparable store sales increased 3% during the quarter driven by higher customer traffic in all four major divisions. Free cash flow more than doubled during the quarter. TJX increased its dividend 25%, which marked the 22nd straight year of dividend increases. TJX also plans to repurchase $2.5 to $3.0 billion of its stock for the full year. TJX’s stock is up more than 17fold over the last 18 years. Buy.

HORMEL FOODS FREE CASH FLOW UP 51% (HRL)

Hormel Foods reported record second quarter results with revenues rising 7% to $2.3 billion and EPS up a plump 13% to $.44. Free cash flow flew 51% higher during the first half of the fiscal year to $309 million. The company paid its 359th consecutive quarterly dividend, representing a 10% increase over the prior year. Despite higher freight costs and a volatile commodity climate,Hormel expects full 2018 fiscal year revenues to approach $10 billion with EPS expected between $1.81$1.95. Hormel’s stock has provided a meaty 596% total return over the last 17 years. Hold.

ALPHABET $103 BILLION IN CASH (GOOGL)

Alphabet reported first quarter revenues increased 26% to $31.1 billion with net income up 73% to $9.4 billion and EPS jumping 72% to $13.33. These results include a $3 billion unrealized gain, or $3.40 per share, from Alphabet’s investment in Uber and other companies. A new accounting standard now requires unrealized gains and losses to flow through the income statement. Excluding the gain, underlying earnings and EPS were still strong with net income up 29% and EPS up 28% during the quarter thanks to the benefits of tax reform.  
 
Google advertising revenues increased 24% during the quarter to $26.6 billion with strong growth in all geographic regions. Google other revenues increased 36% to $4.4 billion reflecting strong results in cloud, hardware (including Nest products) and Google Play. Other Bets revenues rose 14% to $150 million primarily due to growth in the Fiber and Verily health units. Management is very excited about Waymo, the company’s self-driving car unit, although they are still in the early stages of this Other Bet with five million miles having been driven autonomously. Waymo signed a contract with Jaguar to use their technology in their electric cars with production set to begin in 2020. 
 
Free cash flow declined 38% during the quarter to $4.3 billion primarily due to the significant increase in purchases of property, plant and equipment for $7.3 billion as the firm continues to build out its technology infrastructure on a global basis.  
 
During the first quarter, the company repurchased $2.2 billion of its shares and ended the quarter with nearly $103 billion of cash and marketable securities on its fortress balance sheet. Buy.


COGNIZANT TECHNOLOGY FREE CASH FLOW UP 38% (CTSH)

Cognizant Technology Solutions reported first quarter revenues grew a solid 10% to $3.9 billion with operating income up 22%. Revenue from digital services grew by 27%, or three times the company average, and now accounts for 29% of total company revenue.  
 
By business segment, Financial Services revenue increased 6% to $1.5 billion, Healthcare revenues increased a healthy 12% to $1.1 billion, Products and Resources revenues increased 11% to $821 million and Communications, Media and Technology revenue grew by 18% to $509 million. On a geographic basis, revenues grew in all regions led by 22% growth in Europe.  
 
During the quarter, Cognizant generated $292 million in free cash flow, up 38% from last year. Cognizant ended the quarter with $4.9 billion in cash and investments (including $2 billion repatriated from overseas in response to the recent tax reform) and $673 million in long-term debt on its sturdy balance sheet.  
 
During the quarter, Cognizant Technology returned $434 million to shareholders through dividend payments of $118 million and share repurchases of $316 million. The company is on track to achieve its plan, announced in February 2017, to return $3.4 billion to shareholders by the end of 2018 with $2.1 billion in share repurchases including $300 million in an accelerated share repurchase program launched during the first quarter.  
 
For the full year 2018, Cognizant expects sales in the range of $16.05 billion to $16.3 billion with EPS of at least $4.47. Buy


UNITED TECHNOLOGIES SOLDTAYLOR FOR $1 BILLION (UTX)

United Technologies reported first quarter sales increased 10% versus the prior year to $15.2 billion. EPS and net income declined 6% to $1.62 and $1.3 billion, respectively. The prior year included a one-time benefit of $.29 per share, so on an adjusted basis EPS increased 20%.  
 
By business segment, Otis sales gained 8% to $3 billion with organic sales up 1% and new equipment orders down 4%. Climate, Controls and Security sales increased 12% to $4.4 billion. Organic equipment orders were up 10% driven by a 37% increase in transport refrigeration.  
 
Aerospace Systems sales increased 6% to $3.8 billion, boosted by a 16% rise in the commercial aftermarket and a 15% increase in military, partially offset by an 8% decline in commercial OE. Pratt & Whitney sales rose 15% to $4.3 billion on strength in military engines and commercial aftermarket. 
 
United Technologies is selling the Taylor Company, a unit of the Climate, Controls and Security group for $1.0 billion in cash.The deal is expected to close early in the third quarter of 2018.
 
United Technologies’ free cash flow decreased 83% for the first quarter to $116 million with the company paying $535 million in dividends and repurchasing $25 million of its shares. Management reaffirmed free cash flow expectations of $4.5 billion to $5.0 billion for the full year 2018.
 
Management increased 2018 adjusted EPS guidance from the range of $6.85 to $7.10 to the range of $6.95 to $7.15. Total 2018 sales are expected in the $63 billion to $64.5 billion range, up $0.5 billion on the lower and upper end of previous guidance. Buy.