Within one week of Russia’s incursion into Ukraine, Western and EU sanctions imposed on the Russian economy and corporations have forced the Russian ruble down to record lows, driven oil prices higher than $110/barrel, and frozen foreign assets owned by Russian oligarchs. But concerns about the aftermath of these developments are contributing to immense stock market volatility.
The uncertainty, along with concerns over high inflation, supply chain issues, and forthcoming interest rate hikes, could drive the markets to further retreats in the near term. Therefore, investors seeking to 'bottom-fish' could focus on low-priced stocks with solid fundamentals.
Ambev S.A. (ABEV), Global Cord Blood Corporation (CO), Target Hospitality Corp. (TH), Dynagas LNG Partners LP (DLNG), and IRIDEX Corporation (IRIX) are currently trading at less than $5 but we think are well-positioned to rebound soon. So, these stocks could be solid additions to one’s watchlist.
Ambev S.A. (ABEV)
ABEV is a São Paulo, Brazil-based brewing company that produces, distributes, and sells beer, draft beer, carbonated soft drinks (CSD), other non-alcoholic beverages, malt, and food products in the Americas. It offers its products through a network of third-party distributors and a direct distribution system.
For its fiscal 2021 fourth quarter, ended Dec. 31, 2021, ABEV’s net revenue increased 18.6% year-over-year to R$22.01 billion ($4.27 billion). The company’s gross profit came in at R$11.52 billion ($2.23 billion), up 11.2% from the prior-year period. It had R$16.63 billion ($3.22 billion) in cash and cash equivalents as of Dec. 31, 2021.
Analysts expect ABEV’s EPS to improve 7.1% year-over-year to $7.41 for its fiscal 2022, ending Dec. 31, 2022. It surpassed the Street’s revenue estimates in each of the trailing four quarters. The $13.89 billion consensus revenue estimate for the same fiscal year represents a 22.6% rise from the prior-year period. And the company’s EPS is expected to grow at a 9.6% rate per annum over the next five years.
The stock has gained 12.8% in price over the past month and closed yesterday’s trading session at $2.82. ABEV’s 2.10x non-GAAP forward PEG is 25.4% lower than the 2.81x industry average. And in terms of forward EV/EBITDA, ABEV is currently trading at 9.69x, which is 21.4% lower than the 12.32x industry average.
ABEV’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has an A grade for Quality and a B grade for Stability. Click here to see the additional ratings for ABEV’s Growth, Value, Sentiment, and Momentum.
ABEV is ranked #11 of 37 stocks in the Beverages industry.
Global Cord Blood Corporation (CO)
CO is a Hong Kong-based life science enterprise that provides umbilical cord blood storage and ancillary services. The company also preserves donated cord blood units, provides matching services on such donated units, and delivers matching units to patients in need of transplants.
For its fiscal 2021 third quarter, ended Dec. 31, 2021, CO’s revenues increased 9.1% year-over-year to $49.78 million. The company’s non-GAAP gross profit came in at $42.36 million, indicating a 9.8% year-over-year improvement. Its non-GAAP operating income was $25.36 million for the quarter, up 18.6% from its year-ago period. CO’s net income increased 15.1% year-over-year to $21.06 million. Its EPS came in at $0.17, up 15.6% from the prior-year period, and as of Dec. 31, 2021, the company had $1.02 billion in cash and cash equivalents.
CO stock has gained 3.9% in price over the past year and ended yesterday’s trading session at $4.49. In terms of trailing-12-month Price/Sales, CO is currently trading at 2.60x, which is 53.9% lower than the 5.65x industry average. In terms of trailing-12-month Price/Cash Flow, CO is currently trading at 4.64x, which is 76.7% lower than the 19.91x industry average.
CO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Value, Stability, and Sentiment. Click here to see the additional ratings for CO (Momentum and Growth).
CO is ranked #3 of 58 stocks in the Medical - Diagnostics/Research industry.
Click here to checkout our Healthcare Sector Report for 2022
Target Hospitality Corp. (TH)
TH is a specialty rental and hospitality services company that focuses on building, owning, and operating housing communities across energy and government end markets. The Woodlands, Tex., company operates through four segments: Hospitality & Facilities Services – South; Hospitality & Facilities Services – Midwest; Government; and TCPL Keystone. It provides cost-effective and customized accommodations, culinary services, and hospitality solutions.
For its fiscal 2021 third quarter, ended Sept. 30, 2021, TH’s total revenue increased 84.8% year-over-year to $89.17 million. The company’s adjusted gross profit came in at $47.90 million, representing a 102% rise from the prior-year period. Its operating income was $16.68 million for the quarter, versus $948,000 loss in the year-ago period. TH’s net income came in at $6.68 million versus a $7.60 million net loss in the prior-year period. Its EPS was $0.07, compared to an $0.08 loss per share in the year-ago period. The company had cash and cash equivalents of $30.64 million as of Sept. 30, 2021.
TH’s revenue for its fiscal year 2022, ending Dec. 31, 2022, is estimated to be $284.95 million, representing a 26.6% rise from the prior-year period. It surpassed consensus EPS estimates in three of the trailing four quarters. The company’s EPS is expected to grow at a 15% rate per annum over the next five years.
The stock has gained 82.9% in price over the past year to close yesterday’s trading session at $3.11. TH’s 5.37x forward EV/EBITDA is 43% lower than the 9.41x industry average. And in terms of forward Price/Cash Flow, TH is currently trading at 3.35x, which is 68.8% lower than the 10.74x industry average.
TH’s POWR Ratings reflect its solid prospects. It has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has an A grade for Sentiment and Growth and a B grade for Momentum and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for TH’s Stability and Value here.
TH is ranked #3 of 22 stocks in the Travel - Hotels/Resorts industry.
Dynagas LNG Partners LP (DLNG)
Headquartered in Athens, Greece, DLNG owns and operates liquefied natural gas (LNG) carriers and is engaged in the seaborne transportation industry worldwide. The company operates vessels that are contracted to energy companies to transport goods.
For its fiscal 2021 third quarter, ended Sept. 30, 2021, DLNG’s voyage revenues increased marginally from the prior-year period to $34.69 million. The company’s operating income came in at $16.80 million, indicating a 4% rise from the prior-year period. While its adjusted net income increased 13.2% year-over-year to $11.55 million, its adjusted EPS increased 14.3% to $0.24. As of Sept. 30, 2021, DLNG had $91.32 million in cash and cash equivalents and restricted cash.
DLNG surpassed the Street’s EPS estimates in three of the trailing four quarters. The company’s EPS is expected to grow at a rate of 1% per annum over the next five years.
The stock has gained 1.1% over the past year and ended yesterday’s session at $2.90. DLNG’s 0.90x forward Price/Sales is 40.7% lower than the 1.53x industry average. In terms of forward Price/Cash Flow, DLNG is currently trading at 1.61x, which is 71.6% lower than the 5.69x industry average.
DLNG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has a B grade for Stability, Sentiment, and Quality. Click here to see the additional ratings for DLNG (Growth, Value, and Momentum).
DLNG is ranked #13 of 53 stocks in the Shipping industry.
IRIDEX Corporation (IRIX)
IRIX in Mountain View, Calif., is an ophthalmic medical technology company that provides therapeutic-based laser systems, delivery devices, and consumable instrumentation to treat sight-threatening eye diseases. The company serves ophthalmologists, research and teaching hospitals, government installations, surgical centers, and office clinics. It markets its products through direct and independent sales force, as well as through independent distributors.
For its fiscal year 2021 third quarter, ended Oct. 2, 2021, IRIX’s total revenues increased 50.7% year-over-year to $13.26 million. The company’s gross profit income came in at $5.78 million, representing a 58.2% year-over-year improvement. It had cash and cash equivalents of $25.57 million as of Oct. 2, 2021.
Analysts expect IRIX’s revenue to improve 11.7% year-over-year to $59.55 million for its fiscal year 2022, ending Dec. 31, 2022. The company’s EPS is expected to grow at a 30% rate per annum over the next five years.
The stock has declined 29.3% in price over the past year and ended yesterday’s trading session at $4.41. IRIX’s 0.90x forward EV/Sales is 80.3% lower than the 4.59x industry average. In terms of forward Price/Sales, IRIX is currently trading at 1.31x, which is 75.8% lower than the 5.43x industry average.
IRIX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has an A grade for Sentiment and a B grade for Value. Click here to see the additional ratings for IRIX (Growth, Stability, Quality, and Momentum).
IRIX is ranked #36 of 168 stocks in the Medical - Devices & Equipment industry.
Click here to checkout our Healthcare Sector Report for 2022
ABEV shares were trading at $2.85 per share on Wednesday afternoon, up $0.03 (+1.06%). Year-to-date, ABEV has gained 1.79%, versus a -7.67% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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