The stock market had a difficult first half of the year due to worries over record-high inflation. The combination of the Fed’s hawkish tilt, lingering supply chain issues, and continuing geopolitical tensions have proved to be substantial obstacles for the market and economy. The result has been a slowing economy, which contracted for two consecutive quarters, signaling we have slipped into a recession.
While the benchmark indexes have significantly recovered since June lows, many analysts believe the market has further fall if the Federal Reserve continues its aggressive interest rate hikes. The policymakers have indicated that they will keep raising rates until inflation comes down to the central bank’s target level. From a market perspective, going from 8% inflation to 2% could prove to be a painful process.
However, despite these challenging market conditions, under-the-radar stocks Archrock, Inc. (AROC) and PBF Energy Inc. (PBF) have largely shrugged all this off. The strong fundamentals of these stocks should help them maintain their momentum in the upcoming months regardless of the market’s movement. So, these stocks could be solid investments now.
Archrock, Inc. (AROC)
AROC is an energy infrastructure company operating through the two broad segments of Contract Operations and Aftermarket Services. The company designs, sourcing, owns, installs, operates, services, repairs, and maintains its owned fleet of natural gas compression equipment to provide natural gas compression services to customers in the oil and natural gas industry.
On July 28, 2022, the company’s Board of Directors declared a quarterly dividend of $0.145 per share of common stock, which was paid on August 16, 2022. This reflects the company’s ability to generate cash and create shareholder returns.
For the fiscal second quarter ended June 30, 2022, AROC’s total revenue increased 10.3% year-over-year to $215.83 million. Its net income grew 91.3% year-over-year to $16.75 million. The company’s adjusted EBITDA increased 14.3% year-over-year to $99.49 million. Also, its EPS increased 83.3% year-over-year to $0.11.
Analysts expect AROC’s EPS to increase 75% year-over-year to $0.07 for the quarter ending December 31, 2022. Street expects its revenue for the current year to improve 11.8% from the prior year to $873.56 million.
The stock has gained 4.4% over the past year to close the last trading session at $7.79. AROC is currently trading above its 10-day moving average of $7.70, indicating an uptrend.
AROC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has an A grade for Momentum and a B for Quality. Among the 44 stocks in the Energy – Services industry, it is ranked #9. To see the additional POWR Ratings for Growth, Value, Stability, and Sentiment, click here.
PBF Energy Inc. (PBF)
PBF is a petroleum refiner and supplier of gasoline, diesel fuel, jet fuel, unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants, and other petroleum products. The company operates through two segments: Refining; and Logistics.
On July 28, 2022, PBF announced the acquisition of the remaining public stake in PBF Logistics LP. As of July 22, 2022, it owned approximately 47.7% of the outstanding common units of PBF Logistics. Tom Nimbley, PBF Energy's and PBF Logistics' Chairman and CEO, said, "This transaction will ultimately allow us to simplify our corporate structure and eliminate administrative, compliance, and cost burdens of running a separate public company. Following consummation of the merger, we believe that the combined company will have a significantly enhanced financial profile."
For the second quarter, which ended June 30, 2022, PBF’s revenues increased 104.1% year-over-year to $14.08 billion. Its income from operations rose 1,057% from its year-ago value to $1.71 billion. The company’s adjusted net income increased 2,416% year-over-year to $1.21 billion, while its EPS grew 2,374.3% from the prior-year quarter to $9.65. Also, its adjusted EBITDA grew substantially from the year-ago value to $1.91 billion.
Analysts expect PBF’s revenues to increase 44.1% year-over-year to $10.36 billion in its fiscal third quarter (ending September 30, 2022). Its EPS is expected to increase significantly to $5.71 in the current quarter.
Shares of PBF have gained 350.5% over the past year to close the last trading session at $36.31. PBF is currently trading above its 50-day and 200-day moving averages of $31.95 and $23.51, respectively, indicating an uptrend.
PBF’s POWR Ratings reflect this promising outlook. The company's overall A rating translates to a Strong Buy in our proprietary rating system.
It has an A grade for Growth, Value, and Momentum and a B for Quality. Within the B-rated Energy – Oil & Gas industry, it is ranked #5 of 97 stocks. To see additional POWR Ratings for Stability and Sentiment for PBF, click here.
AROC shares were trading at $7.65 per share on Friday morning, down $0.14 (-1.80%). Year-to-date, AROC has gained 7.82%, versus a -10.53% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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