The U.S. labor market remains resilient in the face of lingering macro headwinds and massive tech layoffs. The unemployment rate slipped to 3.4% in January, the lowest since 1969. While interest rate hikes by the Fed are expected to continue, the pace could be slower.
Moreover, given the strong job market, Goldman Sachs has slashed its U.S. recession estimates. The bank believes there's now a 25% chance the U.S. will suffer a recession within 12 months, down from the previous forecast of 35%.
In addition, business indices have shown signs of improvement of late. The ISM Services PMI for the U.S. beat estimates and jumped to 55.2 in January, rebounding sharply from over a two-year low of 49.2 in December.
Given the backdrop, investors could consider buying top quality stocks Albertsons Companies, Inc. (ACI), American Vanguard Corporation (AVD), and AstroNova, Inc. (ALOT), which are currently trading under $30. These stocks are A (Strong Buy) rated in our POWR Ratings system.
Albertsons Companies, Inc. (ACI)
ACI and its subsidiaries operate food and drug stores in the United States. The company's food and retail drug stores offer grocery, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services.
On February 6, 2023, ACI announced the launch of Sincerely Health, a digital health and wellness platform. The platform will offer customized health and wellness services and is expected to enhance ACI's portfolio.
ACI's forward EV/Sales of 0.29x is 83.6% lower than the industry average of 1.79x. Its forward Price/Sales of 0.15x is 88.4% lower than the industry average of 1.28x.
Its trailing-12-month ROCE and ROTC of 81.65% and 9.44% are 685.1% and 53.4% higher than the industry averages of 10.40% and 6.16%.
ACI's net sales and other revenue came in at $18.15 billion for the quarter that ended December 3, 2022, up 8.5% year-over-year. Its adjusted net income increased 10.5% year-over-year to $505.10 million, while its adjusted EPS increased 10.1% year-over-year to $0.87.
Analysts expect ACI's revenue to increase 7.9% year-over-year to $77.56 billion for the current fiscal year, 2023. Its EPS is expected to increase 5.9% year-over-year to $3.25 for the same period. It surpassed EPS estimates in all four trailing quarters. Over the past month, the stock has gained 2.7% to close the last trading session at $21.37.
ACI's POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to a Strong Buy in our POWR Rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has a B grade for Value, Sentiment, and Quality. It is ranked #7 out of 39 stocks in the A-rated Grocery/Big Box Retailers industry. Click here for ACI's additional POWR Ratings for Growth, Momentum, and Stability.
American Vanguard Corporation (AVD)
AVD and its subsidiaries develop, manufacture, and market specialty chemicals for agricultural, commercial, and consumer uses in the United States and internationally.
On January 17, 2023, AMGUARD™ Environmental Technologies, the specialty markets division of AMVAC Chemical Corporation, a wholly owned subsidiary of AVD, announced the acquisition of the product and trademark assets of American Bio-Systems.
Shayne M. Wetherall, the CEO of AMGUARD, said, "BioMop-Plus and DrainGel are a great fit with AMGUARD's portfolio and our strategy to provide compelling biological solutions to the commercial pest control industry."
AVD's forward EV/Sales of 1.31x is 14.7% lower than the industry average of 1.53x. Its forward Price/Sales of 1.06x is 11.9% lower than the industry average of 1.20x.
AVD's trailing-12-month gross profit margin of 39.65% is 29.7% higher than the industry average of 30.57%.
AVD's net sales came in at $152.12 million for the quarter that ended September 30, 2022, up 3.3% year-over-year. Its net income increased 22.6% year-over-year to $6.74 million. Also, its EPS came in at $0.23, representing an increase of 27.8% year-over-year.
Street expects AVD's revenue to increase 4.2% year-over-year to $165.45 million for the yet-to-be-reported quarter ending December 2022. Its EPS is expected to increase 55.6% year-over-year to $0.28 for the same period. Over the past year, the stock has gained 46.5% to close the last trading session at $21.40.
It's no surprise that AVD has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has a B grade for Growth, Value, Stability, Sentiment, and Quality.
AVD is ranked #2 out of 87 stocks in the B-rated Chemicals industry. Get additional POWR Ratings for AVD (Momentum) here.
AstroNova, Inc. (ALOT)
ALOT designs, develops, manufactures, and distributes specialty printers, and data acquisition and analysis systems in the United States, Europe, Asia, Canada, Central and South America, and internationally. The company operates in two segments, Product Identification and Test & Measurement.
In terms of trailing-12-month Price/Sales, ALOT's 0.72x is 75.6% lower than the industry average of 2.95x. Its trailing-12-month Price/Book of 1.18x is 62.4% lower than the industry average of 3.13x.
ALOT's trailing-12-month CAPEX/Sales of 13.25% is 428% higher than the industry average of 2.51%.
ALOT's revenue increased 36.6% year-over-year to $39.41 million for the quarter that ended October 29, 2022. Its net income came in at $289,000, compared to a loss of $425,000 in the year-ago period. Moreover, its EPS came in at $0.04, compared to a loss per share of $0.06 in the prior-year period.
ALOT's revenue is expected to increase 6.4% year-over-year to $125.03 million in 2023. Over the past six months, the stock has gained 7.9% to close the last trading session at $12.75.
ALOT has an overall A grade, equating to a Strong Buy in our POWR Ratings system.
It has an A grade for Value and Sentiment and a B for Momentum and Quality. It is ranked first among 49 stocks in the Technology – Hardware industry. To see Growth and Stability ratings for ALOT, click here.
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ACI shares were unchanged in premarket trading Wednesday. Year-to-date, ACI has gained 3.62%, versus a 8.57% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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