Stock market action is anticipated to remain turbulent, due to concerns over looming interest rate hikes to curb the surging inflation. However, Cormac Weldon, manager of U.K. money manager Artemis' U.S. Smaller Companies fund, believes small-cap companies are ready to recover from their price slump as "periods of outright risk aversion tend to be brief."
Moreover, small-cap companies in the United States will likely be more insulated from the global chaos created by the Russia-Ukraine war, which should allow them to generate significant returns. Investors' interest in small-cap stocks is evident from the Invesco S&P SmallCap 600 Equal Weight ETF's (EWSC) 1% gain over the past month.
That’s why today we're highlighting 3 exciting stocks from our Top 10 Small-Cap screen, which is just 1 of the 10 screens in our POWR Screens 10 service (more on that below). We think it could be prudent to invest in fundamentally sound small cap stocks Westlake Chemical Partners LP (WLKP), Tredegar Corporation (TG), and FONAR Corporation (FONR).
Westlake Chemical Partners LP (WLKP)
With a market capitalization of $961.00 million, WLKP acquires, develops, and operates ethylene production facilities and related assets. The company's ethylene production facilities primarily convert ethane into ethylene and sell ethylene co-products, including propylene, crude butadiene, pyrolysis gasoline, and hydrogen, directly to third parties on either a spot or a spot contract basis.
In the fourth quarter ended December 31, 2021, WLKP's total net sales increased 34.5% year-over-year to $330.46 million. Its income from operations grew 81.4% from its year-ago value to $140.77 million, while the net income increased 96.4% from its prior-year quarter to $29.51 million. The company's EPS rose 95.3% year-over-year to $0.84.
Analysts expect WLKP's revenue to increase 32% year-over-year to $354.00 million in the first quarter ending March 2022. The consensus EPS estimate of $0.57 for the first quarter ending March 2022 represents a 33.4% improvement year-over-year. The stock has gained 13.1% over the past year and 12.1% over the past six months.
WLKP's POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock also has an A grade for Sentiment and Quality and a B for Value. Within the A-rated MLPs – Other industry, it is ranked #1 of 11 stocks.
To see additional POWR Ratings for Growth, Stability, and Momentum for WLKP, click here.
Tredegar Corporation (TG)
TG, along with its subsidiaries, is engaged in the manufacturing and selling aluminum extrusions, polyethylene (PE) films, and polyester films in the United States and internationally. It has three operating segments: Aluminum Extrusions; PE Films; and Flexible Packaging Films. It has a market capitalization of $415.72 million.
For the fourth quarter ended, December 31, 2021, TG's sales increased 14.8% year-over-year to $220.99 million. The net income increased 2285.7% year-over-year to $21.35 million. The company's EPS increased 3050% from its year-ago value to $0.63. Its cash and cash equivalent stood at $30.52 million for the fiscal year ending December 31, 2021.
The company's shares have surged 4.2% year-to-date and 8.8% over the past month.
TG's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Momentum and a B for Growth and Quality. Within the A-rated Industrial - Manufacturing industry, it is ranked #1 of 39 stocks.
In total, we rate TG on eight different levels. Beyond what we've stated above, we have also given TG grades for Stability, Sentiment, and Value. Get all the TG ratings here.
FONAR Corporation (FONR)
With a market capitalization of $125.42 million, FONR engages in the research, development, production, and marketing of magnetic resonance imaging (MRI) scanners to detect and diagnose human diseases in the United States. The company operates through the Medical Equipment segment and the Physician Management and Diagnostic services segment.
FONR's revenue increased 15.7% year-over-year to $24.48 million in the second quarter ended December 31, 2021. The income from operation grew 30.1% year-over-year to $6.48 million, while its net income increased 30.8% from its year-ago value to $5.14 million. The company's EPS rose 29.5% from its prior-year quarter to $0.57.
The stock has soared 25.3% year-to-date and 20.1% over the past six months.
It is no surprise that FONR has an overall A rating, which equates to Strong Buy in our POWR Ratings system. FONR has an A grade for Stability and a B grade for Growth and Value. Among the 162 stocks in the Medical - Devices & Equipment industry, it is ranked #1.
Click here to see the additional POWR Ratings for FONR (Momentum, Quality, and Sentiment).
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WLKP shares were trading at $27.23 per share on Monday morning, down $0.06 (-0.22%). Year-to-date, WLKP has gained 3.19%, versus a -3.82% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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