After witnessing the worst first half of the year since 1970, the S&P 500 closed its best month in two years in July. However, top economist Mohamed El-Erian is not calling a bottom just yet. He said, "July was an illustration of the adage that 'the market is not the economy.”
The personal consumption expenditures price index, which the Federal Reserve uses as its primary barometer for gauging inflation, increased 6.8% in June, marking the biggest 12-month increase in more than 40 years.
Moreover, the U.S. economy contracted for the second consecutive quarter by 0.9% in April-June, increasing the odds of a potential recession. According to Ark Invest CEO Cathie Wood, the U.S. economy has already entered a recession.
Since the market headwinds are not expected to ease anytime soon, we think it could be wise to invest in fundamentally sound stocks AstroNova, Inc. (ALOT), Overseas Shipholding Group, Inc. (OSG) and Rimini Street, Inc. (RMNI), which are currently trading at significant discounts to their peers.
AstroNova, Inc. (ALOT)
ALOT designs, develops, manufactures, and distributes specialty printers and data acquisition and analysis systems worldwide. It operates through two segments Product Identification (PI) and Test & Measurement (T&M).
The PI segment provides tabletop and production-ready digital color label printers and specialty OEM printing systems under the QuickLabel brand. In contrast, the T&M segment offers airborne printing solutions such as ToughWriter, used to print hard copies of navigation maps and other air traffic control data.
In the first quarter ended April 30, 2022, ALOT's net revenue increased 6.6% year-over-year to $31.01 million. Its operating income grew 3.9% from the year-ago value to $764.00 million, while its net income amounted to $425.00 million over the period. The company's EPS stood at $0.06 over the period.
The stock’s 0.78x trailing-12-months EV/Sales is 75.7% lower than the 3.21x industry average. Also, in terms of trailing-12-months Price/Sales, the stock is trading at 0.71x, 76.7% lower than the industry average of 3.06x.
The stock closed its last trading session at $11.76.
ALOT'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 Value and Sentiment and a B for Momentum. Within the B-rated Technology - Hardware industry, it is ranked #1 of 49 stocks. Click here to see additional POWR Ratings for Growth, Quality, and Stability for ALOT.
Overseas Shipholding Group, Inc. (OSG)
Headquartered in Tampa, Florida, OSG owns and operates a fleet of oceangoing vessels. Its vessels are involved in the transportation of crude oil and petroleum products in the United States flag trade.
In June, OSG announced that its Board of Directors authorized a program to purchase up to five million shares of the company’s common stock. This program enables the company to repurchase shares from time to time in open market transactions or in privately negotiated transactions.
During the first quarter ending March 31, 2022, OSG’s shipping revenues increased 28% year-over-year to $104 million. Its operating income amounted to $7.70 million, while adjusted EBITDA came in at $25.41 million, up 309.2% from its prior-year quarter. The company's cash and cash equivalent stood at $76.90 million for the three months ended March 31, 2022.
Closing the last trading session at $2.44, the stock has gained 29.8% year-to-date and 36.3% over the past six months. The stock’s 1.97x trailing-12-months EV/Sales is 15.6% lower than the 2.33x industry average. Also, in terms of trailing-12-months Price/Sales, the stock is trading at 0.58x, 63.1% lower than the industry average of 1.57x.
OSG’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 Sentiment and Quality. Within the A-rated Shipping industry, it is ranked #2 of 44 stocks.
In total, we rate OSG on eight different levels. Beyond what we've stated above, we have also given OSG grades for Stability, Growth, and Value. Get all the OSG ratings here.
Rimini Street, Inc. (RMNI)
RMNI offers enterprise software products, services, and support for multiple industries. The company provides software support services for Oracle and SAP enterprise software products. It sells its solutions primarily through direct sales organizations in North America, Latin America, Europe, Africa, the Middle East, Asia, and the Asia-Pacific.
Last month, RMNI launched Rimini Protect, a new suite of security solutions that is available full time and provides a more comprehensive layer of security that surrounds and protects enterprise IT infrastructure and applications.
In June, RMNI’s Board of Directors authorized to increase its previously announced common stock repurchase program from up to $15 million over two years to up to $50 million over the next four years. In addition, the company has prepaid $5 million of indebtedness outstanding under its term loan on May 31, 2022, with no prepayment penalty, leaving an approximate loan balance of $81.6 million as of June 1, 2022.
During the first quarter ended March 31, 2022, RMNI's revenue increased 11.4% year-over-year to $97.91 million. The non-GAAP operating income grew 30.1% from its year-ago value to $12.10 million, while the non-GAAP net income improved 9% from its prior-year quarter to $9.25 million. The company's EPS came in at $0.04 compared to a loss per share of $0.13 in the previous period.
The company’s 1.33x forward EV/Sales is 54% lower than its industry average of 2.88x. Also, its 1.4x forward Price/Sales is 49% lower than its industry average of 2.88x.
The consensus EPS estimate of $0.11 for the second quarter ending June 2022 represents 13.3% year-over-year growth. Analysts expect revenue to increase 8.3% year-over-year to $99.23 million for the second quarter ending June 2022. In addition, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters.
Closing the last trading session at $6.91, the stock has gained 15.8% year-to-date and 32.9% over the past six months.
It is no surprise that RMNI has an overall A rating, which equates to Strong Buy in our POWR Ratings system. RMNI has an A grade for Quality and a B for Value and Growth.
Within the Software – Application industry, it is ranked #1. Click here to see the additional POWR Ratings for RMNI (Stability, Sentiment, and Momentum).
ALOT shares were trading at $11.95 per share on Tuesday afternoon, up $0.19 (+1.62%). Year-to-date, ALOT has declined -11.48%, versus a -13.03% 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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