December’s inflation report came in better than expected, with headline CPI rising 6.5% from a year ago, indicating that inflation is moderating. Also, wholesale prices rose 6.2% from a year earlier, a sixth consecutive slowdown in 2022.
Easing inflationary pressures are raising hopes of the Fed slowing down its rate hike aggression. Federal Reserve Governor Christopher Waller is supporting a 25-bps rate hike in the upcoming meeting. The eventual loosening of the monetary grip is expected to bode well for the broader market.
Furthermore, CNBC’s Jim Cramer believes stocks will be largely buyable in 2023 and highlighted several factors that could help propel stocks higher. In addition, according to Factset, analysts have predicted earnings growth of 4.2% this year.
Therefore, quality stocks Ambev S.A. (ABEV), VEON Ltd. (VEON), and Cidara Therapeutics, Inc. (CDTX), which are trading at significant discounts, could be ideal buys now.
Ambev S.A. (ABEV)
Headquartered in São Paulo, Brazil, ABEV and its subsidiaries produce, distribute, and sell beer, draft beer, carbonated soft drinks, other non-alcoholic beverages, malt, and food products. The company has four segments: Brazil; Central America and the Caribbean; Latin America South; and Canada.
In terms of forward EV/EBITDA, ABEV’s 8.44x is 27.1% lower than the industry average of 11.57x, while its forward Price/Book of 2.65x is 13% lower than the industry average of 3.05x.
ABEV’s trailing-12-month gross profit margin of 49.47% is 57.7% higher than the industry average of 31.37%, while its trailing-12-month EBITDA margin of 27.08% is 143.1% higher than the industry average of 11.14%.
For the quarter ended September 30, 2022, ABEV’s net revenue came in at R$20.59 billion ($3.95 billion), up 11.3% year-over-year. Its gross profit increased 7.6% year-over-year to R$9.94 billion ($1.91 billion). Also, its income from operations came in at R$4.06 billion ($779.04 million), representing a marginal year-over-year increase.
ABEV’s revenue is expected to increase 5.7% year-over-year to $16.56 billion in 2023. Its EPS is expected to increase by 9.4% per annum for the next five years. ABEV’s shares have lost marginally intraday to close the last trading session at $2.57.
ABEV’s POWR Ratings reflect its promising outlook. It has an overall B rating representing a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ABEV has a B grade for Sentiment and Quality. It is ranked #13 out of 36 stocks in the Beverages industry. Click here to see the additional POWR Ratings for ABEV (Growth, Value, Momentum, and Stability).
VEON Ltd. (VEON)
Headquartered in Amsterdam, the Netherlands, VEON and its subsidiaries provide mobile and fixed-line telecommunications services. It offers voice, data, and other telecommunication services.
VEON’s forward EV/Sales of 1.36x is 32.7% lower than the industry average of 2.02x. Its forward Price/Sales of 0.11x is 91.8% lower than the industry average of 1.32x.
VEON’s trailing-12-month gross profit margin of 76.90% is 52.8% higher than the industry average of 50.32%. Its trailing-12-month EBITDA margin of 36.24% is 91.2% higher than the industry average of 18.95%.
VEON’s revenue came in at $2.08 billion for the 2022 third quarter, up 3.6% year-over-year. Its service revenue increased 7.9% year-over-year to $1.97 billion. Moreover, its EBITDA increased marginally year-over-year to $889 million.
Street expects VEON’s revenue to increase 6.2% year-over-year to $8.27 billion for the yet-to-be-reported fiscal year 2022. Over the past month, the stock has gained 18.7% to close the last trading session at $0.55.
VEON has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Value and a B for Growth, Stability, Sentiment, and Quality.
VEON is ranked first among 47 stocks in the A-rated Telecom – Foreign industry. To see VEON’s ratings for Momentum, click here.
Cidara Therapeutics, Inc. (CDTX)
Biotechnology company CDTX focuses on the discovery, development, and commercialization of long-acting anti-infectives for treating and preventing infectious diseases and oncology in the United States.
CDTX’s forward EV/Sales of 0.23x is 94.4% lower than the industry average of 4.15x. Its forward Price/Sales of 1.03x is 78.3% lower than the industry average of 4.74x.
CDTX’s trailing-12-month asset turnover ratio of 1.04% is 204.8% higher than the industry average of 0.34%.
CDTX’s total revenues came in at $40.74 million for the quarter that ended September 30, 2022, up 82.6% year-over-year. Its net income came in at $11.90 million, compared to a loss of $18.08 million, while its EPS came in at $0.17, compared to a loss per share of $0.37.
Analysts expect CDTX’s revenue to increase 849.5% year-over-year to $67.50 million for the yet-to-be-reported quarter ending March 2023. Its EPS is expected to increase by 61.2% per annum for the next five years. Over the past month, the stock has gained 36.6% to close the last trading session at $0.93.
It’s no surprise that CDTX has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Growth and a B for Value, Sentiment, and Quality. It is ranked #13 out of 399 stocks in the Biotech industry. Get the additional POWR Ratings for CDTX here (Momentum and Stability).
ABEV shares were unchanged in premarket trading Tuesday. Year-to-date, ABEV has declined -5.15%, versus a 4.49% 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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