Investing in stocks with robust growth potential can offer stable returns and capital appreciation. Also, stocks with low P/E are relatively lower in price, making them affordable and an ideal choice.
So, investors could consider investing in robust stocks such as Viatris Inc. (VTRS), Open Text Corporation (OTEX), and The Goodyear Tire & Rubber Company (GT) with low P/E.
The US economy is likely to continue to slow down in the near future as high prices and elevated interest rates disturb domestic demand. The economy’s Real GDP growth has slowed to 1.4% quarterly annualized in Q1 2024. It is further expected that consumer spending and real GDP growth will slow down to about 1% quarterly annualized in the third quarter of 2024.
Nevertheless, cooling inflation and potential interest rate cuts by the Federal Reserve is causing optimism. In a recent report, consumer prices declined 0.1% from May to June after maintaining the same levels in the previous month, as per the Labor Department.
Under such economic trends, a diversified and well-exposed portfolio of stocks can offer investors stability and long-term gain. Stocks with low P/E appear as a suitable investments.
Given these favorable market trends, let us deep dive into the fundamentals of the stocks mentioned above.
Viatris Inc. (VTRS)
VTRS operates as a healthcare company internationally. The company operates through four segments: Developed Markets; Greater China; JANZ; and Emerging Markets. It provides prescription brand drugs, generic drugs, complex generic drugs, biosimilars, and active pharmaceutical ingredients (APIs).
In terms of forward non-GAAP P/E, VTRS is trading at 4.20x, 79.5% lower than the industry average of 20.53x. Likewise, the stock’s forward EV/Sales multiple of 2.07 is 42.6% lower than the industry average of 3.61. Also, its forward Price/Cash Flow of 4.89x is considerably lower than the industry average of 16.31x.
On May 1, VTRS expanded its wellbeing program with the launch of unmind, a leading workplace resource focused on mental health. Unmind is a leading provider of workplace mental health solutions encouraging colleagues to live life fully and is an essential part of the company’s mission to empower people worldwide to live healthier at every stage of life.
On April 15, VTRS unveiled PrGlatiramer Acetate Injection 20 mg/mL in Canada for once-daily injection, the first generic bioequivalent version of Teva’s Copaxone® 20 mg/mL, indicated for treating patients with Relapsing-Remitting Multiple Sclerosis (RMMS), a chronic inflammatory disease of the central nervous system.
During the first quarter that ended March 31, 2024, VTRS reported total revenues of $3.66 billion and its adjusted gross profit was $2.15 billion. The company’s adjusted EBITDA amounted to $1.19 billion for the quarter. In addition, its adjusted net earnings and EPS stood at $812.70 million and $0.67, respectively.
Analysts expect VTRS’ EPS for the fourth quarter (ending December 2024) to increase 9.2% year-over-year to $0.68 and its revenue is expected to be $3.77 billion for the same period. Moreover, VTRS’ shares have gained 9.2% over the past month and 8.3% over the past year to close the last trading session at $11.50.
VTRS’ bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has an A grade for Value and a B grade for Growth. Within the Medical - Pharmaceutical industry, VTRS is ranked #27 out of 154 stocks.
Click here to access additional ratings of VTRS for Momentum, Sentiment, Stability, and Quality.
Open Text Corporation (OTEX)
Headquartered in Canada, OTEX offers information management software and solutions. It provides content services, including content collaboration and intelligent capture to records management, collaboration, e-signatures, and archiving.
In terms of forward non-GAAP P/E, OTEX is trading at 7.45x, 69.7% lower than the industry average of 24.60x. Further, its forward EV/EBITDA multiple of 7.95 is 46.3% lower than the industry average of 14.81. Similarly, the stock’s forward Price/Sales of 1.43x is 51.9% lower than the 2.97x industry average.
On July 16, OTEX announced its latest groundbreaking product innovations with Cloud Editions (CE) 24.3 which represents an important step forward in integrating advanced information management capabilities, trusted cloud solutions, robust security measures, and cutting-edge artificial intelligence (AI) to optimize data performance for simpler, but superior, results.
On June 14, OTEX attained “fully authorized” status by the FedRAMP for its Cloud for Government solution in the United States which includes OpenText Extended ECM and OpenText AppWorks, two core products within the OpenText Content Cloud portfolio. The new FedRAMP authorized solution enhances federal agencies’ ability to deliver a seamless total citizen experience.
During the third quarter that ended March 31, 2024, OTEX’s total revenues increased 16.3% year-over-year to $1.45 billion. Its non-GAAP operating income grew 29% from the year-ago value to $431.60 million. Net income attributable to OpenText and non-GAAP EPS of $98.30 million and $0.94, reflects growth of 70.8% and 28.8% from the prior year’s quarter, respectively.
Furthermore, the company’s adjusted EBITDA increased 27% year-over-year to $463.70 million. And its adjusted free cash flow rose 13.9% from the prior year’s quarter to $348.20 million.
Analysts expect OTEX’s revenue and EPS for the fiscal year (ended June 2024) to increase 29.6% and 28.1% year-over-year to $5.81 billion and $4.22, respectively. Moreover, OTEX has topped the consensus EPS and revenue estimates in each of the trailing four quarters, which is impressive.
Shares of OTEX have surged 5.8% over the past month to close the last trading session at $31.39.
OTEX’s POWR Ratings reflect its bright prospects. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
OTEX has an A grade for Value and a B grade for Growth. The stock is ranked #29 among 135 stocks in the Software - Application industry.
In addition to the POWR Ratings I’ve just highlighted, you can see OTEX’s ratings for Quality, Stability, Sentiment, and Momentum here.
The Goodyear Tire & Rubber Company (GT)
GT develops, manufactures, distributes, and sells tires and related products and services globally. It offers various lines of rubber tires under the Goodyear, Cooper, Dunlop, Kelly, Mastercraft, Roadmaster, Debica, Sava, Fulda, Mickey Thompson, Avon, and Remington brands.
In terms of forward non-GAAP P/E, GT is trading at 10.05x, 35.2% lower than the industry average of 15.51x. Further, its forward Price/Sales of 0.18x is significantly lower than the industry average of 0.91x. Likewise, the stock’s forward EV/EBITDA multiple of 5.62 is 42.8% lower than the industry average of 9.83.
On July 22, GT signed a definitive agreement to sell its Off-the-Road tire business to The Yokohama Rubber Company, Limited for $905 million in cash and is in line with the company’s strategic review of the OTR tire business in connection with the Goodyear Forward transformation plan.
On June 20, GT launched the Cooper® Discoverer® Stronghold™ AT tire, its newest addition to the Cooper Discoverer family of tires. The all-terrain tire is designed to stay tough on tough terrain and to stand up to heavy loads for towing and hauling. The tire is engineered for maximum durability, quiet comfort, unparallel grip and three-peak mountain snowflake designation.
During the first quarter that ended March 31, 2024, GT reported net sales of $4.54 billion. Its total segment operating income grew 97.6% from the year-ago value to $247 million. The company’s Americas segment operating income of $179 million indicates growth of 126.6% from the prior year’s quarter.
In addition, the company’s total current assets stood at $8.06 billion as of March 31, 2024, compared to $7.65 billion as of December 31, 2023.
Street expects GT’s revenue for the third quarter (ending September 2024) to increase marginally year-over-year to $5.15 billion and its EPS is expected to grow 15.3% year-over-year to $0.42 for the same quarter. Also, the company surpassed the consensus EPS estimates in three of the trailing four quarters.
GT’s stock has increased 7.5% over the past month to close the last trading session at $12.17.
GT’s POWR Ratings reflect its sound fundamentals. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
GT has an A grade for Value. It also has a B grade for Growth. It is ranked #22 out of 61 stocks in the B-rated Auto Parts industry.
In addition to the POWR Ratings we’ve stated above, we also have GT ratings for Sentiment, Momentum, Quality, and Stability. Get all GT ratings here.
What To Do Next?
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VTRS shares were trading at $11.72 per share on Wednesday afternoon, up $0.22 (+1.91%). Year-to-date, VTRS has gained 10.50%, versus a 15.20% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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