The stock market has been suffering immense volatility so far this year. The broad market indices have entered correction territory due to concerns about surging inflation and the Fed's hawkish policy tilt. Last week, Fed Chairman Jerome Powell indicated an interest rate hike of 50 basis points in May would be forthcoming to restore price stability. Furthermore, the spread of COVID-19 in China and other parts of the world and the reintroduction of strict lockdown measures could hurt the global economic growth and further dampen investor sentiment owing to the fears of economic slowdown. Over the past five days, the NASDAQ Composite Index has retreated 8.3%, while the S&P Index has plunged 6.4%.
Amid the current environment, investors are favoring the companies with solid profits and cash flows, coupled with impressive growth prospects. Such financially strong companies could potentially hedge against the market’s uncertainties. The recent selloff in growth stocks has created an excellent opportunity to buy these fundamentally sound stocks at bargain prices.
Given these factors, we think quality stocks ARC Document Solutions, Inc. (ARC), Rimini Street, Inc. (RMNI), and Martin Midstream Partners L.P. (MMLP) are well-positioned to gain momentum soon.
ARC Document Solutions, Inc. (ARC)
ARC is a leading digital printing company that offers digital printing and document-related services in the U.S. The Walnut Creek, Calif., company provides managed print services, cloud-based document management software, ancillary services, and other digital hosting services. It operates more than 146 service centers in the U.S., Canada, China, United Kingdom, and India.
In February, ARC announced that its board of directors declared a $0.05 per share quarterly cash dividend, payable on May 31, 2022. This is the second cash dividend planned for 2022. The previously declared dividend announced in December represents a 150% increase from $0.02 to $0.05. This reflects the company's commitment to returning shareholder value.
In its fiscal year 2021 fourth quarter, ended Dec. 31, 2021, ARC's net sales increased 7.6% year-over-year to $69.20 million, while its gross profit grew 7.7% year-over-year to $22.30 million. Its income from operations improved 84.9% from its year-ago value to $4.30 million. Its adjusted net income attributable to ARC and adjusted earnings per share came in at $2.70 million and $0.06, respectively, registering an increase of 170% and 200% from the prior-year period.
The $288.03 million consensus revenue estimate for its fiscal 2022 represents 5.8% year-over-year growth. The $0.30 consensus EPS estimate for the current year represents a 36.4% rise from the previous year.
The stock has improved 10.7% in price over the past three months and 63.9% over the past year. It closed yesterday's trading session at $3.70. The 12-month median price target of $5.50 indicates a 49.1% potential upside.
ARC's POWR Ratings reflect a strong outlook. The stock has an overall A rating, which translates to Strong Buy in our POWR Ratings system.
ARC has an A grade for Growth, Sentiment, and Quality. It has a B grade for Value. It is ranked #1 of 44 stocks in the B-rated Outsourcing - Business Services industry.
Click here to see ARC's POWR Ratings for Stability and Momentum.
Rimini Street, Inc. (RMNI)
RMNI in Las Vegas provides enterprise software support products and services in North America, Europe, Africa, the Middle East, and Asia. The company offers software support services for Oracle, Microsoft, IBM, and SAP enterprise software products. Its supported vendor includes SAP Applications, SAP Databases, Oracle Applications, Oracle Technology, Microsoft Databases, IBM Databases, Open Source Databases, etc.
On April 12, RMNI partnered with Sajo Systems, a division of the Korean Sajo Group. This partnership will help the Korean IT and logistics company to create a business-driven IT roadmap and fuel the company's competitive advantage and growth. It is expected to boost RMNI's revenue streams and business growth.
Also this month, RMNI partnered with France’s Labeyrie Fine Foods. The latter moved its Oracle JD Edwards and Oracle Database support to service provider Rimini Street to enable its digital evolution by driving efficiencies and enabling the complete migration of its business applications to the cloud. This partnership might boost RMNI's profitability.
RMNI's revenue increased 13% year-over-year to $99.28 million in its fiscal 2021 fourth quarter, ended Dec. 31, 2021. Its gross profit grew 19.1% year-over-year to $64.62 million. Its non-GAAP operating income improved 63.4% year-over-year to $19.36 million. Its adjusted EBITDA rose 49.5% year-over-year to $19.27 million. And the company's non-GAAP net income increased 600.6% from its year-ago value to $77.8 million.
Analysts expect RMNI's revenue for its fiscal year 2022 second quarter, ending June 30, 2022, to come in at $99.48 million, representing an 8.6% increase year-over-year. The Street expects the company's EPS for the current quarter to rise 13.3% year-over-year. RMNI has an impressive earnings surprise history; it has surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of RMNI have increased 13% in price over the past three months and closed yesterday's trading session at $5.57. The only Wall Street analyst that rated RMNI rated it Buy. The 12-month price target of $8.50 indicates a 53.2% potential upside.
RMNI's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.
RMNI has an A grade for Quality and B for Growth, Sentiment, and Value. Within the Software - Application industry, it is ranked #2 of 157 stocks.
To see additional POWR Ratings (Stability and Momentum) for RMNI, click here.
Click here to check out our Software Industry Report for 2022
Martin Midstream Partners L.P. (MMLP)
MMLP engages in terminaling, processing, storage, and packaging of petroleum products and by-products in the U.S. Gulf Coast region. The Kilgore, Tex., company operates through four segments: Terminaling and Storage; Transportation; Sulfur Services; and Natural Gas Liquids. In addition, it offers land rental services to oil and gas companies and storage and handling services for lubricants and fuels.
"On March 31, 2022, the Partnership's adjusted leverage ratio was 3.87 times compared to 4.19 times on December 31, 2021. For the past few years, we have been focused on reducing leverage to enhance the balance sheet and return value to our unitholders. During that time, we have made significant progress toward our adjusted leverage goal of 3.75 times and believe the Partnership is in an excellent position as we look to improve our capital structure this year," said Bob Bondurant, President, and CEO of MMLP.
In its fiscal 2022 first quarter, ended March 31, 2022, MMLP's total revenues increased 38.9% year-over-year to $279.20 million. The company's operating income grew 62.2% year-over-year to $25.45 million. Its net income and net income per unit attributable to limited partners came in at $11.48 million and $0.29, respectively, registering a rise of 357.1% and 383.3% from the prior-year period.
Analysts expect MMLP's revenue for fiscal 2023 to come in at $175.87 million, representing a marginal increase year-over-year. The Street expects the company's EPS for fiscal 2022 to grow 350% year-over-year to $0.05.
The stock gained 87.2% in price year-to-date and 124.3% over the past year. It closed yesterday's trading session at $4.98. The 12-month median price target of $6.00 indicates an 18.9% potential upside.
MMLP's POWR Ratings reflect a strong outlook. The stock has an overall rating of A, which translates to Strong Buy in our POWR Ratings system.
MMLP has a grade of B for Quality, Momentum, and Value. It is ranked #1 of 35 stocks in the A-rated MLPs - Oil & Gas industry.
Click here to see MMLP's POWR Ratings for Stability, Sentiment, and Growth.
What To Do Next?
If you would like to see more top stocks under $10, then you should check out our free special report:
What gives these stocks the right stuff to become big winners?
First, because they are all low-priced companies with explosive growth potential, that excel in key areas of growth, sentiment and momentum.
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Click below now to see these 3 exciting stocks which could double (or more!) in the year ahead:
ARC shares were trading at $3.76 per share on Wednesday afternoon, up $0.04 (+1.08%). Year-to-date, ARC has gained 9.09%, versus a -11.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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