Factors like slightly eased inflation data, a red-hot job market, and growth in the services sector should lead to positive investor sentiment. However, while inflation has declined from the 40-year high, it remains elevated.
Uncomfortable inflation and favorable economic indicators might push the Fed to maintain its hawkish stance. As a result, the economy could witness a slowdown. This, along with the rising U.S.-China tensions over Taiwan, might drive significant market volatility in the near term.
Given this backdrop, it could be wise to invest in quality penny stocks Commercial International Bank (Egypt) S.A.E (CIBEY), TransGlobe Energy Corporation (TGA), and VEON Ltd. (VEON), which are currently trading at significant discounts to their peers.
Commercial International Bank (Egypt) S.A.E (CIBEY)
CIBEY provides retail, corporate, and investment banking services in Egypt. It also provides structured financing, corporate leasing, merger and acquisition services, and trades in financial instruments. Furthermore, it offers investment savings products, consumer loans, and mortgage services.
On July 25, 2022, CIBEY signed a five-year bancassurance agreement with AXA Egypt, a part of the global insurance company AXA Group, to receive general insurance products in 139 CIB branches during the first phase, expanding into all CIB branches by the end of 2023. This allows CIBEY to offer its customers life, savings, and health insurance products.
For the fiscal 2022 second quarter ended June 30, 2022, CIBEY’s net interest income increased 159.5% year-over-year to EGP7.01 billion ($366.05 million). The company’s pre-tax income came in at EGP5.18 billion ($270.61 million), up 13.4% from the prior-year period.
While its net profit increased 9.5% year-over-year to EGP3.52 billion ($184.52 million), its EPS rose 9.9% to EGP1.56. As of June 30, 2022, the company had EGP56.78 billion ($2.96 billion) in cash and cash equivalents.
CIBEY surpassed Street EPS estimates in three of the trailing four quarters. The stock’s 1.15x trailing-12-month Price/Book is 6.2% lower than the 1.23x industry average. In terms of forward Price/Sales, CIBEY is trading at 2.32x, 19.7% lower than the 2.88x industry average. Over the past month, the stock has gained 10.3% to close the last trading session at $1.92.
CIBEY’s POWR Ratings reflect this promising outlook. It has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has an A grade for Stability and a B for Momentum. Click here to see the additional ratings for CIBEY’s Growth, Value, Sentiment, and Quality. CIBEY is ranked #14 of 95 stocks in the B-rated Foreign Banks industry.
TransGlobe Energy Corporation (TGA)
Headquartered in Calgary, Canada, TGA acquires, explores, develops, and produces crude oil and natural gas in Egypt and Canada. It holds interests in various production sharing concessions (PSC) in Eastern Desert Egypt and Western Desert Egypt. It also owns approximately 100% working interest in Harmattan property.
In its 2022 second quarter, TGA’s production averaged 12.1 MBoepd, drilled and cased four Egypt Eastern Desert development wells, and sold approximately 451 Mbbl cargo of Egypt entitlement crude oil for proceeds of $46 million.
TGA’s revenue for its fiscal 2022 second quarter ended June 30, 2022, increased 47.5% year-over-year to $74.69 million. The company’s pre-tax income came in at $41.51 million, up 211.5% from the prior-year period.
Its net earnings came in at $32.13 million, representing a 316.1% rise from the prior-year period. TGA’s EPS increased 300% year-over-year to $0.44. It had $61.18 million in cash and equivalents as of June 30, 2022.
Analysts expect an EPS estimate of $1.23 for fiscal 2022 ending December 31, 2022, indicating a rise of 348.8% from the prior-year period. The consensus revenue estimate of $339.50 million for the same fiscal year represents a 100.9% year-over-year improvement.
The stock’s 0.60x forward EV/Sales is 66.4% lower than the 1.80x industry average. In terms of forward Price/Sales, TGA is trading at 0.70x, 50.5% lower than the 1.42x industry average. Over the past month, the stock has lost marginally to close the last trading session at $3.25.
TGA’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has an A grade for Momentum and a B grade for Growth, Value, and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see TGA’s Sentiment and Stability ratings here. TGA is ranked #9 of 42 stocks in the A-rated Foreign Oil & Gas industry.
VEON Ltd. (VEON)
Based in the Netherlands, VEON is a communications and technology company that offers voice, data, and other telecommunication services through a range of wireless, fixed-line, and broadband internet services for corporations, operators, and consumers, as well as sells equipment and accessories.
It provides mobile telecommunications services under contract and prepaid plans for corporate and consumer segments and value-added services.
For its fiscal 2022 second quarter ended June 30, 2022, VEON’s total operating revenues grew 5.6% year-over-year to $2.01 billion. The company’s operating profit came in at $370 million, indicating a 4.2% rise from the year-ago period.
Its net profit came in at $184 million, up 44.9% from the prior-year period. VEON’s EPS increased 33.3% year-over-year to $0.08. As of June 30, 2022, the company had $2.34 billion in cash and cash equivalents.
Analysts expect an EPS estimate of $0.39 for fiscal 2022 ending December 31, 2022, indicating a rise of 41.3% from the prior-year period. The consensus revenue estimate of $8.86 billion for the same fiscal year represents a 13.8% year-over-year improvement.
The stock’s 1.34x forward EV/Sales is 34.2% lower than the 2.04vx industry average. In terms of forward Price/Sales, VEON is trading at 0.09x, 93.2% lower than the 1.36x industry average. Over the past month, the stock has gained 4.8% to close the last trading session at $0.47.
VEON’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has an A grade for Value and Quality. Click here to see the additional ratings for VEON (Growth, Sentiment, Stability, and Momentum). VEON is ranked #7 of 46 stocks in the A-rated Telecom - Foreign industry.
CIBEY shares were trading at $1.91 per share on Wednesday afternoon, down $0.01 (-0.54%). Year-to-date, CIBEY has declined -38.49%, versus a -11.08% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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