The benchmark indexes have experienced wild swings since the beginning of the year due to the Fed’s aggressive interest rate hikes and two consecutive quarters of negative economic growth. This has led to many quality stocks now trading at reasonable valuations.
Market volatility has been rife due to August’s CPI (Consumer Price Index) coming higher than estimates and the Fed announcing the third consecutive 75 basis point benchmark interest rate hike last month. With the Fed raising its key rate estimates for 2022, a recession by next year is highly likely.
However, investors should stay invested and focus on longer-term investing goals. We think fundamentally sound stocks, AmerisourceBergen Corporation (ABC), Bluegreen Vacations Holding Corporation (BVH), and Genie Energy Ltd. (GNE), which are currently trading at discounts to their peers, could be ideal investments this fall.
AmerisourceBergen Corporation (ABC)
ABC is a global pharmaceutical sourcing and distribution services company that operates through two segments U.S. Healthcare Solutions; and International Healthcare Solutions.
On July 27, 2022, ABC announced plans to launch DTx Connect, a fully integrated ordering, dispensing, and fulfillment platform that aims to facilitate patient access to physician-ordered digital therapeutics and diagnostics.
AMC’s SVP of Strategy and Innovation, Jason Dinger, said, “Given our role in the supply chain and our portfolio of commercialization services, we are uniquely positioned to build a solution that aims to address unmet needs and helps patients start and stay on physician–ordered products.”
ABC’s revenue increased 12.5% year-over-year to $60.06 billion for the third quarter that ended June 30, 2022. Its adjusted operating income rose 19.9% year-over-year to $756.19 million. Its non-GAAP net income increased 22.8% year-over-year to $554.77 million. In addition, its adjusted EPS came in at $2.62, representing an increase of 21.3% year-over-year.
In terms of its forward EV/EBITDA, ABC is trading at 9.70x, 26.7% lower than the industry average of 13.23x. Its forward EV/EBIT multiple of 10.82x is 35.6% lower than the industry average of 16.80x. Its 0.12x forward P/S is 97.2% lower than the industry average of 4.52x.
Analysts expect ABC’s EPS and revenue for the quarter ended September 30, 2022, to increase 7.8% and 2.9% year-over-year to $2.58 and $60.62 billion, respectively. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has lost 3.6% to close the last trading session at $142.45.
ABC’s POWR Ratings reflect solid prospects. According to our proprietary rating system, it has an overall rating of A, translating to a Strong Buy. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Value and a B for Growth and Stability. It is ranked #2 out of 81 stocks in the Medical – Services industry. Click here to see the other ratings of ABC for Momentum, Sentiment, and Quality.
Bluegreen Vacations Holding Corporation (BVH)
BVH operates as a vacation ownership company. It administers resorts in tourist and metropolitan areas, markets, and sells vacation ownership interests (VOI). Additionally, the business offers services for resort management, mortgages, titles, reservations, and building design and development.
On August 3, 2022, Alan B. Levan, BVH’s Chairman and CEO, said, “In July, we acquired two resort buildings comprising 46 units in Vail, Colorado, further expanding our footprint in the West. We hope to have this exciting new location available for use by our owners in 2023.” “We are also commencing construction of new resort units in Big Bear, California; the Smoky Mountains of Tennessee; and Orlando, Florida, including our popular Presidential Units,” he added.
For the second quarter that ended June 30, 2022, BVH’s total revenue increased 21.8% year-over-year to $235.57 million. The company’s free cash flow increased 35.6% year-over-year to $61.05 million. Moreover, the company’s sales of VOIs rose 57.1% year-over-year to $144.26 million.
In terms of its forward EV/EBITDA, BVH is trading at 6.59x, 21.2% lower than the industry average of 8.36x. Its forward EV/EBIT multiple of 6.14x is 47.2% lower than the industry average of 11.62x. Its 0.39x forward P/S is 51.9% lower than the industry average of 0.80x.
For the quarter that ended September 30, 2022, BVH’s EPS and revenue are expected to increase 5.6% and 10.5% year-over-year to $1.21 and $237.07 million, respectively. Over the past month, the stock has lost 9.4% to close the last trading session at $18.10.
BVH has an overall A rating, equating to a Strong Buy in our POWR Ratings system.
It has an A grade for Value and Quality and a B for Sentiment. Within the B-rated Travel – Hotels/Resorts industry, it is ranked first out of 21 stocks. To see the other ratings of BVH for Growth, Momentum, and Stability, click here.
Genie Energy Ltd. (GNE)
GNE supplies electricity and natural gas to residential and small business customers through its Genie Retail Energy (GRE), GRE International (GREI), and Genie Renewables segments internationally. It also provides energy advisory and brokerage services, solar panel manufacturing and distribution, solar installation design, and project management activities.
On July 25, 2022, GNE’s Genie Renewables division announced the formation of Sunlight Energy Investments, which will act as the primary equity financing vehicle for Genie Renewables- originated commercial, community, and utility-scale solar projects and also will participate in projects originated by other solar developers. This will help the company to contribute to the transition to renewable energy.
GNE’s gross margin for the second quarter ended June 30, 2022, came in at 89.9%, compared to 27.8% in the year-ago period. The company’s net income increased 578.3% year-over-year to $33.89 million. Also, its EPS came in at $1.30, representing an increase of 584.2% year-over-year. In addition, its gross profit increased 218.1% year-over-year.
In terms of its trailing-12-month EV/EBITDA, GNE is trading at 1.56x, 88.1% lower than the industry average of 13.16x. Its trailing-12-month EV/EBIT multiple of 1.58x is 92.9% lower than the industry average of 22.29x. Its 0.65x trailing-12-month P/S is 68.9% lower than the industry average of 2.10x.
The stock has gained 61.2% year-to-date to close the last trading session at $8.98.
GNE’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Value and Momentum and a B for Quality. It is ranked first out of 66 stocks in the Utilities – Domestic industry. Click here to see the other ratings of GNE for Growth, Stability, and Sentiment.
ABC shares were trading at $140.51 per share on Thursday morning, down $1.94 (-1.36%). Year-to-date, ABC has gained 6.73%, versus a -20.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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