The high interest-rate environment keeps the recession fears alive, keeping the stock market volatile. As the market volatility is not expected to lessen anytime soon, investing in stocks that institutional investors depend on could be wise.
To that end, quality stocks APi Group Corporation (APG), Amphastar Pharmaceuticals, Inc. (AMPH), and Aquestive Therapeutics, Inc. (AQST), which are significantly held by investors, could be worthy additions to your portfolio now.
Before delving deeper into the fundamentals of these stocks to understand why they are solid investments now, let's see what’s happening on the economic front.
The year 2023 started with a state of euphoria and rising optimism about a Fed pivot. However, investors’ optimism gradually lost steam due to the financial sector jitters and the Fed’s continued rate hikes.
While the White House and top Republicans agreed in principle Saturday night to extend the debt ceiling and avert a catastrophic default, the high-interest rate environment and the existing risks related to the banking sector will keep the market volatile.
Therefore, following smart money and investing in APG, AMPH, and AQST could be wise.
APi Group Corporation (APG)
APG provides safety, specialty, and industrial services in North America, Europe, Australia, the Asian-Pacific, and other countries. It operates through Safety Services and Specialty Services segments. It serves customers in the public and private sectors. Institutions hold roughly 86.1% shares of the company.
In terms of forward non-GAAP P/E, APG is trading at 15.20x, 5.2% lower than the industry average of 16.04x. Its forward Price/Sales multiple of 0.77 is 39.7% lower than the industry average of 1.28x.
APG’s trailing-12-month levered FCF margin of 6.02% is 15.8% higher than the industry average of 5.20%. Likewise, its trailing 12-month cash from operations of $387 million is 80.3% higher than the industry average of $214.60 million.
For the fiscal first quarter that ended March 31, 2023, APG’s net revenues and gross profit increased 9.7% and 13% year-over-year to $1.61 billion and $425 million, respectively. The company’s operating income for the same quarter stood at $73 million, compared to an operating loss of $7 million in the year-ago quarter.
Moreover, APG’s adjusted net income and adjusted net income per share grew 11.3% and 8.7% year-over-year to $69 million and $0.25, respectively.
APG’s President and CEO, Russ Becker, stated, “While successfully growing the business with an inspection first mindset, the team has never lost sight of serving our customers safely and efficiently and we are grateful for their commitment. We have great confidence in the business and the direction we are heading despite the macroeconomic environment, allowing us to raise our full year guidance for the business."
For the full year 2023, APG expects its net revenues to come between $6.88 billion to $7.03 billion, while adjusted EBITDA is projected to come between $740 million to $780 million.
Analysts expect APG’s revenue and EPS for the fiscal second quarter (ending June 2023) to increase 7.1% and 7.4% year-over-year to $1.77 billion and $0.40, respectively. The company shows an impressive earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters.
Over the past six months, the stock has gained 22.8% to close the last trading session at $22.80. Over the past year, it has gained 26%.
APG’s POWR Ratings reflect this positive outlook. It has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The company has an A grade for Growth and a B for Sentiment. Within the B-rated 80-stock Industrial – Services industry, it is ranked #20.
Click here to see the additional POWR Ratings of APG for Value, Momentum, Stability, and Quality.
Amphastar Pharmaceuticals, Inc. (AMPH)
AMPH is a biopharmaceutical company that manufactures, markets, and sells generic and proprietary injectable, inhalation, and intranasal products in the United States, China, and France. The company operates through two segments, Finished Pharmaceutical Products and Active Pharmaceutical Ingredient. Roughly 62.6% shares of AMPH are held by institutions.
On April 24, Eli Lilly and Company (LLY) and AMPH entered into a definitive agreement for LLY to divest BAQSIMI worldwide to AMPH to continue expanding the availability of BAQSIMI. The acquisition would integrate AMPH’s core strategic vision of strengthening its proprietary products profile and enhancing its diabetes portfolio offering.
AMPH's president and CEO, Jack Zhang, Ph.D., commented, “We are optimistic about BAQSIMI's growth potential as it is the first and only commercial intra-nasal glucagon demonstrated to treat low blood sugar emergencies."
In terms of forward non-GAAP P/E, AMPH is trading at 18.30x, 4.4% lower than the industry average of 19.14x. Its forward Price/Sales multiple of 3.55 is 16.8% lower than the industry average of 4.26.
AMPH’s trailing-12-month EBITDA margin of 27.97% is significantly higher than the industry average of 1.93%. Likewise, its trailing 12-month ROCE, ROTC, and ROTA of 18.12%, 12.07%, and 12.04% compare to the industry averages of negative 43.12%, 23.20%, and 33.14%, respectively.
For the fiscal first quarter that ended March 31, 2023, AMPH’s net revenues and gross profit increased 16.3% and 32.3% year-over-year to $140.02 million and $73.84 million, respectively. The company’s income from operation for the same quarter stood at $33.43 million, up 54.7% from the year-ago quarter.
Moreover, AMPH’s non-GAAP net income and non-GAAP net income per share grew 30.7% and 31.9% year-over-year to $32.14 million and $0.62, respectively.
Analysts expect AMPH’s revenue and EPS for the fiscal second quarter (ending June 2023) to increase 11.6% and 43.6% year-over-year to $137.73 million and $0.56, respectively. The company has topped consensus revenue estimates in three of the trailing four quarters.
Over the past six months, shares of AMPH have gained 50.2% to close the last trading session at $44.14. Over the past three months, it has gained 20.7%.
AMPH’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which translates to Strong Buy in our proprietary rating system.
The company has a B grade for Growth, Sentiment, and Quality. Within the 167-stock Medical - Pharmaceuticals industry, it is ranked #14.
To see the additional POWR Ratings of AMPH for Value, Momentum, and Stability, click here.
Aquestive Therapeutics, Inc. (AQST)
AQST is a pharmaceutical company that identifies, develops, and commercializes various products to address unmet medical needs in the United States and internationally. Institutions hold about 27% shares of AQST.
In March 2023, AQST expanded its exclusive license (the original license was announced in September 2022) and supply agreement with Atnahs Pharma UK Limited for Libervant™ Buccal Film to cover the rest of the world, excluding the United States, Canada, and China. Pursuant to the expanded agreement, AQST will serve as the product's exclusive sole manufacturer and supplier, and Atnahs Pharma will be responsible for all regulatory and commercialization activities.
AQST received an undisclosed upfront payment and, if approved for market access, will receive additional milestone payments and double-digit royalties on net sales of the diazepam buccal film in the licensed territories.
In terms of forward EV/Sales, AQST is trading at 3.42x, 5.3% lower than the industry average of 3.61x. Its forward Price/Sales multiple of 2.92 is 31.5% lower than the industry average of 4.26x.
AQST’s trailing-12-month asset turnover ratio of 0.79x is 124.7% higher than the industry average of 0.35x, while its trailing 12-month gross profit margin of 57.23% is 2.6% higher than the industry average of 55.78%.
For the fiscal first quarter that ended March 31, 2023, AQST’s total revenue stood at $11.13 million. Its comprehensive income and earnings per share attributable to common stockholders came in at $8.07 million and $0.11, compared to comprehensive loss and loss per share of $13.22 million and $0.32, respectively, in the year-ago quarter.
Moreover, as of March 31, 2023, its total current assets stood at $43.71 million, compared to $39.89 million as of December 31, 2022.
For the full year 2023, the company expects its total revenue to come between $42 million and $46 million.
Analysts expect AQST’s revenue for the fiscal second quarter (ending June 2023) to be $10.92 million. The company has topped consensus revenue estimates in each of the trailing four quarters.
Over the past year, shares of AQST have gained 117.5% to close the last trading session at $2.24. Moreover, over the past three months, it has gained 190.9%.
It is no surprise AQST has an overall rating of B, which translates to Buy in the POWR Ratings system.
The company has a B grade for Growth, Sentiment, and Quality. Within the Medical - Devices & Equipment industry, it is ranked #17 out of the 140 stocks.
Beyond what we have highlighted above, one can access the additional POWR Ratings of AQST (Value, Momentum, and Stability) here.
What To Do Next?
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APG shares were unchanged in premarket trading Tuesday. Year-to-date, APG has gained 21.21%, versus a 10.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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