In recent news, Federal Reserve Chairman Jerome Powell asserted that additional rate hikes would be appropriate this year, as their inflation fight ‘has a long way to go.’ Given the renewed jitters of market uncertainty, loading up on quality stocks, Carrefour SA (CRRFY), CorVel Corporation (CRVL), and Ceragon Networks Ltd. (CRNT) could help investors endure the bouts of widespread market volatility and secure solid returns.
The cumulative effect of interest-rate hikes by the Federal Reserve was exhibited in May’s Consumer Price Index (CPI) data that made a sharp pullback to 4%. Also, the Producer Price Index (PPI) measured 1.1% year-over-year in May, easing sharply from the 2.3% bump recorded in April.
On the other hand, the blockbuster jobs report indicates that the labor market remains strong, despite an uptick in the unemployment rate. The U.S. economy added more than 300,000 jobs last month, while the unemployment rate rose to 3.7%.
Looking at these figures, markets seem increasingly confident that the Federal Reserve can restore inflation to target without tipping the economy into a recession. However, job market resilience could keep the interest rate higher in the latter half of the year.
In such a scenario, it could be wise for investors to bank on businesses that are fundamentally strong and stable enough to help them weather the macroeconomic uncertainties and garner healthy returns. With that in mind, let us look closely at the fundamental strength of featured stocks.
Carrefour SA (CRRFY)
CRRFY is a France-based retail distribution group that operates hypermarkets, supermarkets, convenience stores, cash and carry stores; e-commerce sites; and service stations. Its stores offer a wide range of local fresh produce; local products; and non-food products, including electronic and household appliances, textiles, childcare, and seasonal products.
CRRFY’s total revenue increased 15.8% year-over-year to €83.09 billion ($91.20 billion) in the fiscal year that ended December 31, 2022. Its gross margin from recurring operations rose 9.5% from the year-ago value to €16.31 billion ($17.91 billion).
Its operating income improved 33.8% from the prior-year quarter to €2.46 billion ($2.70 billion). Also, its net income amounted to €1.57 billion ($1.72 billion) and €1.80 per share, up 20.3% and 33.2% year-over-year, respectively.
Street expects CRRFY’s revenue and EPS for the fiscal year ending December 2023 to increase 5.6% and 12.6% year-over-year to $94.25 billion and $0.41, respectively. Moreover, it surpassed the revenue estimates in three of its trailing four quarters, which is impressive.
Its revenue and net income have grown at 3.9% and 6.2% CAGRs over the past three years, respectively. Moreover, its EPS has increased at 8.2% CAGR over the same period.
CRRFY’s trailing-12-month ROCE of 12.80% is 25.8% higher than the industry average of 10.17%. Also, its trailing-12-month asset turnover ratio of 1.59x is 76.2% higher than the industry average of 0.90x.
Over the past nine months, the stock has gained 15.6% to close the last trading session at $3.60. Also, it has a five-year beta of 0.55, indicating comparative stability than the broader market.
CRRFY’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, translating to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Value and Stability. In the 38-stock A-rated Grocery/Big Box Retailers industry, it is ranked #22. To see additional POWR Ratings for CRRFY for Growth, Momentum, Sentiment, and Quality, click here.
CorVel Corporation (CRVL)
CRVL provides workers' compensation, auto, liability, and health solutions for employers, third-party administrators, insurance companies, and government agencies to assist them in managing medical costs and monitoring the quality of care provided to claimants.
On May 1, CRVL announced the integration of generative AI into its claims and care solution, which is expected to reduce costs, minimize liability, and enhance holistic care and claims oversight while offering intelligent, efficient claims through its renowned CareMC claims platform.
Commenting on this, Michael Combs, President, and CEO at CRVL, said, “Generative AI will revolutionize claims administration in the next several years, transforming how insurance companies, third-party administrators, and medical management firms manage claims processing. With these capabilities, we will reach new standards of efficiency, results, and lower risk costs.”
For the fiscal year that ended on March 31, 2023, CRVL’s revenue increased 11.2% year-over-year to $718.56 million. Its gross profit grew 4% from the year-ago value to $158.26 million. During the same period, its income from operations rose marginally from the prior-year quarter to $84.55 million, while its net income amounted to $66.36 million. In addition, its EPS came in at $3.77, representing an increase of 3% year-over-year.
CRVL’s revenue and net income have increased at CAGRs of 6.7% and 11.9%, respectively, over the past three years, while its EPS has grown at a 13.9% CAGR.
The stock’s trailing-12-month EBITDA margin of 15.26% is 374.8% higher than the 3.21% industry average, while its trailing-12-month ROTA of 16.85% compares with the negative industry average of 33.16%.
The stock has gained 42.4% over the past year to close the last trading session at $200.42. Additionally, the company has a 24-month beta of 0.81.
It’s no surprise that CRVL has an overall rating of B, which equates to Buy in our proprietary rating system. It also has a B grade for Stability and Quality. Within the Medical - Services industry, it is ranked #19 of 75 stocks.
In addition to the POWR Ratings we stated above, we also have CRVL’s ratings for Growth, Value, Momentum, and Sentiment. Get all CRVL ratings here.
Ceragon Networks Ltd. (CRNT)
Headquartered in Rosh HaAyin, Israel, CRNT provides wireless backhaul and fronthaul solutions that enable cellular operators and other wireless service providers. Its offerings include network management systems, and network and radio planning, site survey, solutions development, installation, network auditing and optimization, maintenance, training, and other services.
On May 16, the company signed a multi-year contract worth up to $4.2 million to upgrade the public safety network of the City of Cincinnati. The project includes a multi-technology, multi-service solution that provides a robust, modernized backhaul and routing solution and a long-term maintenance and support plan.
This win is another testament to CRNT’s end-to-end network design and implementation capabilities, and it aligns perfectly with the company’s long-term growth strategy.
On March 28, CRNT announced that since the beginning of 2023, it had received follow-on orders of $29 million from Tier 1 Operators in India for deployment in 2023. The orders include both hardware and services focused on upgrading existing network capabilities to 5G, expanding capacity, improving rural connectivity, and providing customers with reliable, uninterrupted high-speed experiences.
This reflects the company’s vast market reach and strong demand for its services over its peers. Commenting on this, Doron Arazi, CRNT’s CEO, said, “The strength of our product portfolio, our high standard services, and our vast knowledge in the wireless transport domain as a global vendor have been key in winning this trust.”
During the fiscal first quarter (ended March 31, 2023), CRNT’s revenue increased 18.6% year-over-year to $83.41 million, while its gross profit grew 45.7% from the year-ago value to $28.18 million in the same period. Non-GAAP net income came in at $3.63 million and $0.04 per share, compared to a non-GAAP net loss of $1.85 million and $0.02 per share, respectively, in the prior-year quarter.
In addition, its cash and cash equivalent at the end of the period stood at $26.42 million, representing a 5.9% increase year-over-year.
The consensus EPS estimate of $0.08 for the third quarter (ending September 2023) represents a 60% improvement year-over-year. The consensus revenue estimate of $86.91 million for the next quarter represents a 10.5% increase from the same period last year.
Over the past three years, its revenue and EBITDA have grown at 4.2% and 1.2% CAGR, respectively.
The stock’s trailing-12-month asset turnover ratio of 1.04x is 71.9% higher than the 0.61x industry average. Likewise, its trailing-12-month CAPEX/Sales of 3.60% compare to the industry average of 2.27%.
CRNT’s shares have gained 20.2% over the past three months to close the last trading session at $1.96. It has a 24-month beta of 0.94.
CRNT’s solid prospects are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.
It also has an A grade for Growth and Sentiment and a B for Value and Stability. Out of 52 stocks in the Technology - Communication/Networking industry, it is ranked #2. Click here to see the other ratings of CRNT for Momentum and Quality.
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CRRFY shares were trading at $3.62 per share on Friday afternoon, up $0.02 (+0.56%). Year-to-date, CRRFY has gained 11.91%, versus a 14.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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