While inflation is easing, recession concerns are still widespread. Although the market might remain volatile in the near term, I think investing in Fortive Corporation (FTV), Lear Corporation (LEA), and Liberty Energy Inc. (LBRT) could be worth. These fundamentally robust stocks look poised to witness solid growth.
The Federal Reserve has raised interest rates, despite concerns that the move may deepen financial turmoil in the aftermath of the bank failures. The Federal Reserve increased interest rates by 0.25 percentage point, citing the financial system as “sound and resilient.”
Bank of America CEO Brian Moynihan predicts the United States will enter a “very slight” recession later this year.
In addition, the International Monetary Fund (IMF) recently reduced its global growth forecast for this year to 2.8%, a 0.1 percentage point decrease from the previous projection in January.
Let’s discuss why the above-mentioned stocks could be ideal buys despite the market uncertainties.
Fortive Corporation (FTV)
FTV primarily designs, develops, manufactures, markets, and services professional and engineered products, software, and services worldwide. Its segments include Intelligent Operating Solutions; Precision Technologies; and Advanced Healthcare Solutions.
FTV’s forward Price/Book multiple of 2.31 is 3.5% lower than the industry average of 2.40.
FTV’s trailing-12-month gross profit margin of 57.73% is 92.8% higher than the industry average of 29.94%. Its trailing-12-month net income margin of 12.96% is 95.6% higher than the industry average of 6.63%.
FTV’s sales for the fiscal fourth quarter that ended December 31, 2022, increased 11.3% year-over-year to $1.53 billion. Its gross profit increased 12.4% from the year-ago value to $892.50 million, while its operating profit increased 44.3% from the prior-year quarter to $290.90 billion.
The company’s adjusted net earnings from continuing operations amounted to $313 million and $0.88 per share, up 8.7% and 11.4% year-over-year, respectively.
FTV’s revenue grew at a CAGR of 8.5% over the past three years. In addition, its EBITDA grew at a CAGR of 16.8% over the past three years.
Analysts expect FTV’s revenue to increase 4.7% year-over-year to $6.33 billion in 2024. Its EPS is expected to grow 9.4% year-over-year to $3.67 in 2024. It has surpassed the EPS estimate in all four trailing quarters. FTV’s shares have gained 22.6% over the past nine months to close the last trading session at $67.33.
FTV’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
FTV has a B grade for Growth, Momentum, Stability, Sentiment, and Quality. Within the B- rated Industrial - Equipment industry, it is ranked #5 out of 16 stocks. Click here for the additional POWR Ratings for Value for FTV.
Lear Corporation (LEA)
LEA designs, develops, engineers, manufactures, assembles, and provides automotive seating and electrical distribution systems, as well as related components, to automotive OEMs in North America, Europe, Africa, Asia, and South America.
LEA’s forward EV/Sales multiple of 0.47 is 58.5% lower than the industry average of 1.12. Its forward EV/EBITDA multiple of 6.42 is 31.9% lower than the industry average of 9.44.
LEA’s trailing-12-month asset turnover ratio of 1.54% is 49.2% higher than the industry average of 1.03%.
LEA’s net sales 10.1% year-over-year to $5.37 billion in the fiscal fourth quarter that ended December 31, 2022. Its net income attributable increased 446.5% year-over-year to $117.50 million in the same quarter. Also, its EPS came in at $1.97, up 447.2% year-over-year.
LEA’s revenue grew at a CAGR of 1.8% over the past three years. In addition, its total assets grew at a CAGR of 2.8% over the past three years.
Street expects LEA’s revenue to increase 5.7% year-over-year to $22.08 billion in 2024. Its EPS is expected to increase 24% year-over-year to $10.80 in 2024. It has surpassed the EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 5.5% to close the last trading session at $134.60.
LEA’s solid prospects are reflected in its POWR Ratings. The stock has an overall B rating, translating to a Buy in our POWR Ratings system.
LEA has an A grade for Growth and a B for Value and Momentum. It is ranked #16 out of 60 stocks in the A-rated Auto Parts industry. For additional POWR Rating for Stability, Sentiment, and Quality for LEA, click here.
Liberty Energy Inc. (LBRT)
LBRT provides hydraulic services and related technologies to onshore oil and natural gas exploration and production companies in North America.
LBRT’s forward EV/Sales multiple of 0.52 is 71.8% lower than the industry average of 1.83. Its forward EV/EBITDA multiple of 3.08 is 62.3% lower than the industry average of 8.16.
LBRT’s trailing-12-month ROCE of 29.51% is 37.6% higher than the industry average of 21.44%. Its trailing-12-month ROTA of 15.5% is 118.8% higher than the industry average of 7.09%.
For the fiscal fourth quarter ended December 31, 2022, LBRT’s revenue increased 3.1% year-over-year to $1.23 billion. Its total operating profit came in at $198.46 million, up 8.5% year-over-year. Also, its net income and EPS came in at $152.89 million and $0.82, up 4% and 5.1% year-over-year, respectively.
LBRT’s revenue grew at a CAGR of 27.8% over the past three years. In addition, its total assets grew at a CAGR of 26.5% over the past three years.
LBRT’s revenue is expected to increase 3.4% and 14.8% year-over-year to $5.27 billion and $4.04 in 2024, respectively. It has surpassed EPS estimates in three of trailing quarters. Over the past nine months, the stock has gained 15% to close the last trading session at $13.25.
It’s no surprise that LBRT has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Growth and Momentum and a B for Value. It is ranked #9 out of 43 stocks in the B-rated Energy - Services industry.
Beyond what is stated above, we’ve also rated LBRT for Stability, Sentiment, and Growth. Get all LBRT ratings here.
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FTV shares were trading at $67.36 per share on Tuesday morning, up $0.03 (+0.04%). Year-to-date, FTV has gained 4.95%, versus a 8.49% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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