The October CPI report sparked a steep rally in stocks and represented a game-changer for the market. Moreover, looking at the signs of inflation cooling, the majority of policymakers recently agreed it would “likely soon be appropriate” to slow the pace of interest rate hikes.
Fundstrat’s Tom Lee reiterated that softening inflation would change the Federal Reserve’s hawkish stance on raising rates to bring prices down. He said that the stock market could see “fireworks” in the last five weeks of the year, with signs pointing to inflation cooling in November. Lee also predicted the S&P 500 to reach 4,400-4,500 by year-end, about 10% higher than current levels.
While some experts are concerned that the Fed’s historic pace of interest rate hikes, aimed at cooling down the hot economy, could spur a recession next year, the Conference Board CEO Steve Odland told CNBC that any potential downturn is expected to be mild.
Given the rising optimism, fundamentally strong stocks Rimini Street, Inc. (RMNI), GEE Group, Inc. (JOB), and Ultralife Corporation (ULBI), which are trading at a discount, might be solid buys this week.
Rimini Street, Inc. (RMNI)
RMNI offers enterprise software products, services, and support for various industries. It provides software support services for Oracle and SAP enterprise software products. The company sells its solutions mainly through direct sales organizations.
In August, RMNI announced that the University of Technology Sydney (UTS) switched to RMNI for improved support and security of its Oracle database and technology platforms. This might bolster the company’s position in the education market.
In terms of forward EV/Sales, RMNI is currently trading at 0.82x, which is 69.5% lower than the industry average of 2.68x. Its forward Price/Sales of 0.89x is 64.3% lower than the industry average of 2.49x.
During the third quarter that ended September 30, 2022, RMNI’s revenue came in at $101.93 million, representing a 6.6% year-over-year growth. Its gross profit increased marginally year-over-year to $62.66 million. The company reported its adjusted EBITDA of $10.04 million.
Analysts expect RMNI’s EPS for the fiscal second quarter ending June 2023 to be $0.11, indicating a 49.6% year-over-year growth. The company’s revenue for the same quarter is expected to grow 6.4% from its prior-year quarter to $107.69 million. In addition, RMNI has beaten the consensus revenue estimates in each of the trailing four quarters, which is impressive.
RMNI has declined 1.6% over the past month, closing its last trading session at $4.07.
RMNI’s POWR Ratings reflect this promising outlook. The stock 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 stock has a B for Value and Quality. It is ranked #19 in the 139-stock Software - Application industry.
Click here for additional RMNI POWR Ratings for Growth, Momentum, Stability, and Sentiment.
GEE Group, Inc. (JOB)
JOB provides permanent and temporary professional and industrial staffing and placement services in the United States. The company operates through two segments, Industrial Staffing Services, and Professional Staffing Services.
JOB’s forward EV/Sales of 0.44x is 73.8% lower than the industry average of 1.69x. Its forward non-GAAP PEG multiple of 0.57x is 61.6% lower than the industry average of 1.48x.
JOB’s net revenues increased 8% year-over-year to $41.11 million for the fiscal third quarter ended June 30, 2022. Its income from operations rose 74.4% from its previous-year quarter, while its non-GAAP EBITDA increased 33.7% year-over-year to $4.15 million.
Street expects JOB’s revenue to increase 12.5% year-over-year to $167.53 million in the fiscal year ended September 2022. The stock has surpassed its consensus revenue estimates in three of the trailing quarters.
Over the past year, the stock has gained 65.2% to close the last trading session at $0.76. It has gained 33.3% year-to-date.
JOB’s strong fundamentals are depicted in its POWR Ratings. The stock has an overall B rating, which translates to a Buy in our proprietary system.
The stock has an A grade for Value and Sentiment and a B grade for Quality. Within the A-rated Outsourcing – Staffing Services industry, it is ranked #5 out of 21 stocks.
Click here for the additional POWR Ratings for Growth, Momentum, and Stability for JOB.
Ultralife Corporation (ULBI)
ULBI designs, manufactures, installs, and maintains power and communication, and electronics systems worldwide. The company operates in two segments, Battery & Energy Products and Communications Systems.
On October 27, ULBI was awarded a purchase order valued at approximately $5.5 million to supply its vehicle communications systems to a global prime defense contractor for the U.S. Army.
Moreover, on September 22, ULBI received a contract valued at approximately $7.5 million to supply its integrated system of A-320 amplifiers and A-320HVA radio vehicle mounts to a major international defense contractor for an ongoing government/defense modernization program.
Michael D. Popielec, Ultralife’s President and CEO, said, “This contract further demonstrates our success in executing a key element of our revenue growth strategy – the broadening of our global presence with international allies by extending our core U.S. government and defense business.”
The stock’s forward EV/Sales of 0.68x is 59.5% lower than the industry average of 1.69x. Its forward Price/Sales of 0.52x is 59.2% lower than the industry average of 1.27x.
For the fiscal third quarter ended September 30, 2022, ULBI’s total revenues came in at $33.23 million, up 52.7% year-over-year. Its gross profit rose 31.5% year-over-year to $6.72 million. In addition, its adjusted EBITDA grew 343.5% from its prior-year quarter to $1.26 million.
ULBI’s EPS is expected to increase 466.7% year-over-year to $0.17 in the fiscal second quarter ending June 2023. Its revenue is expected to come in at $33.50 million in the same quarter, representing a 4.3% year-over-year rise. In addition, the company has surpassed each of its consensus revenue estimates in the trailing four quarters.
ULBI declined 2.5% intraday, closing its last trading session at $4.27.
It is no surprise that ULBI has an overall A rating, equating to a Strong Buy in our proprietary rating system. It has an A grade for Value and a B for Momentum, Sentiment, and Quality.
ULBI is ranked #11 out of 93 stocks in the B-rated Industrial – Equipment industry.
In addition to the POWR Ratings stated above, you can see the ULBI ratings for Growth and Stability here.
RMNI shares were trading at $4.04 per share on Tuesday morning, down $0.03 (-0.74%). Year-to-date, RMNI has declined -32.33%, versus a -15.66% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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