U.S. stocks declined sharply on Wednesday after the Federal Reserve's July meeting minutes indicated that the pace of future interest rate hikes would depend on upcoming economic data.
According to market strategists, despite the slight decline in inflation last month, the Federal Reserve is unlikely to get distracted from its hawkish interest rate hikes because of the persistent price pressures and a strong job market. This and the tensions between China and Taiwan could keep the stock market under pressure.
Therefore, it could be wise to invest in momentum stocks APA Corporation (APA), Dynagas LNG Partners LP (DLNG), Friedman Industries, Incorporated (FRD), and GeoPark Limited (GPRK). These stocks are well-positioned to keep their momentum alive for some time, irrespective of market conditions.
APA Corporation (APA)
Headquartered in Houston, Texas, APA, along with its subsidiaries, explores for, develops, and produces oil and gas properties. It operates in the United States, Egypt, and the United Kingdom and has exploration activities offshore Suriname. Energy being a pro-inflation asset, APA is expected to perform well amid the high inflation.
For the second quarter ending June 30, 2022, APA’s total revenue increased 73.4% year-over-year to $3.05 billion. Its adjusted EBITDAX (Non-GAAP) grew 93.6% from its year-ago value to $1.96 billion, while its adjusted earnings improved 204.9% from its prior-year quarter to $266.00 million. The company’s adjusted EPS rose 238.6% from its year-ago value to $2.37.
Analysts expect APA's revenue to increase 60% year-over-year to $2.64 billion for the third quarter ending September 2022. The consensus EPS estimate of $2.43 represents a 147.7% improvement year-over-year for the third quarter ending September 2022.
The stock has gained 25.1% year-to-date and 99.4% over the past year. APA is trading above its 10-day moving average of $32.86.
APA's POWR Ratings reflect this promising outlook. The company 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 also has an A grade for Momentum and Quality and a B for Value. Within the B-rated Energy - Oil & Gas industry, it is ranked #8 of 97 stocks. To see additional POWR Ratings for Growth, Sentiment, and Stability for APA, click here.
Dynagas LNG Partners LP (DLNG)
DLNG operates in the seaborne transportation industry worldwide. The company owns and operates liquefied natural gas (LNG) carriers. As of April 29, 2022, its fleet consisted of six LNG carriers with an aggregate carrying capacity of approximately 914,100 cubic meters.
This month, DLNG announced that its Board of Directors declared a cash distribution of $0.546875 per unit on its Series B Fixed to Floating Cumulative Redeemable Perpetual Preferred Units for the period from May 22, 2022, to August 21, 2022. The cash distribution is payable on August 22, 2022, to all preferred unit holders of record as of August 15, 2022.
During the quarter ending March 31, 2022, DLNG's revenues amounted to $33.45 million. Its operating income amounted to $12.56 million, while its net income grew 50.5% from its year-ago value to $23.88 million. The company's EPS rose 58.3% from its prior-year quarter to $0.57.
The consensus EPS estimate of $0.24 for the fourth quarter ending December 2022 represents a 4.4% year-over-year growth. Analysts expect its revenue to increase 0.9% year-over-year to $133.45 million for fiscal 2023. The stock has gained 15.6% year-to-date and is currently trading above its 10-day and 200-day moving average of $3.29 and $3.26, respectively.
DLNG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The stock also has an A grade for Sentiment and Momentum and a B for Value. Within the A-rated Shipping industry, it is ranked #9 of 44 stocks.
In total, we rate DLNG on eight different levels. Beyond what we've stated above, we have also given DLNG grades for Stability, Growth, and Quality. Get all the DLNG ratings here.
Friedman Industries, Incorporated (FRD)
FRD is involved in steel processing, pipe manufacturing and processing, and the steel and pipe distribution businesses in the United States. It has two operational segments, Coil and Tubular. The Coil segment is involved in converting steel coils into a flat sheet and plate steel cut to customer specifications and reselling steel coils. The Tubular segment manufactures line and oil country pipes and pipes for structural applications.
In May, FRD acquired two high-quality, strategically located facilities from Plateplus, Inc., making FRD a leading North American steel service center with an expanded geographic presence, scale, and processing capabilities. In addition to the facilities acquired, Friedman also acquired the steel inventory and customer relationships at two additional Plateplus locations.
FRD's net revenue increased 126.2% year-over-year to $285.23 million for the fiscal year ended March 31, 2022. Its earnings from operations grew 79.7% from its prior-year quarter to $28.26 million, while its net earnings improved 23.1% from its year-ago value to $14.07 million. The company’s EPS rose 25.2% year-over-year to $2.04.
The stock has gained 12.2% year-to-date and 41.4% over the past month.
FRD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Growth and Momentum and a B for Quality. Within the A-rated Steel industry, it is ranked #9 of 33 stocks.
In total, we rate FRD on eight different levels. Beyond what we've stated above, we have also given FRD grades for Value, Sentiment, and Stability. Get all the FRD ratings here.
GeoPark Limited (GPRK)
Headquartered in Bogotá, Colombia, GPRK is engaged in developing and producing oil and gas reserves in Chile, Colombia, Brazil, Argentina, and Ecuador. As of December 31, 2021, the company had working or economic interests in 42 hydrocarbons blocks.
In May, GPRK announced its plan to redeem the $45,000,000 aggregate principal amount of its 6.500% senior notes due 2024. According to the terms of the Indenture, the Notes will be redeemed at a redemption price equal to 103.250% of the principal amount of the Notes redeemed, plus accrued and unpaid interest and additional amounts to, but excluding the redemption date.
In the second quarter ending June 30, 2022, GPRK’s revenue increased 88% year-over-year to $311.20 million. Its operating profit grew 646.9% from its year-ago value to $143.40 million, while its profit came in at $67.90 million compared to a loss of $2.50 million in the previous period.
The consensus EPS estimate of $4.54 for fiscal 2022 represents a 330.2% year-over-year growth. Analysts expect revenue to increase 50.6% year-over-year to $262.00 million for the third quarter ending September 2022. The company’s shares have surged 25.4% year-to-date. GPRK is trading above its 10-day and 50-day moving averages of $12.45 and $12.87, respectively.
It is no surprise that GPRK has an overall A rating, equating to Strong Buy in our POWR Ratings system. GPRK has an A grade for Momentum and a B for Value and Quality. In the A-rated Foreign Oil & Gas industry, it is ranked #6 of 42 stocks
Click here to see the additional POWR Ratings for GPRK (Growth, Stability, and Sentiment).
APA shares rose $0.56 (+1.67%) in premarket trading Thursday. Year-to-date, APA has gained 26.36%, versus a -9.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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