The stock market witnessed a decline in the last trading session, with the Dow Jones Industrial Average (DJIA) losing 326.63 points. At the same time, the S&P 500 and Nasdaq Composite declined 1.6% and 3.1% to close at 3,935.18 and 11,364.24, respectively.
Yesterday’s sell-off can be attributed to hotter-than-expected inflation data. April’s consumer price index increased 8.3% year-over-year, higher than the 8.1% estimate. Concerns over the Fed’s ability to fight the multi-decade-high inflation without pushing the economy into a recession primarily led to the market plunge.
However, the market correction has led to several quality stocks currently trading at significant discounts. Quilter Cheviot’s investment manager Poppy Fox said, “There can be some sound logic in buying shares of companies after their price takes a tumble, particularly if you continue to believe in the investment case.”
That’s why today we're highlighting 4 exciting stocks from our Top 10 Small-Cap screen, which is just 1 of the 10 screens in our POWR Screens 10 service (more on that below). Civeo Corporation (CVEO), ARC Document Solutions, Inc. (ARC), Forrester Research, Inc. (FORR), and Valhi, Inc. (VHI) are fundamentally strong small-cap stocks that could stage a turnaround once the market stabilizes.
Civeo Corporation (CVEO)
CVEO provides hospitality services to the natural resource industry in Canada, Australia, and the United States. The company develops lodges and villages; and mobile accommodations. It offers food, housekeeping, maintenance services, laundry, facility management and maintenance, water and wastewater treatment, power generation, communication systems, security, logistics, and camp management services.
On April 7, 2022, CVEO announced that the private investment firm Conversant Capital LLC had purchased its approximately 958,000 common shares from entities affiliated with Lance Torgerson under a stock purchase agreement. President and CEO of CVEO Bradley Dodson said, “Civeo is pleased to welcome Conversant as a new shareholder and hopes to benefit from its expertise in the hospitality and lodging sectors.”
CVEO’s revenue increased 32% year-over-year to $165.67 million for the first quarter ended March 31, 2022. The company’s adjusted EBITDA increased 57.5% year-over-year to $25.56 million. Also, its net income came in at $1.90 million, compared to a net loss of $9.42 million in the year-ago period.
Analysts expect CVEO’s EPS for the quarter ending June 30, 2022, to increase 1,800% year-over-year to $0.51. Its revenue for fiscal 2022 is expected to increase 12.1% year-over-year to $666.45 million. Over the past year, the stock has gained 44.1% to close the last trading session at $25.34.
CVEO’s POWR Ratings reflect solid prospects. According to our proprietary rating system, it has an overall rating of A, translating to a Strong Buy. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Sentiment and a B grade for Growth, Value, Stability, and Quality. It is ranked first out of 42 stocks in the B-rated Outsourcing – Business Services industry. Click here to see the rating of CVEO for Momentum.
ARC Document Solutions, Inc. (ARC)
ARC is a digital printing company that provides digital printing and document-related services to customers in various industries. Its primary services include digital printing of general and specialized business documents such as those found in marketing and advertising, engineering and construction, and other industries.
For the first quarter ended March 31, 2022, ARC’s net sales increased 12.6% year-over-year to $69.48 million. The company’s adjusted EBITDA increased 3.5% year-over-year to $9.08 million. Also, its adjusted net income increased 115% year-over-year to $1.97 million.
For fiscal 2022, ARC’s EPS and revenue are expected to increase 18.2% and 5.4% year-over-year to $0.26 and $286.90 million, respectively. Over the past year, the stock has gained 50.7% to close the last trading session at $3.12.
ARC’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Value and Quality. It is ranked #2 in the Outsourcing – Business Services industry. To see the other ratings of ARC for Growth, Momentum, Stability, and Sentiment, click here.
Forrester Research, Inc. (FORR)
FORR is an independent research and advisory firm. The company operates through the Research; Consulting; and Events segments. Its primary subscription research product is Research, which offers clients access to its research designed for strategic decision-making.
FORR’s total revenues increased 9.8% year-over-year to $124.97 million for the first quarter ended March 31, 2022. The company’s total contract value increased 15% year-over-year to $351.40 million. Also, its net income increased 4.8% year-over-year to $4.14 million. Over the past year, the stock has gained 15.2% to close the last trading session at $50.82.
FORR’s POWR Ratings reflect solid prospects. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Growth, Sentiment, and Quality and a B grade for Stability. Within the Financial Services (Enterprise) industry, it is ranked #1 out of 105 stocks. To see the other ratings of FORR for Value and Momentum, click here.
Valhi, Inc. (VHI)
VHI is engaged in chemical, component products, and real estate management and development businesses. It operates through its wholly-owned and majority-owned subsidiaries, including NL Industries, Inc., Kronos Worldwide, Inc., CompX International, Inc., Tremont LLC, Basic Management, Inc., and the LandWell Company.
For the fiscal first quarter ended March 31, 2022, VHI’s net sales increased 23.5% year-over-year to $629 million. The company’s net income attributable to its shareholders increased 206.7% year-over-year to $45.40 million. Also, its total operating income increased 96.2% year-over-year to $100.70 million.
For the quarter ending June 30, 2022, VHI’s EPS is expected to increase 168% year-over-year to $2.01. Over the past nine months, the stock had gained 67.5% to close the last trading session at $38.88.
VHI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Growth and Value and a B grade for Stability, Sentiment, and Quality. It is ranked first out of 90 stocks in the A-rated Chemicals industry. Click here to see the other rating of VHI for Momentum.
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CVEO shares were trading at $24.90 per share on Thursday morning, down $0.44 (-1.74%). Year-to-date, CVEO has gained 29.89%, versus a -17.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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