This year, the stock market has experienced wild swings amid ongoing macroeconomic and geopolitical issues. Inflation is at its multi-decade high, and the Fed is aggressively hiking interest rates to bring it under control. This has raged a fear of recession among investors, and around 90% of the 400 CEOs surveyed by KPMG last month believe that a downturn is coming.
On the other hand, the latest job data revealed that the unemployment rate moved higher to 3.7% in October. Employers added 261,000 new jobs, the lowest since December 2020, thus showing signs of a cooling labor market, raising hopes that the Fed might slow the pace of rate hikes. In addition, the Fed had hinted at smaller increases ahead in the last week.
Therefore, it could be the right time to scoop up shares of fundamentally solid stocks, Oracle Corporation (ORCL), Biogen Inc. (BIIB), Daqo New Energy (DQ), and Kronos Worldwide, Inc. (KRO), which are trading at a discount.
Oracle Corporation (ORCL)
ORCL offers products and services that address enterprise technology environments globally. The company’s Oracle cloud software as a service offering provides various cloud software applications, including Oracle Fusion cloud enterprise resource planning (ERP), Oracle Fusion cloud enterprise performance management, and Oracle Fusion cloud supply chain and manufacturing management.
On November 3, ORCL announced the launch of Oracle Public Safety Services, a new technology platform for law enforcement and first responders. The platform has a unified hardware and software suite, which includes a dispatch command center, law enforcement records, jail management software, and real-time video communication tools. This cutting-edge technology is a significant addition to the company’s offerings.
On October 19, 2022, ORCL introduced its new B2B Commerce services to revolutionize and automate end-to-end B2B processes. This service aims to connect more than 40,000 buyers, sellers, and service providers directly via Oracle Cloud Enterprise Resource Planning and is expected to aid the company’s growth.
For the first quarter that ended August 31, 2022, ORCL’s total revenues came in at $11.45 billion, up 17.7% year-over-year. Its cloud services and license support revenue came in at $8.42 billion, up 14.2% year-over-year, while its services revenue came in at $1.36 billion, up 74.3% year-over-year in the same period.
Analysts expect ORCL’s revenue to increase 16.1% year-over-year to $49.29 billion in the fiscal year ending May 2023. Its EPS is expected to increase 1.3% year-over-year to $4.96 in the same period.
Over the past month, the stock has gained 19.5% to close the last trading session at $75.64.
In terms of its forward EV/EBIT, ORCL is currently trading at 14.02x, 11.5% lower than the industry average of 15.84x. Its forward Price/Cash Flow multiple of 12.89 is 22.8% lower than the industry average of 16.69.
ORCL’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall B rating indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ORCL also has a B grade for Growth and Stability. In the Software – Application industry, it is ranked #26 of 143 stocks.
Click here to access additional POWR Ratings for Value, Momentum, Sentiment, and Growth for ORCL.
Biogen Inc. (BIIB)
BIIB, a biotech company, discovers, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases. The company has strategic collaborations and license agreements with various companies, including Acorda Therapeutics, Inc.; Alkermes Pharma Ireland Limited; and Denali Therapeutics Inc.
During the fiscal third quarter ended September 30, 2022, BIIB’s total revenue came in at $2.51 billion. The company’s net income increased 256.8% from the year-ago value to $1.13 billion, while its EPS grew 253.2% from the prior-year quarter to $7.84. Moreover, its net cash provided by investing activities grew 815.8% year-over-year to $1.67 million.
BIIB’s EPS is expected to grow 2.2% in the fiscal quarter ending December 2022 to $3.46. Its revenue is expected to be $2.44 billion in the same quarter. The stock also surpassed the consensus EPS estimates in three of the trailing four quarters, which is impressive.
In terms of its forward EV/EBITDA, BIIB is currently trading at 10.92x, 16.1% lower than the industry average of 13.02x. Its forward Price/Sales multiple of 4.09 is 1.1% lower than the industry average of 4.14.
The stock has gained 47.8% over the past six months and 19.3% year-to-date to close the last trading session at 286.16.
It is no surprise that BIIB has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Value and Quality and a B for Sentiment. It is ranked #5 out of 384 stocks in the Biotech industry.
To see additional POWR Ratings for Growth, Momentum, and Stability for BIIB, click here.
Daqo New Energy (DQ).
DQ develops and sells polysilicon to photovoltaic product manufacturers. Its products are used in ingots, wafers, cells, and modules for solar power solutions.
On November 7, DQ’s Board of Directors approved a $700 million share repurchase program expected to be funded primarily out of the company’s potentially available cash and existing cash balance. This demonstrates DQ’s strong financials and should improve shareholder returns.
For the fiscal third quarter of 2022, DQ’s revenue increased 108% year-over-year to $1.22 billion. The company’s net income increased 11% year-over-year to $323.4 million. DQ’s EPS stood at $4.28 compared to $3.95 in the prior-year period.
For the fiscal fourth quarter ending December 2022, Street expects DQ’s revenue to come in at $1.14 billion, representing an increase of 188.7% year-over-year. For the same quarter, the consensus EPS estimate of $7.02 indicates a 261.9% year-over-year increase. The company has an impressive earnings surprise history as it beat the consensus EPS estimates in three of the trailing four quarters.
DQ’s stock has gained 29.7% year-to-date to close the last trading session at $52.30.
In terms of its forward EV/Sales, DQ is trading at 0.49x, 80.7% lower than the industry average of 2.53x. Its forward EV/EBITDA multiple of 0.69 is 94.3% lower than the industry average of 12.10.
DQ’s strong fundamentals are reflected in its POWR Ratings. It is rated B, which translates to a Buy in our proprietary rating system. The stock has an A grade in Quality and a B in Growth and Value.
In the B-rated 87-stock Chemicals industry, DQ is ranked #21. To see more of DQ’s POWR Ratings, click here.
Kronos Worldwide, Inc. (KRO)
KRO produces and markets titanium dioxide pigments (TiO2) in Europe, North America, the Asia Pacific, and internationally. The company has TiO2 in two crystalline forms, rutile and anatase, to impart whiteness, brightness, opacity, and durability for various products. It sells its products under the KRONOS brand through agents and distributors to various manufacturers.
KRO’s net sales came in at $459.60 million for the quarter that ended September 30, 2022. Its net income stood at $21 million, while its EPS came in at $0.18 for the same period.
The consensus revenue estimate of $2.06 billion indicates a 6.2% year-over-year increase in fiscal 2022. Its EPS is expected to increase 21.5% year-over-year to $1.19 in the same period.
The stock has gained 10% over the past month to close the last trading session at $9.49.
In terms of its forward Price/Book, KRO is currently trading at 1.14x, 38.2% lower than the industry average of 1.85x. Its forward EV/Sales multiple of 0.57 is 59.7% lower than the industry average of 1.41
According to the POWR Ratings, KRO has an A grade for Value and a B for Stability. It is ranked #41 in the Chemicals industry.
Beyond what is stated above, you can see the additional ratings for KRO for Growth, Momentum, Quality, and Sentiment here.
ORCL shares were trading at $76.28 per share on Wednesday morning, up $0.64 (+0.85%). Year-to-date, ORCL has declined -11.02%, versus a -19.13% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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