Despite widespread headwinds, like lingering inflation and rising recession odds, consumer sentiment increased for the third straight month in February, growing 3% month-over-month.
Improving consumer sentiments should drive growth for high-quality stocks Nokia Oyj (NOK), Overseas Shipholding Group, Inc. (OSG), DHI Group, Inc. (DHX), Rave Restaurant Group, Inc. (RAVE), and Data Storage Corporation (DTST). These stocks seem to be trading at a discount under $5, and this could be the right opportunity to invest and take advantage of their upside potential.
The U.S. labor market remained robust, while inflationary pressures show signs of slowing. The labor market is an important indicator of the health of the overall economy.
U-M economist Joanne Hsu said, “labor markets continue to enjoy historical strength, supporting robust income growth. Consumers will weigh the balance of factors, focusing on implications for their own budgets, as they make decisions on spending or saving.”
Additionally, investors’ interest in value stocks is evident from the SPDR Portfolio S&P 500 Value ETF’s (SPYV) 4.4% gains over the past six months.
So, let’s delve deeper into these stocks mentioned above:
Nokia Oyj (NOK)
Headquartered in Espoo, Finland, NOK provides mobile, fixed, and cloud network solutions worldwide. The company operates through four segments: Mobile Networks; Network Infrastructure; Cloud and Network Services; and Nokia Technologies.
On February 28, 2023, NOK launched the Beacon 10, its first gateway supporting Wi-Fi 6E to provide seamless, high-capacity mesh networking. Amid rapid digitalization, this product addition is expected to yield broad margins for the company.
NOK’s forward EV/Sales of 0.83x is 70.6% lower than the industry average of 2.81x. Its forward Price/Sales of 0.96x is 64.7% lower than the industry average of 2.73x.
Its trailing-12-month EBITDA and net income margins of 15.29% and 17.06% are 35.5% and 490.8% higher than the industry averages of 11.28% and 2.89%.
NOK’s net sales came in at €7.45 billion ($7.91 billion) for the fiscal year 2022 fourth quarter, up 16.1% year-over-year. Its profit for the period increased 363.5% year-over-year to €3.15 billion ($3.34 billion), while its EPS increased 366.7% year-over-year to €0.56.
Analysts expect NOK’s revenue to increase 5.5% year-over-year to $27.62 billion for the current fiscal year, 2023. Its EPS is expected to rise 6.7% per annum for the next five years. It surpassed EPS estimates in three of four trailing quarters. The stock has lost marginally over the past month to close the last trading session at $4.67.
NOK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
NOK has an A grade for Value and a B grade for Growth. Within the B-rated Technology - Communication/Networking industry, it is ranked #4 out of 49 stocks. Click here for the additional POWR Ratings for Momentum, Stability, Sentiment, and Quality for NOK.
Overseas Shipholding Group, Inc. (OSG)
OSG and its subsidiaries own and operate a fleet of oceangoing vessels. Its vessels are engaged in transporting crude oil and petroleum products in the United States flag trade.
OSG’s trailing-12-month Price/Sales of 0.75x is 41.5% lower than the industry average of 1.28x. Its trailing-12-month Price/Book of 0.91x is 48.6% lower than the industry average of 1.77x.
Its trailing-12-month levered FCF margin of 15.41% is 129% higher than the industry average of 6.73%.
OSG’s total shipping revenues came in at $123.06 million for the quarter that ended September 30, 2022, up 31% year-over-year. Its net income came in at $13.25 million, compared to a loss of $16.01 million in the year-ago period. Also, its EPS came in at $0.15 compared to a loss per share of $0.18 in the prior-year period.
Over the past year, the stock has gained 85.1% to close the last trading session at $3.72.
OSG has an overall A rating, equating to a Strong Buy in our POWR Ratings system. Also, the stock has an A grade for Momentum and a B grade for Growth, Value, Sentiment, and Quality.
Within the A-rated Shipping industry, it is ranked first among 46 stocks. Get additional POWR Ratings for OSG (Stability) here.
DHI Group, Inc. (DHX)
DHX provides data, insights, and employment connections through specialized services for technology professionals in the United States.
DHX’s forward EV/Sales of 1.44x is 27.1% lower than the industry average of 1.97x, while its forward Price/Sales of 1.22x is 3.9% lower than the industry average of 1.27x.
Its trailing-12-month gross profit margin of 88.24% is 77.8% higher than the industry average of 49.63%. Its trailing-12-month levered FCF margin of 14.30% is 60.7% higher than the industry average of 8.90%.
DHX’s revenues came in at $149.68 million for the year ended December 31, 2022, up 24.8% year-over-year. Its adjusted EBITDA increased 18% year-over-year to $30.95 million. Moreover, its EPS came in at $0.09, compared to a loss per share of $0.64 in the previous period.
Street expects DHX’s revenue to increase 10.1% year-over-year to $164.77 million in 2023. Its EPS is expected to rise 15.1% per annum for the next five years. DHX’s shares have lost marginally intraday to close the last trading session at $4.38.
DHX’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, equating to a Buy in our POWR Ratings system. Also, the stock has a B grade for Value and Quality. DHX is ranked #3 out of 21 stocks in the A-rated Outsourcing - Staffing Services industry.
Beyond the ratings stated above, we have also rated DHX for Growth, Momentum, Stability, and Sentiment. Click here to see all ratings.
Rave Restaurant Group, Inc. (RAVE)
RAVE and its subsidiaries operate and franchise pizza buffets, delivery/carry-out (delco), and express restaurants under the Pizza Inn trademark in the United States and internationally. It operates through three segments: Pizza Inn Franchising; Pie Five Franchising; and Company-Owned Restaurants.
RAVE’s trailing-12-month EV/EBIT of 11.41x is 15% lower than the industry average of 13.42x. Its trailing-12-month Price/Cash Flow of 10.44x is 21.4% lower than the industry average of 13.29x.
RAVE’s trailing-12-month ROCE and ROTC of 100.31% and 10.70% compare with the industry averages of 11.88% and 6.38%, respectively.
RAVE’s revenues came in at $2.87 million for the quarter that ended December 25, 2022, up 6.3% year-over-year. Its income before taxes increased 5.9% year-over-year to $488,000.
RAVE’s EPS is expected to increase by 10% per annum for the next five years. Over the past year, the stock has gained 54.9% to close the last trading session at $1.60.
RAVE has an overall A rating, equating to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Quality and a B for Value and Sentiment.
RAVE is ranked #4 out of 46 stocks in the B-rated Restaurants industry. Click here for the additional POWR Ratings for RAVE (Growth, Momentum, and Stability).
Data Storage Corporation (DTST)
DTST provides multi-cloud information technology solutions primarily in the United States. The company offers data protection and disaster recovery solutions; high availability, data vaulting, DRaaS, IaaS, message logic, standby server, support and maintenance, and internet solutions.
DTST’s forward EV/Sales of 0.12x is 95.8% lower than the industry average of 2.81x. Its forward Price/Sales of 0.52x is 80.9% lower than the industry average of 2.73x.
DTST’s sales came in at $4.42 million for the quarter that ended September 30, 2022, up 14.5% year-over-year. Its gross profit increased 20.1% year-over-year to $1.85 million.
Analysts expect DTST’s revenue to come in at $23.30 million in 2023. Its EPS is expected to increase 113.6% year-over-year to $0.03 in 2023. It surpassed EPS estimates in three of four trailing quarters. The stock has gained 3% over the past month to close the last trading session at $1.78.
It’s no surprise that DTST has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Sentiment and a B grade for Value and Quality. It is ranked #6 out of 66 stocks in the Internet industry.
To see the additional POWR Ratings for DTST (Growth, Momentum, and Stability), click here.
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NOK shares were unchanged in premarket trading Tuesday. Year-to-date, NOK has gained 0.30%, versus a 4.24% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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