The benchmark indexes registered their biggest weekly decline since January as the latest Consumer Price Index report rattled the market. Inflation accelerated by a higher-than-expected 8.6% in May, marking a fresh four-decade high. The Dow Jones Industrial Average tumbled 880 points, while the tech-heavy Nasdaq index slid 3.5%, and the broad-based S&P 500 sank 116.96 points.
The market is tense, and the situation is frightening for the investors as they have been assessing the economy’s health in recent weeks. “There’s a lot of headfakes going on. And unfortunately, we’re not going to get a lot of clean looks at the economy, whether the U.S. economy or certainly the global economy, for quite some time because there’s just so many things that are hard to decipher,” said Michael Skordeles, senior U.S. macro strategist at Truist.
The market sell-off has led several fundamentally sound stocks to decline significantly in price, but they are poised to bounce back soon. We think financially robust small-cap stocks Heritage-Crystal Clean, Inc (HCCI), YPF Sociedad Anónima (YPF), Perdoceo Education Corporation (PRDO), Ryerson Holding Corporation (RYI), and Preformed Line Products Company (PLPC), which are currently trading at a discount could be worth your attention.
Heritage-Crystal Clean, Inc (HCCI)
HCCI provides parts cleaning, hazardous and non-hazardous waste, and used oil collection services to small and mid-sized customers in the industrial and vehicle maintenance sectors in the United States and Canada. It operates through two segments, Environmental Services; and Oil Business. The company has a market cap of $650.27 million.
On April 19, HCCI, through its subsidiary Heritage-Crystal Clean, LLC, announced an investment in its battery recycling partner, HBR Retriev Holdco, LLC. “We are very excited with this investment as we believe it provides a great opportunity for our shareholders to benefit further from the growing electrification of our economy. We believe this puts us in a great position to assist our current customers and future generations in achieving their sustainability goals,” said Brian Recatto, President and CEO of HCCI.
HCCI’s total revenue increased 32.2% from the prior-year quarter to $139.37 million in the fiscal first quarter ended March 26, 2022. Operating income for the quarter came in at $17.55 million, reflecting an increase of 37.7% year-over-year, while the net income stood at $12.88 million, up 39.9% year-over-year. Its net income per share increased 38.5% from its year-ago value to $0.55.
Analysts expect HCCI’s revenue for the fiscal quarter ending June 2022 to come in at $139.42 million, indicating an increase of 18.9% year-over-year. Also, the company’s revenue is expected to grow 15.4% year-over-year to $594.62 million in the ongoing fiscal year. HCCI also beat the consensus EPS estimates in the trailing four quarters.
In terms of its forward EV/Sales, HCCI is currently trading at 1.13x, 29.9% lower than the industry average of 1.62x. Its forward EV/EBITDA multiple of 6.14 is 38.9% lower than the industry average of 10.06.
Over the past month, the stock has gained 1.2% to close yesterday’s trading session at $26.78.
HCCI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
HCCI also has an A grade in Value and a B in Sentiment and Quality. It is ranked #3 of 15 stocks in the B-rated Waste Disposal industry.
Beyond what is stated above, we’ve also rated HCCI for Momentum, Stability, and Growth. Get all the HCCI ratings here.
YPF Sociedad Anónima (YPF)
With a market cap of $1.59 billion, YPF engages in the oil and gas upstream and downstream activities in Argentina. The company’s upstream operations include the exploration, development, and production of crude oil, natural gas, and NGLs. Its downstream operations include the refining, marketing, transportation, and distribution of oil, petroleum products, natural gas, and others.
For the fiscal quarter ended March 2022, YPF’s revenues increased 37.3% year-over-year to $3.64 billion. Its non-GAAP EBITDA grew 26.8% from the year-ago value to $972 million. Operating income for the quarter stood at $380 million, reflecting a 388.4% increase year-over-year. Moreover, its EPS was $0.64, up 966.7% from the prior-year quarter.
Analysts expect YPF’s revenue in the current quarter to come in at $3.63 billion, indicating an increase of 8.5% year-over-year. Also, the company’s revenue is expected to grow 9% year-over-year to $14.43 million in the ongoing fiscal year. The company also surpassed the consensus EPS estimates in three of the trailing four quarters.
In terms of its forward EV/Sales, YPF is currently trading at 0.62x, 70.9% lower than the industry average of 2.12x. Its forward Price/Sales multiple of 0.20 is 87.3% lower than the industry average of 1.62.
YPF has gained 6% year-to-date and 1.5% over the past six months to close the last trading session at $4.05.
YPF’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to Strong Buy in our POWR Ratings system.
The company also has an A grade in Value and Momentum and a B in Growth and Quality. The stock is ranked #9 of 42 stocks in the A-rated Foreign Oil & Gas industry.
To get YPF’s ratings for Stability, and Sentiment, click here.
Perdoceo Education Corporation (PRDO)
PRDO provides postsecondary education through online, campus-based, and blended learning programs in the United States. The company operates in two segments, Colorado Technical University; and American InterContinental University. It has a market cap of $711.18 million.
PRDO’s operating income increased 7.6% year-over-year to $43.69 million in the fiscal first quarter of 2022. Its net income grew 4.2% from the year-ago value to $32.10 million, while its EPS improved 7% year-over-year to $0.46.
Street expects PRDO’s EPS for the fiscal year ending December 2023 to improve 5.8% year-over-year to $1.46. The consensus revenue estimate of $678.61 million for the same period represents a 3% increase year-over-year. It has an impressive earnings surprise history, as it topped Street EPS estimates in each of the trailing four quarters.
In terms of its forward EV/EBIT, PRDO is currently trading at 2.23x, 80% lower than the industry average of 11.16x. Its forward EV/EBITDA multiple of 1.79 is 78.9% lower than the industry average of 8.48.
PRDO’s shares have slumped 0.1% over the past month to close the last trading session at $10.34.
The company has an overall rating of A, translating to Strong Buy in our proprietary ratings system. The stock is also rated A in Value and Quality. Within the B-rated Outsourcing - Education Services industry, it is ranked #1 of 24 stocks.
Click here to see additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for PRDO.
Ryerson Holding Corporation (RYI)
RYI processes and distributes industrial metals in the United States, Canada, Mexico, and China. It offers a line of products in carbon steel, stainless steel, alloy steel, aluminum, nickel, and red metals. The company has a market cap of $1.07 billion.
On June 1, RYI announced the acquisition of Ford Tool Steels, a tool steel processor based out of St. Louis, Missouri. FTS’s sawing and machining capabilities are aligned with those of Southern Tool Steel, a member of RYI, and thus, this strategic acquisition is expected to recognize synergies between the two brands and enhance RYI’s growth and customer experiences.
In May, the company announced its investment in FreeFORM Technologies, an additive manufacturing, and engineering company. This is expected to mark RYI’s strategic exposure to additive manufacturing. “It is an important step forward allowing us to explore synergies, new opportunities, and additional value-added capabilities with our customers as we look towards the emerging present and future of the metals industry,” said Chief Operations Officer Mike Burbach.
RYI’s revenues increased 52.4% year-over-year to $1.75 billion in the fiscal first quarter of 2022. Its net income improved 546.6% year-over-year to $163.60 million over the period, while its non-GAAP EBITDA and non-GAAP EPS increased 102.9% and 1,542.3% from its year-ago values to $250.60 million and $4.27 respectively.
Analysts expect RYI’s EPS for the fiscal quarter ending June 2022 to come in at $4.23, indicating an increase of 241.1% year-over-year. Also, the company’s EPS is expected to grow 18.3% year-over-year to $8.83 in the ongoing fiscal year. RYI also beat the consensus EPS estimates in the trailing four quarters, which is impressive.
In terms of its forward P/E, RYI is currently trading at 5.37x, 53.5% lower than the industry average of 11.55x. Its forward EV/Sales multiple of 0.37 is 75.2% lower than the industry average of 1.47.
RYI’s shares have gained 83.5% over the past year to close the last trading session at $28.98. The stock has gained 17% in the past six months.
It is no surprise that RYI has an overall rating of A, equating to Strong Buy in our POWR Ratings system. The stock also has an A grade in Value and a B in Growth, Momentum, Quality, and Sentiment. Out of the 37 stocks in the Industrial - Metals industry, RYI is ranked #1.
In addition to the POWR Rating grades I’ve just highlighted, you can see the RYI’s ratings for Stability here.
Preformed Line Products Company (PLPC)
PLPC designs and manufactures products and systems that are used in the construction and maintenance of overhead, ground-mounted, and underground networks for the energy, telecommunication, cable operator, information, and other industries. It has a market cap of $315.28 million.
PLPC’s net sales increased 17.6% year-over-year to $138.22 million in the fiscal quarter ended March 31, 2022. Its gross profit grew 4.4% from the year-ago value to $41.95 million. The company’s net income increased 71.4% year-over-year to $12.30 million over the period. Also, its EPS came in at $2.49, up 71.7% from the prior-year quarter.
In terms of its trailing-12-month Price/Sales, PLPC is currently trading at 0.58x, 57.9% lower than the industry average of 1.38x. Its trailing-12-month P/E GAAP multiple of 7.76 is 57.9% lower than the industry average of 18.42.
The stock has gained 4.8% over the past three months to close the last trading session at $63.82.
PLPC’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, translating to Strong Buy in our proprietary rating system.
PLPC is also rated A in Value and a B in Growth, Quality, Stability, and Sentiment. Of the 93 stocks, PLPC is ranked #1 in the Industrial - Equipment industry.
To see additional POWR Ratings for Momentum for PLPC, click here.
HCCI shares were trading at $25.93 per share on Monday afternoon, down $0.85 (-3.17%). Year-to-date, HCCI has declined -19.02%, versus a -19.72% 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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