The U.S. gross domestic product fell at a 0.9% annualized rate in the second quarter. Moreover, given the sky-high inflation, consecutive interest rate hikes, and recessionary pressures, stock market volatility is rife. This is evident as the CBOE Volatility Index (^VIX) is up about 28% this year.
However, the S&P 500 surged 1.6% in Wednesday’s trading session, closing at an almost two-month high. Moreover, the Dow Jones Industrial Average rose 1.3%. The stock market bounced on an upbeat July report of U.S. services sector growth.
Given the turbulent macroeconomic backdrop, it might be wise to diversify one’s portfolio and invest in value stocks instead of aggressive growth strategies. Hence, we think the fundamentally strong low priced value stocks ARC Document Solutions, Inc. (ARC), Assertio Holdings, Inc. (ASRT), and Chico’s FAS, Inc. (CHS), which are trading under $10, might be ideal investments this week.
ARC Document Solutions, Inc. (ARC)
ARC provides digital printing and document-related services in the United States. The company offers managed print services, cloud-based document management software, and other digital hosting services.
On July 29, ARC declared a quarterly dividend of $0.05 per share, payable on November 30, to shareholders of record as of October 31. This reflects upon the cash generation ability of the company.
In terms of its trailing-twelve-month EV/Sales, ARC is trading at 0.67x, 62.3% lower than the industry average of 1.77x. Its trailing-twelve-month Price/Sales multiple of 0.43 is 68.4% lower than the industry average of 1.35.
ARC’s net sales increased 8.4% year-over-year to $74.56 million for the second quarter ended June 30. Its operating income increased 32.9% year-over-year to $5.56 million, while adjusted net income attributable to ARC came in at $3.69 million, representing a 39.8% year-over-year growth. Adjusted EPS increased 33.3% from the prior-year period to $0.08.
Analysts expect ARC’s EPS for the fiscal year 2022 to be $0.26, representing an 18.2% year-over-year growth. The company’s revenue is expected to grow 5.4% from the prior year to $286.90 million for the same period.
ARC has gained 26.2% over the past year and 8% over the past month to close its last trading session at $2.84.
ARC’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ARC has an A grade for Value and Quality and a B for Growth and Sentiment. It is ranked #2 of 41 stocks in the Outsourcing - Business Services industry.
Beyond what we’ve stated above, we have also given ARC grades for Momentum and Stability. Get all the ARC ratings here.
Assertio Holdings, Inc. (ASRT)
ASRT is a specialty pharmaceutical company that offers medicines in different treatment areas, including neurology, pain, and inflammation. The company offers INDOCIN, an oral solution to treat moderate to severe rheumatoid arthritis, and CAMBIA, a non-steroidal anti-inflammatory drug (NSAID).
ASRT’s forward non-GAAP PEG multiple of 0.66 is 67.4% lower than the industry average of 2.02. In terms of its forward EV/EBITDA, the stock is trading at 2.53x, 81.1% lower than the industry average of 13.43x.
ASRT’s total revenue increased 36.1% year-over-year to $36.54 million in the first quarter ended March 31. Its income from operations grew 54% from the year-ago value to $11.56 million, while its adjusted earnings improved 70.3% year-over-year to $17.53 million. The company’s adjusted EPS increased 40.7% from its year-ago value to $0.38.
The consensus revenue estimate of $131.73 million for the fiscal year 2022 represents an 18.7% increase from the prior year. The consensus EPS estimate for the same period is $0.40.
The stock has gained 170.2% over the past year and 66.1% year-to-date to close its last trading session at $3.62.
The stock has an overall rating of A, which translates to Strong Buy in our proprietary rating system.
ASRT is rated an A in Growth, Value, and Quality. It is also rated a B in Sentiment. Within the Medical - Pharmaceuticals industry, it is ranked #10 out of 172 stocks. To see additional POWR Ratings for Momentum and Stability for ASRT, click here.
Chico’s FAS, Inc. (CHS)
CHS operates as an omnichannel specialty retailer of women’s private branded casual-to-dressy clothing, intimates, and complementary accessories. It operates under the Chico’s, White House Black Market (WHBM), and Soma brands.
In July, CHS announced the launch of a customer loyalty program for its three brands. The program is expected to provide the company’s customers with more personalized and seamless opportunities. This is expected to enhance customer satisfaction.
In terms of its forward Price/Sales, CHS is trading at 0.32x, 66.7% lower than the industry average of 0.97x. Its forward EV/Sales multiple of 0.56 is 52.1% lower than the industry average of 1.16.
CHS’s revenue increased 39.4% year-over-year to $540.92 million in the first quarter ended April 30, 2022. Its operating income grew 703.5% from the year-ago value to $45.41 million, while its net income improved 491.2% year-over-year to $34.93 million. The company’s net income per common share increased 450% from its year-ago value to $0.28.
The consensus EPS estimate of $0.25 for the fiscal quarter ended July 2022 indicates a 19.1% improvement year-over-year. The consensus revenue is expected to be $543.90 billion for the same period, indicating a 15.2% year-over-year growth.
The stock has gained 27.1% over the past six months and 11.7% over the last month to close its last trading session at $5.54.
It is no surprise that CHS has an overall B rating, which translates to Buy in our POWR Rating system.
It has an A grade for Value and Quality and a B for Growth. It is ranked #5 out of 67 in the B-rated Fashion & Luxury industry.
Beyond what we’ve stated above, we have also given CHS grades for Momentum, Stability, and Sentiment. Get all the CHS ratings here.
ARC shares were trading at $2.87 per share on Thursday afternoon, up $0.03 (+1.06%). Year-to-date, ARC has declined -14.01%, versus a -12.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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