Investors’ concerns over several macroeconomic issues that include sky-high inflation and the Fed’s rigorous efforts to combat it by raising the interest rates have precipitated an equity market correction over the past few weeks. Furthermore, according to experts, these factors combined with persistent geopolitical uncertainties, rising oil prices, and supply chain disruptions have increased the odds of the U.S. economy slipping into a recession.
Goldman Sachs recently lowered its forecast for U.S. economic growth in 2022. The investment bank now expects U.S. GDP to grow by 2.4% for the year, compared with its prior estimate of 2.6%. Furthermore, the S&P 500 is down more than 16% year-to-date and recorded its sixth straight week of losses for the first time since 2011 last week, despite a relief rally on Friday. However, we believe the recent correction is an excellent opportunity for investors looking to bottom-fish.
We think it could be wise to invest in fundamentally sound stocks NICE Ltd. (NICE), Lattice Semiconductor Corporation (LSCC), Croda International Plc (COIHY), Veeva Systems Inc. (VEEV), and Coty Inc. (COTY), which have declined significantly since the beginning of the year.
NICE Ltd. (NICE)
Headquartered in Ra'anana, Israel, NICE and its subsidiaries provide cloud platforms for AI-driven digital business solutions worldwide. It offers CXone, a cloud-native open platform that supports contact centers ranging from small single sites to distributed remote agents and enterprises.
During the first quarter, ending March 31, 2022, NICE’s non-GAAP revenues increased 15.4% year-over-year to $527.43 million. Its operating income grew 8.9% from its year-ago value to $72.36 million, while its non-GAAP net income improved 17.2% from its prior-year quarter to $120.49 million. The company’s non-GAAP EPS rose 16.9% year-over-year to $1.80.
Last month, NICE announced a partnership with Deutsche Telekom Global Business, Deutsche Telekom’s affiliate that offers telecommunications and connectivity solutions to businesses of all sizes, including the public sector. With this collaboration, Deutsche Telekom Global Business will offer the CXone portfolio of industry-leading digital and agent-assisted CX solutions in Europe.
Also, in March, NICE announced the launch of its advanced X-Sight Entity Risk SaaS solution, an innovative solution that produces a single risk score that allows a financial institution to gain a better understanding of its clients across the organization. Powered by artificial intelligence, machine learning, entity resolution, and network analytics, X-Sight Entity Risk enhances the efficacy of advanced anti-money laundering, enterprise fraud prevention, and other financial services applications.
Analysts expect NICE's revenue to increase 14.2% year-over-year to $523.82 million in the second quarter, ended June 30, 2022. The $1.79 consensus EPS estimate represents a 14.1% improvement year-over-year. Furthermore, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has declined 35.5% in price year-to-date.
NICE's POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock also has a B grade for Growth and Stability. Within the Software - Application industry, it is ranked #24 of 157 stocks.
To see additional POWR Ratings for Value, Sentiment, Quality, and Momentum for NICE, click here.
Click here to check out our Cloud Computing Industry Report for 2022
Lattice Semiconductor Corporation (LSCC)
Headquartered in Hillsboro, Oregon, LSCC and its subsidiaries develop and sell semiconductor products in Asia, Europe, and the Americas. The company provides field-programmable gate arrays that consist of four product families, including the Certus-NX and ECP, Mach, iCE40, and CrossLink. It also offers video connectivity application-specific standard products.
For the first quarter, ending April 2, 2022, LSCC’s revenue increased 30.1% year-over-year to $150.52 million. Its non-GAAP operating income amounted to $54.65 million, up 68.6% from its year-ago value, while its non-GAAP net income improved 71.7% year-over-year to $52.70 million. The company’s non-GAAP EPS grew 15.6% from its prior-year quarter to $0.37.
The $0.28 consensus EPS estimate for the second quarter, ending June 30, 2022, represents 86.7% year-over-year growth. Analysts expect its revenue to increase 25.5% year-over-year to $157.98 million for the same period. In addition, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has plunged 38% in price year-to-date. However, it has gained 3% over the past year.
LSCC's strong fundamentals are reflected in its POWR Ratings. The stock has a B grade for Growth, Momentum, and Quality. Within the B-rated Semiconductor & Wireless Chip industry, it is ranked #46 of 95 stocks.
Beyond what we have stated above, we have also given LSCC grades for Stability, Value, and Sentiment. Get all the LSCC ratings here.
Click here to checkout our Semiconductor Industry Report for 2022
Croda International Plc (COIHY)
Headquartered in Goole, U.K. COIHY creates, makes, and sells specialty chemicals in Europe, the Middle East, Africa, North America, Asia, and Latin America. It has four operating segments: Consumer Care; Life Sciences; Performance Technologies; and Industrial Chemicals.
For its fiscal year ending Dec. 31, 2021, COIHY’s adjusted sales increased 35.9% year-over-year to £1.89 billion ($2.32 billion). Its adjusted operating profit improved 46.6% from its year-ago value to £468.60 million ($574.80 million), while its profit before tax grew 48.1% from its prior-year quarter to £445.20 million ($546.10 million). The company’s EPS rose 42.5% year-over-year to £250.00. The company’s shares have declined 41.3% in price year-to-date.
COIHY's strong fundamentals are reflected in its POWR Ratings. The stock has a B grade for Growth and Stability. Within the A-rated Chemicals industry, it is ranked #46 of 89 stocks.
In total, we rate COIHY on eight distinct levels. Beyond what we have stated above, we have also given COIHY grades for Value, Momentum, Quality, and Sentiment. Get all the COIHY ratings here.
Veeva Systems Inc. (VEEV)
Headquartered in Pleasanton, Calif., VEEV provides cloud-based software for the life sciences industry in North America, Europe, the Asia Pacific, the Middle East, Africa, and Latin America. The company offers Veeva Commercial Cloud, a suite of software, data, and analytics solutions.
This month, VEEV announced that Lucid Diagnostics Inc. ( LUCD), a commercial-stage cancer prevention medical diagnostics company, and majority-owned subsidiary of PAVmed Inc. (PAVM), has selected Veeva Vault CDMS to provide electronic data capture (EDC), coding, and data cleaning in their forthcoming study for EsoGuard in patients undergoing standard of care screening for, and management of Barrett's esophagus or esophageal adenocarcinoma.
Also this month, VEEV announced that AmplifyBio is building a base for advanced quality, study execution, and reporting with Veeva Vault Quality Suite. With the help of a modern quality system with built-in industry best practices, the company will simplify and automate processes to increase the efficiency of its preclinical drug testing.
VEEV’s total revenues increased 22.4% year-over-year to $485.50 million for the fourth quarter, ending Jan. 31, 2022. Its non-GAAP operating income grew 21.6% from its year-ago value to $186.25 million, while its non-GAAP net income improved 16.5% from its prior-year quarter to $146.95 million. The company’s EPS rose 15.4% year-over-year to $0.90.
Analysts expect VEEV's revenue to increase 14.4% year-over-year to $495.88 million for the first quarter, ending April 31, 2022. The company's EPS is expected to grow 1.3% year-over-year to $0.92 for the first quarter, ending April 30, 2022. Furthermore, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters. The company’s shares have declined 36.5% in price year-to-date.
It is no surprise that VEEV has an overall B rating, which equates to Buy in our POWR Ratings system. VEEV has an A grade for Quality and a B grade for Growth. In the Medical - Services industry, it is ranked #23 of 83 stocks
Click here to see the additional POWR Ratings for VEEV (Stability, Sentiment, Momentum, and Value).
Note that VEEV is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
Coty Inc. (COTY)
New York City-based COTY and its subsidiaries manufacture, market, distribute, and sell beauty products worldwide. The company offers prestige fragrances, skincare, and color cosmetics products through renowned retailers, including perfumeries, department stores, e-retailers, direct-to-consumer websites, and duty-free shops under brands that include Alexander McQueen, Burberry, Calvin Klein, Gucci, and other reputed brands.
In February, COTY announced that Sally Hansen revealed an advanced virtual try-on tool, the first to market Perfect Corp.'s AgileHand Technology application, allowing consumers to easily experience hundreds of Sally Hansen nail color options in an expanded reality environment. Perfect Corp. is a well-known beauty and fashion tech solutions provider.
COTY's net revenue increased 15.4% year-over-year to $1.19 billion in the third quarter, ended March 31, 2022. Its adjusted operating income grew 11% from its year-ago value to $113.60 million, while its adjusted net income improved 419.2% year-over-year to $27.00 million. The company’s adjusted EPS improved 200% from its prior-year quarter to $0.03.
Analysts expect COTY's revenue to increase 7.9% year-over-year to $1.15 billion in the fourth quarter, ended June 30, 2022. The stock has declined 40.4% in price year-to-date.
COTY's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has a B grade for Growth, Value, and Quality. Within the A-rated Fashion & Luxury industry, it is ranked #29 of 68 stocks.
In total, we rate COTY on eight distinct levels. Beyond what we have stated above, we have also given COTY grades for Sentiment, Stability, and Momentum. Get all the COTY ratings here.
NICE shares were trading at $193.77 per share on Tuesday afternoon, down $2.02 (-1.03%). Year-to-date, NICE has declined -36.18%, versus a -14.14% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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