In its last session, the stock market witnessed a mixed performance as it struggled for direction after a better-than-expected inflation report. CPI for July stood at 8.5%, which was slightly lower than the 8.7% expected by analysts. Moreover, the July producer price index showed a decline from June.
However, inflation is still at an elevated level. So, the Federal Reserve might not change its hawkish stance anytime soon. According to Victoria Fernandez, chief market strategist at Crossmark Global Investments, the Fed might not turn dovish as the stickier parts of inflation like wages and rent are still high.
As value stocks have a history of outpacing their growth counterparts in times of high inflation and rising interest rates, fundamentally strong stocks Albertsons Companies, Inc.(ACI), AutoNation, Inc. (AN), Core Molding Technologies, Inc.(CMT), Genie Energy Ltd.(GNE), and TravelCenters of America Inc.(TA), trading at discounted valuations, might be solid investments this month.
Albertsons Companies, Inc. (ACI)
ACI operates food and drug stores in the United States. The company’s food and retail drug stores offer grocery, general merchandise, health and beauty care products, pharmacy, fuel, and other items.
In July, ACI announced its deployment of an online service for Electronic Benefits Transfer (EBT) recipients at Albertsons, Safeway, Jewel-Osco, Vons, and Pavilions stores across the country.
Susan Morris, Chief Operating Officer of ABT, said, “This program allows shoppers to use their EBT cards to make online purchases for home delivery or free store pickup, which is a critical part of our ongoing efforts to create a flexible and convenient shopping experience for all customers.”
In the same month, ACI declared a second-quarter dividend of $0.12 per share of Class A common stock, which was payable to stockholders on August 10. This reflects upon the company’s ability to pay back its shareholders.
In terms of its forward EV/Sales, ACI is trading at 0.35x, 81.2% lower than the industry average of 1.87x. Its forward Price/Sales multiple of 0.20 is 83.5% lower than the industry average of 1.23.
ACI’s net sales and other revenue increased 9.6% year-over-year to $23.31 billion in the first quarter ended June 18. Its adjusted EBITDA grew 8.6% from the year-ago value to $1.42 billion, while its adjusted net income improved 12.5% year-over-year to $582 million. The company’s adjusted earnings per common share increased 12.4% from its year-ago value to $1.00.
The consensus EPS estimate of $0.56 for the fiscal second quarter ending August 2022 indicates a 7.4% improvement year-over-year. The consensus revenue is expected to increase 6.7% from the prior-year period to $17.62 billion for the same period.
The stock has gained 8.6% over the past month and 6.9% over the last five days to close its last trading session at $28.91.
ACI’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.
ACI is rated a B in Growth, Value, Sentiment, and Quality. Within the A-rated Grocery/Big Box Retailers industry, it is ranked #2 out of 38 stocks.
To see additional POWR Ratings for Momentum and Stability for ACI, click here.
AutoNation, Inc. (AN)
AN is an automotive retailer operating through the three segments of Domestic; Import; and Premium Luxury. The company provides a range of automotive products and services and automotive finance and insurance products.
In July, it was reported that electric vehicle subscription company Autonomy had partnered with AN to help it scale up its electric vehicle (EV) subscriptions nationally. This partnership might benefit the company.
In terms of its forward non-GAAP PEG, ACI is trading at 0.20x, 82.3% lower than the industry average of 1.15x. Its forward Price/Sales multiple of 0.25 is 74.5% lower than the industry average of 0.98.
In the second quarter ended June 30, AN’s gross profit increased 2.7% year-over-year to $ 1.36 billion. Its operating income grew 5.3% year-over-year to $558.10 million. For the six months ended June 30, adjusted net income and adjusted net income per share came in at $738.40 million and $12.25, up 19.4% and 62% from the prior-year period.
Analysts expect AN’s revenue for the third quarter ending September 2022 to be $6.94 billion, indicating 8.9% year-over-year growth. The company’s EPS for the same quarter is expected to increase 23.3% from the prior-year quarter to $6.31.
AN has gained 17.8% over the past six months and 9.9% over the past month to close its last trading session at $123.84.
It is no surprise that AN has an overall A rating, which translates to Strong Buy in our POWR Rating system.
AN has an A grade for Value and a B for Growth and Quality. In the B-rated Auto Dealers & Rentals industry, it is ranked #2 out of 25 stocks.
Beyond what we’ve stated above, we have also given AN grades for Momentum, Stability, and Sentiment. Get all the AN ratings here.
Core Molding Technologies, Inc. (CMT)
CMT operates as a molder of thermoplastic and thermoset structural products. The company serves various markets such as medium and heavy-duty trucks, automobiles, power sport, construction, agriculture, building products, and other commercial markets, offering a range of manufacturing processes.
CMT’s forward Price/Sales multiple of 0.30 is 74.5% lower than the industry average of 1.19. In terms of its forward EV/Sales, the stock is currently trading at 0.40x, 71.9% lower than the industry average of 1.43x.
CMT’s total net sales grew 22.7% year-over-year to $ 98.74 million for the second quarter of 2022 ended June 30. Its adjusted EBITDA amounted to $7.94 billion, while its net income and earnings per share came in at $2.19 million and $0.26.
Analysts expect CMT’s EPS for the quarter ending September 2022 to increase 96.4% from the prior-year quarter to $1.08. The company’s revenue for the same period is expected to be $351.37 million.
CMT has gained 48.9% year-to-date and 51.9% over the last six months to close its last trading session at $12.67.
It is no surprise that CMT has an overall A rating, which translates to Strong Buy in our POWR Rating system.
CMT has an A grade for Growth and Value and a B for Sentiment and Quality. It is ranked #1 out of 42 stocks in the A-rated Industrial - Manufacturing industry.
Beyond what we’ve stated above, we have also given CMT grades for Momentum and Stability. Get all the CMT ratings here.
Genie Energy Ltd. (GNE)
GNE supplies electricity and natural gas to residential and small business customers internationally. It operates in three segments, Genie Retail Energy (GRE); GRE International; and Genie Renewables.
On August 8, GNE’s Board of Directors declared a dividend of $0.075 per share of Class A and Class B common stock, payable on or about August 26. This reflects upon the cash generation ability of the company.
GNE’s trailing-12-month EV/Sales multiple of 0.59 is 86.2% lower than the industry average of 4.24. In terms of its trailing-12-month EV/EBIT, the stock is trading at 1.73x, 92.8% lower than the industry average of 23.92x.
GNE’s gross profit increased 218.2% year-over-year to $67.47 million in the second quarter ended June 30. Its operating income grew 968.7% from the year-ago value to $48.48 million, while its net income attributable to common stockholders improved 578.3% year-over-year to $33.90 million. The company’s net earnings per common share increased 584.2% from its year-ago value to $1.30.
Over the past year, GNE’s stock has gained 65.4% to close its last trading session at $10.04. It has gained 80.3% year-to-date.
This promising prospect is reflected in GNE’s POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
GNE has an A grade for Value and a B for Momentum, Sentiment, and Quality. It is ranked #1 of 66 stocks in the Utilities - Domestic industry.
Click here to see the additional POWR Ratings for Growth and Stability.
TravelCenters of America Inc. (TA)
TA operates travel centers, truck service facilities, and restaurants in the United States and Canada. The company operates travel centers offering various products and services, quick-service restaurants, and travel stores providing general merchandise.
In June, Service Management Group (SMG) announced a new customer experience management program with TA. This partnership is expected to help TA improve guest satisfaction, leveraging SMG’s expertise.
TA’s forward Price/Sales multiple of 0.07 is 92.5% lower than the industry average of 1.19. In terms of its forward EV/Sales, the stock is currently trading at 0.23x, 80.6% lower than the industry average of 1.20x.
In the second quarter ended June 30, TA’s total revenues increased 67.9% year-over-year to $3.08 billion. Its income from operations grew 89.3% year-over-year to $94.23 million. Adjusted net income and adjusted net income per share came in at $64.40 million and $4.34, up 117% and 108.7% from their prior quarter values.
Analysts expect TA’s revenue for the quarter ending September 2022 to be $2.72 billion, indicating a 40% year-over-year growth. The company’s EPS for the same quarter is expected to increase 56% from the prior-year quarter to $2.37.
TA has gained 46.5% over the past year and 54.8% over the past month to close its last trading session at $53.99.
It is no surprise that TA has an overall A rating, which translates to Strong Buy in our POWR Rating system.
TA has an A grade for Growth and Value and a B for Sentiment and Quality. In the Specialty Retailers industry, it is ranked #1 out of 46 stocks.
Beyond what we’ve stated above, we have also given TA grades for Momentum and Stability. Get all the TA ratings here.
ACI shares were trading at $28.08 per share on Friday afternoon, down $0.83 (-2.87%). Year-to-date, ACI has declined -5.82%, versus a -9.62% 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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