Musk Wants to End Deal With Twitter. What Does It Mean for the Stock?

Elon Musk is officially seeking to walk out of the deal to buy out Twitter (TWTR) for $54.20 per share after TWTR failed to disclose the number of spam accounts on its platform. Since Musk announced his offer to buy TWTR, the stock has declined to reach much below his offer price. With Musk walking out of the deal, can TWTR recover? Read on to learn more.

After months of speculation, Tesla, Inc. (TSLA) CEO Elon Musk has backed out of the $44 billion deal to buy Twitter, Inc. (TWTR). Musk had promised to buy TWTR for $54.20 per share.

Musk had been threatening to pull out of the deal lately as the social media giant failed to disclose the number of spam accounts on its platform.

In the letter disclosed in an SEC filing, Skadden Arps attorney Mike Ringler said, “Twitter has not complied with its contractual obligations. Twitter has failed or refused to provide this information. Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”

On July 12, 2022, TWTR filed a lawsuit against Musk, as his decision to back out of the deal has led to its stock price and investor sentiment tumbling. In its lawsuit, TWTR argued that having signed a binding agreement, he could not abandon it.

In the lawsuit, TWTR argues that “Musk refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests. Musk apparently believes that he – unlike every other party subject to Delaware contract law – is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away.”

Months of speculation have affected TWTR’s share price. The stock has declined 16% in price year-to-date and 48.3% over the past year to close the last trading session at $36.29. It is currently trading 50.5% below its 52-week high of $73.34, which it hit on July 23, 2021.

Here’s what could influence TWTR’s performance in the upcoming months:

Robust Financials

TWTR’s revenue increased 15.9% year-over-year to $1.20 billion for the first quarter ended March 31, 2022. The company’s non-GAAP net income increased 435% year-over-year to $755.57 million. Also, its non-GAAP EPS came in at $0.90, representing an increase of 462.5% year-over-year. In addition, its adjusted EBITDA increased 301.2% year-over-year to $1.18 billion.

Mixed Analyst Estimates

Analysts expect TWTR’s EPS for fiscal 2023 to decline 28.4% year-over-year to $1.18. Its revenues for fiscal 2022 and 2023 are expected to increase 15.3% and 21.3% year-over-year to $5.85 billion and $7.10 billion, respectively.

Stretched Valuation

In terms of forward non-GAAP P/E, TWTR’s 21.94x is 36.1% higher than the 16.12x industry average. Likewise, its 4.79x forward EV/S is 154.2% higher than the 1.88x industry average. And the stock’s 5.52x forward P/B is 201.8% higher than the 1.83x industry average.

Lower-than-industry Profitability

TWTR’s 4.27% trailing-12-month net income margin is 10.7% lower than the 4.78% industry average. Likewise, its 1.77% trailing-12-month EBIT margin is 81.1% lower than the 9.39% industry average. Furthermore, the stock’s 0.37% trailing-12-month asset turnover ratio is 22.2% lower than the industry average of 0.47%.

POWR Ratings Reflect Uncertainty

TWTR has an overall rating of C, equating to a Neutral in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. TWTR has a C grade for Sentiment, consistent with mixed analyst estimates.

The stock is currently trading below its 50-day and 200-day moving averages of $39.67 and $43.79, in sync with its D grade for Momentum.

TWTR is ranked #27 out of 66 stocks in the F-rated Internet industry. Click here to access TWTR’s ratings for Growth, Value, Stability, and Quality.

Bottom Line

All the speculation about Elon Musk buying TWTR has affected its stock price. The stock is currently trading below its 50-day and 200-day moving averages, indicating a downtrend.

With the billionaire walking out of the deal due to TWTR’s failure to disclose the number of bots and spam accounts on its platform, its stock is expected to remain under pressure. So, it could be wise to wait for a better entry point in the stock.

How Does Twitter, Inc. (TWTR) Stack Up Against its Peers?

While TWTR has an overall POWR Rating of C, you might want to consider investing in the following Internet stocks with a B (Buy) rating: Yelp Inc. (YELP), trivago N.V. (TRVG), and Travelzoo (TZOO).

TWTR shares fell $0.14 (-0.37%) in after-hours trading Friday. Year-to-date, TWTR has declined -12.68%, versus a -18.31% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.

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https://www.entrepreneur.com/article/431549

Which of These 2 Streaming Giants Makes a Better Play?

The rising demand for captivating content on OTT platforms, integration of advanced technologies to improve video quality and device flexibility, and flexible subscription plans should benefit streaming giants Netflix (NFLX) and Walt Disney (DIS). But which of these stocks is a better buy now? Read more to find out….

Netflix, Inc. (NFLX) and The Walt Disney Company (DIS) are renowned companies operating in the streaming services industry. NFLX is a popular online streaming entertainment service provider, offering TV series, documentaries, and feature films across various genres and languages. It acquires, licenses, and produces content, including original programming.

On the other hand, DIS engages in film and episodic production and distribution activities and operates television broadcast networks, studios producing motion pictures, and D2C streaming services. It sells branded merchandise through retail, online, and wholesale businesses and develops and publishes books, comics, and magazines.

Rising demand for in-home entertainment helped over-the-top (OTT) streaming service providers benefit by expanding their customer bases, introducing innovative and captivating content, and offering flexible subscription plans since the onset of the pandemic.

Moreover, the integration of cloud-based solutions, blockchain technology, and AI/ML to improve video quality and customer experience should allow the streaming industry to grow. The global video streaming market is expected to grow at a 19.9% CAGR to reach $1.69 trillion by 2029.

While DIS lost 3.4% over the past month, NFLX declined 3.1%. But which of the stocks is a better buy now? Let’s find out.

Recent Financial Results

For the fiscal 2022 first quarter ended March 31, 2022, NFLX’s revenues increased 9.8% year-over-year to $7.87 billion. The company’s operating income came in at $1.97 billion for the quarter, indicating a marginal rise from the prior-year period.

While its net income decreased 6.4% year-over-year to $1.60 billion, its EPS fell 5.9% to $3.53. The company had cash and cash equivalents of $6.01 billion as of March 31, 2022.

For its fiscal 2022 second quarter ended April 2, 2022, DIS’ revenues increased 23.3% year-over-year to $19.25 billion. The company’s income from continuing operations came in at $1.10 billion, up 10.4% from the year-ago period.

Its net income came in at $470 million, representing a 47.8% rise from the prior-year period. Its EPS came in at $0.26, indicating a 46.9% year-over-year improvement. As of April 2, 2022, the company had $13.27 billion in cash and cash equivalents.

Past and Expected Financial Performance

Over the past three years, NFLX’s EPS, total assets, and levered free cash flow have increased at CAGRs of 57.9%, 18.5%, and 5%, respectively.

Analysts expect NFLX’s EPS to decline 3.6% in fiscal 2022, ending December 31, 2022, and rise 8.8% in fiscal 2023. The company’s revenue is expected to grow 9% year-over-year in fiscal 2022 and 8.8% in fiscal 2023. Its EPS is expected to grow at 11.7% per annum over the next five years.

Over the past three years, DIS’ EPS, total assets, and levered free cash flow have decreased at CAGRs of 45.1%, 1.9%, and 4.9%, respectively.

DIS’ EPS is expected to increase 92.1% year-over-year in fiscal 2022, ending September 30, 2022, and 38.4% in fiscal 2023. The company’s revenue is expected to grow 39.5% year-over-year in fiscal 2022 and 12% in fiscal 2023. Its EPS is expected to grow at a 40.9% rate per annum over the next five years.

Valuation

In terms of forward EV/EBITDA, DIS is currently trading at 15.29x, 14.5% higher than NFLX’s 13.36x. In terms of non-GAAP forward P/E, NFLX’s 16.34x compares with DIS’ 23.44x.

Profitability

DIS’ trailing-12-month revenue is 2.5 times that of NFLX’s. However, NFLX is more profitable, with a 41.6% gross profit margin versus DIS’ 33.8%.

Furthermore, NFLX’s ROE, ROA, and ROTC of 32.9%, 9.1%, and 11.9% compare with DIS’ 3.1%, 1.8%, and 2.3%, respectively.

POWR Ratings

While NFLX has an overall C grade, which translates to Neutral Buy in our proprietary POWR Ratings system, DIS has an overall D grade, equating to Sell. The POWR Ratings are calculated by considering 118 distinct factors, each weighted to an optimal degree.

NFLX has been graded a B for Quality, consistent with its higher-than-industry profitability ratios. NFLX’s 32.9% trailing-12-month ROE is 510.7% higher than the 5.4% industry average.

DIS’ D grade for Quality is in sync with its lower-than-industry profit margins. DIS has a 3.1% trailing-12-month ROE, which is 43% lower than the 5.4% industry average.

NFLX has a C grade for Value, in sync with its slightly higher-than-industry valuation ratios. NFLX’s 16.34x non-GAAP forward P/E is 0.4% higher than the 16.27x industry average. DIS’s D grade for Value is in sync with its overvaluations. DIS’ 23.44x non-GAAP forward P/E is 44.1% higher than the 16.27x industry average.

Of the 66 stocks in the F-rated Internet industry, NFLX is ranked #17.

DIS is ranked #13 of 19 stocks in the F-rated Entertainment – Media Producers industry.

Beyond what we have stated above, our POWR Ratings system has graded NFLX and DIS for Stability, Growth, Sentiment, and Momentum. Get all NFLX ratings here. Also, click here to see the additional POWR Ratings for DIS.

The Winner

The release of new content on DIS’ OTT streaming service platform Disney+ has been attracting massive viewership, but the impact of high inflation and recessionary concerns on DIS’ Parks, Experiences, and Products segment has been affecting the company’s financials.

On the other hand, the unexpected decline in subscriptions during the first quarter is still weighing heavily on NFLX.

Considering the weak growth prospects of NFLX and DIS, their current valuations do not look reasonable. Therefore, none of these two stocks appear to be good investments. However, given NFLX’s relatively lower valuation and higher profitability, it could be wise to wait for a better entry point in the stock.

Our research shows that the odds of success increase if one invests in stocks with an Overall POWR Rating of Buy or Strong Buy. Click here to access the top-rated stocks in the Internet industry, and here for those in the Entertainment – Media Producers industry.

NFLX shares were trading at $174.54 per share on Tuesday afternoon, down $2.80 (-1.58%). Year-to-date, NFLX has declined -71.03%, versus a -19.09% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.

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Is It Worth Adding These 2 Semiconductor Stocks to Your Portfolio This Summer?

Despite the pressure from high inflation and supply chain disruptions, growing demand and surging investments to ramp up production should help the semiconductor industry perform well. Therefore, fundamentally sound chip stocks NVIDIA (NVDA) and Lattice Semiconductor (LSCC) could be good additions to your portfolio at their current price levels. Let’s discuss….

High demand, policy support, and corporate investments to ramp up production helped the semiconductor industry register an 18% rise in sales globally in May 2022. In the Americas, sales were up 36.9% year-over-year.

Though the Russia-Ukraine conflict and tensions related to Taiwan between China and the United States continue to affect the supply chain, the growing demand and development of advanced chips with lower latency and power consumption should allow the industry to stay afloat.

Investors’ interest in this space is evident from the SPDR S&P Semiconductor ETF’s (XSD) 7.4% gains over the past week versus the SPDR S&P 500 Trust ETF’s (SPY) 2% returns. The global semiconductor market is expected to grow at a 9.2% CAGR to $893.10 billion by 2029.

Wall Street analysts expect quality chip stocks NVIDIA Corporation (NVDA) and Lattice Semiconductor Corporation (LSCC) to surge significantly in the upcoming months. Therefore, these stocks could be solid additions to your watchlist.

NVIDIA Corporation (NVDA)

NVDA designs and manufactures computer graphics processors, chipsets, and related multimedia software in gaming, professional visualization, data center, and automotive markets.

It serves OEMs, ODMs, system builders, add-in board manufacturers, retailers/distributors, internet and cloud service providers, mapping companies, and other ecosystem participants.

On June 29, 2022, NVDA and Siemens AG (SIEGY), a German industrial automation and manufacturing company, expanded their partnership to enable the industrial metaverse and increase the use of AI-driven digital twin technology to bring industrial automation to a new level.

Adding NVDA’s NVIDIA Omniverse to the open Siemens Xcelerator partner ecosystem will accelerate the use of digital twins that can deliver enhanced productivity and improvements across the production and product life cycles. This will help the companies to introduce industrial metaverse and lead in the markets.

For the fiscal 2023 first quarter ended May 1, 2022, NVDA’s revenue increased 46.4% year-over-year to $8.29 billion. The company’s non-GAAP gross profit came in at $5.56 billion, representing a 48.5% rise from the prior-year period. Its non-GAAP income from operations came in at $3.96 billion for the quarter, increasing 54.7% from the prior-year period.

NVDA’s non-GAAP net income came in at $3.44 billion, up 48.9% from the year-ago period. Its non-GAAP EPS came in at $1.36, indicating a 49.5% year-over-year improvement. As of May 1, 2022, the company had $3.89 billion in cash and cash equivalents.

The consensus EPS estimate of $5.43 for fiscal 2023 ending January 31, 2023, indicates a 22.3% year-over-year improvement. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. NVDA’s revenues are expected to be $33.60 billion for the same fiscal year, up 24.9% from the prior-year period. Its EPS is expected to grow at 22.8% per annum over the next five years.

The company’s levered free cash flow has grown 107.2% over the past year, 808.9% above the industry average of 11.8%. Its EBITDA growth of 79.7% over the past year is 270.8% higher than the 21.5% industry average.

NVDA’s 42% trailing-12-month ROE is 486.3% higher than the 7.2% industry average. It has a 20.9% trailing-12-month ROA, 599.5% higher than the 3% industry average. The stock has gained 9.1% over the past week to close the last trading session at $158.38. The average analyst price target of $261.67 indicates a 71.8% upside potential.

NVDA’s POWR Ratings reflect this promising outlook. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

It has a B grade for Quality. Click here to see the additional ratings for NVDA’s Value, Growth, Momentum, Sentiment, and Stability.

NVDA is ranked #70 of 95 stocks in the B-rated Semiconductor & Wireless Chip industry.

Lattice Semiconductor Corporation (LSCC)

LSCC develops and sells semiconductor products that offer field-programmable gate arrays that consist of Certus-NX and ECP, MachXO, iCE40, and CrossLink product families. It licenses its technology portfolio through standard IP and IP core licensing, patent monetization, and IP services.

It serves OEMs in the communications and computing, consumer, industrial and automotive end markets and sells its products directly to end customers and indirectly through a network of independent manufacturers’ representatives and independent distributors.

On July 6, 2022, LSCC collaborated with Alphabet Inc.’s (GOOGL) and Lenovo Group Limited (LNVGY) to equip their latest Lenovo IdeaPad Flex 5i Chromebook to leverage the companies’ combined hardware and software expertise and enable advanced user presence detection and privacy features.

The laptop and these new capabilities are powered by LSCC’s Lattice low-power FPGAs built on the award-winning Lattice Nexus platform. This should help LSCC to expand its footprint in the Client Computing space.

For its fiscal 2022 first quarter ended April 2, 2022, LSCC’s revenue increased 30.1% year-over-year to $150.52 million. The company’s non-GAAP gross profit came in at $101.89 million, indicating a 42.8% rise from the year-ago period. Its non-GAAP income from operations came in at $54.65 million for the quarter, representing a 68.6% rise from the prior-year period.

While its non-GAAP net income increased 71.7% year-over-year to $52.70 million, its non-GAAP EPS grew 68.2% to $0.37. As of April 2, 2022, the company had $122.99 million in cash and cash equivalents.

The consensus EPS estimate of $1.59 for fiscal 2022 ending December 31, 2022, shows a 50% rise from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters. Analysts expect LSCC’s revenue to be $634.26 million for the same fiscal year, indicating a 23.1% year-over-year improvement. Its EPS is expected to grow at a 15% rate per annum over the next five years.

The company’s levered free cash flow has grown 70.8% over the past year, 500.6% above the industry average of 11.8%. Its EBITDA growth of 62.9% over the past year is 192.3% higher than the 21.5% industry average. The stock has lost 4.8% over the past month. The average analyst price target of $71.14 indicates a 49% upside potential.

LSCC’s 27.8% trailing-12-month ROE is 289.1% higher than the 7.2% industry average. It has a 15.7% trailing-12-month ROA, 425% higher than the 3% industry average. The stock has gained 8.2% over the past week to close the last trading session at $49.01.

LSCC’s POWR Ratings reflect its solid prospects. It has a B grade for Growth and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see LSCC’s Momentum, Value, Stability, and Sentiment ratings here.

The stock is ranked #43 in the same industry.

NVDA shares were trading at $152.91 per share on Monday afternoon, down $5.47 (-3.45%). Year-to-date, NVDA has declined -47.99%, versus a -18.21% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

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Stock Market Bottom? Think Again…

Determining bear market bottom is much easier in hindsight than doing it in real time. That’s because the stock market (SPY) offers up many impressive bounces that give the illusion of the worst being over…just before you drop to even lower lows. So price action is a tricky way to determine bottom. Which brings us back to the fundamental attributes like what is happening with the inflation and the economy to determine our path forward. That will be at the heart of our discussion in this week’s commentary.….

Please enjoy this updated version of my weekly commentary.

Determining bear market bottom is much easier in hindsight than doing it in real time. That’s because there are many impressive bounces that give the illusion of the worst being over…just before you drop to even lower lows.

So price action is a tricky way to determine bottom. Which brings us back to the fundamental attributes like what is happening with the inflation and the economy to determine our path forward. That will be at the heart of our discussion in this week’s commentary.

Market Commentary

The truth is that its very difficult to gauge bottom from price action alone. You only have to look at the bottoming process from past bear markets to show how difficult it is to call it over. And why investors are so frequently pulled into “sucker’s rallies” before true bottom is found.

This brings us back around to an exploration of the future outlook for the economy and what that means for share price valuations.

Because falling economy > falling earnings > falling PE levels > MUCH LOWR stock prices.

At this moment we very much look like we have just entered a recession. Technically speaking that happens when you have 2 consecutive quarters of negative GDP.

Well Q1 was a surprisingly bad -1.6% that many investors sloughed off because early Q2 projections looked quite healthy.

But far too many of the subsequent economic reports have been well under expectations and now the GDP Now estimate from the Atlanta Fed has fallen to -1.2% for the current quarter. So barring some miracle we are already smack dab in the middle of a recession.

That is the picture of here and now. The key is what happens moving forward. That is why we next have to think about the Fed’s uphill battle fighting inflation.

Plain and simple the Fed got it wrong on inflation. For a long time they talked about it being transitory and did nothing. Now they are coming to the rescue WAY TOO LATE and thus raising rates at the fastest pace in modern history.

The full awareness of this mistake is what got investors fearful that the Fed would gladly trade in a recession for taming inflation. Thus, the correction that started in January, and was confirmed as a bear in mid June, was actually a good reading of the ominous tea leaves.

All signs were pointing to a worsening recession and harsher moves by the Fed until we got a welcome sign of relief on the inflation front.

I am talking about the very timely decline in commodity prices which is quite evident in this year to date commodity price chart below.

This easing of inflationary pressures (including lower prices at the gas pump) is the #1 reason why it’s been 3 weeks since exploring the bear market lows. In fact, today represents the second straight time the S&P 500 (SPY) has closed back above bear market territory (3,855), having some pondering if this bear market is indeed over.

The equation to explain that end of bear market logic goes as follows:

Easing of inflation > Less Aggressive Fed > Less Damage to Economy > Soft Landing > Shallow Bear Market > Bull Market returns second half of the year.

Sounds good right?

This is plausible and no doubt everyone’s preferred outcome as we all enjoy bull markets over bears. Unfortunately, the odds of a worsening of economic conditions makes more sense with lower lows on the way.

Consider this. Just like an economic expansion and bull market is a long term process that takes time to unfold. The same is true for a recession and bear market.

We are only 6 months into that process which averages 13 months to grind its way to bottom. At this stage there is already too many things in motion that will cause additional negative effects. Namely job losses.

Reity, you must be kidding. The Government Employment Report came out today and it showed many more jobs added than expected. You must be smoking something funny to see a problem here.

As shared with you guys many times before, employment is a lagging indicator. Kind of like a smoke alarm that goes off AFTER the house has already burned down.

However, there are cracks showing up in the employment foundation if you look at other key reports. For example, weekly Jobless Claims have been rolling higher nearly every single week for 3 months. Any subsequent report closer to 300,000 claims per week will be a real wake up call to other investors.

Next is the monthly Challenger Job Cuts reports which shows movement in the # of announced corporate layoffs. The June report announced Thursday was 58.8% higher than May with a note that says:

“Employers are beginning to respond to financial pressures and slowing demand by cutting costs. While the labor market is still tight, that tightness may begin to ease in the next few months”

Meaning the wheels are in motion for employment to be the next domino to fall. And that equation goes like this:

Job loss > lower income > lower spending > deepening of recession > lower corporate earnings > lower share prices

To be clear, I am open to the possibility that the moderating inflation picture could win the day which would lead to a white flag for this bear market.

However, given my background in economics, and 40+ years of watching its interrelationship with the stock market (SPY), the much smarter money rides on the recession grinding lower…and the bear market mauling its way lower as well.

What To Do Next?

Right now there are 6 positions in my hand picked portfolio that will not only protect you from a forthcoming bear market, but also lead to ample gains as stocks head lower.

This strategy perfectly fits the mission of my Reitmeister Total Return service. That being to provide positive returns…even in the face of a roaring bear market.

Yes, it’s easy to make money when the bull market is in full swing. Anyone can do that.

Unfortunately most investors do not know how to generate gains as the market heads lower.

So let me show you the way with 6 trades perfectly suited for today’s bear market conditions.

And then down the road we will take our profits on these positions and start bottom fishing for the best stocks to rally as the bull market makes it rightful return.

Come discover what my 40 years of investing experience can do you for you.

Plus get immediate access to my full portfolio of 6 timely trades that are primed to excel in this difficult market environment.

Click Here to Learn More >

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, StockNews.com
Editor, Reitmeister Total Return & POWR Value

SPY shares closed at $388.67 on Friday, down $-0.32 (-0.08%). Year-to-date, SPY has declined -17.56%, versus a % rise in the benchmark S&P 500 index during the same period.

About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

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Analysts Just Issued Upgrades on These 4 Buy-Rated Stocks

The blistering inflation and rising recession odds have led to low consumer sentiment. And the market volatility is expected to remain in the near term. So, we think fundamentally solid stocks Lamar Advertising (LAMR), EPR Properties (EPR), Merck & Co. (MRK), and Tenaris (TS), which analysts recently upgraded, could be ideal buys now. Moreover, these stocks are rated Buy in our proprietary rating system. Read on….

Consumer sentiment has been on a downtrend amid the rising inflation and the possibility of a recession looming over the economy. Moreover, according to the Labor Department, applications for jobless aid rose to 235,000 for the week ended July 2, 2022, the most since mid-January, adding to the woes.

Given such volatile circumstances, as evident from the CBOE Volatility Index’s 53.7% year-to-date gains, investors should be prepared for the volatile ride and trade cautiously.

We think adding recently upgraded stocks Lamar Advertising Company (LAMR), EPR Properties (EPR), Merck & Co., Inc. (MRK), and Tenaris S.A. (TS) to your portfolio could be wise, given their fundamental strength. These stocks are rated Buy in our POWR Ratings system.

Lamar Advertising Company (LAMR)

LAMR is one of North America’s largest outdoor advertising companies, with over 352,000 displays across the United States and Canada. Also, the company offers the largest network of digital billboards in the United States, with over 3,900 displays. On July 7, 2022, Citigroup upgraded LAMR from Neutral to Buy.

On May 4, 2022, LAMR announced its complete acquisition of Burkhart Advertising Inc. in Indiana, a leading out-of-home advertising provider. With this acquisition, LAMR aims to expand the traditional advertising business with a modern touch.

LAMR’s net revenues increased 21.7% year-over-year to $451.39 million in the first quarter that ended March 31, 2022. Its net income came in at $92.06 million, up 140.8% year-over-year, while its EPS came in at $0.91, up 139.5% year-over-year. Also, its adjusted EBITDA came in at $191.25 million, up 25.5% year-over-year.

For fiscal 2022, LAMR’s revenue is expected to grow 10.7% year-over-year to $1.98 billion. Its EPS is estimated to increase 27.9% year-over-year to $4.90 in 2022. It surpassed the EPS estimates in three of the four trailing quarters. Over the past month, the stock has lost 6.3% to close the last trading session at $91.72.

LAMR has an overall B rating, which equates to a Buy in our proprietary POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

In addition, it has a B grade for Quality. LAMR is ranked #3 out of 51 stocks in the REITs – Diversified industry. Click here to see the additional POWR Ratings for LAMR (Growth, Value, Momentum, Stability, and Sentiment).

EPR Properties (EPR)

EPR is a leading experiential net lease real estate investment trust (REIT) specializing in select enduring experiential properties in the real estate industry. The company has nearly $6.7 billion in total investments across 44 states. On July 7, 2022, Janney Montgomery Scott upgraded EPR from Neutral to Buy.

On June 2, 2022, EPR announced that it would acquire the Village Vacances Valcartier resort and hotel in Quebec City, Quebec, and the Calypso Waterpark in Ottawa. Gregory Silvers, EPR’s Chairman and CEO said, “Acquisitions demonstrate the value of our years of experience and long-standing relationships in experiential real estate.”

EPR’s total revenue increased 40.9% year-over-year to $157.47 million for the first quarter that ended March 31, 2022. Its net income came in at $36.16 million, compared to a loss of $2.65 million in the year-ago period. Moreover, its EPS came in at $0.48, compared to a loss per share of $0.04.

Analysts expect EPR’s revenue to be $585.40 million in 2022, representing a 10.1% year-over-year rise. In addition, the company’s EPS is expected to increase 115% year-over-year to $2.15 in 2022. Also, it surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has gained 2.7% year-to-date to close the last trading session at $48.79.

EPR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.

In addition, it has a B grade for Growth and Quality. EPR is ranked #6 out of 33 stocks in the REITs – Retail industry. Click here to see the additional POWR Ratings for EPR (Value, Momentum, Stability, and Sentiment).

Merck & Co., Inc. (MRK)

MRK operates as a healthcare company worldwide. It operates through two segments, Pharmaceutical and Animal Health. On July 7, 2022, Daiwa Capital upgraded MRK from Hold to Outperform.

MRK continues to make crucial contributions to healthcare. On June 29, 2022, MRK announced the launch of the Merck Digital Sciences Studio to generate innovative technologies for drug discovery and development.

Moreover, on June 24, 2022, the European Commission approved KEYTRUDA, MRK’s anti-PD-1 therapy, for treating adults and adolescents with stage IIB or IIC melanoma, which is expected to add significantly to the company’s revenue stream upon commercialization.

MRK’s sales increased 49.6% year-over-year to $15.90 billion for its 2022 first quarter. The company’s net income came in at $4.31 billion, up 35.6% year-over-year, while its EPS came in at $1.70, up 36% year-over-year.

For 2022, analysts expect MRK’s revenue to increase 18.9% year-over-year to $57.92 billion. Its EPS is expected to increase 22.1% year-over-year to $7.35 in 2022. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has gained 21.4% year-to-date to close the last trading session at $93.01.

MRK has an overall A rating, which indicates a Strong Buy in our proprietary rating system.

MRK has an A grade for Growth and a B grade for Value, Stability, Sentiment, and Quality. Within the Medical – Pharmaceuticals industry, it is ranked first among 170 stocks. Click here to see the additional POWR Rating for Momentum for MRK.

Tenaris S.A. (TS)

Based in Luxembourg, TS and its subsidiaries produce and sell seamless and welded steel tubular products; and provide related services for the oil and gas industry and other industrial applications. On July 7, 2022, Jefferies upgraded TS from Hold to Buy.

On July 7, 2022, TS announced that it would acquire U.S. seamless steel pipe producer Benteler Steel & Tube Manufacturing Corp for $460 million. The company aims to expand its manufacturing business with this agreement.

TS’ net sales came in at $2.37 billion for the first quarter that ended March 31, 2022, up 100.3% year-over-year. Its income for the period came in at $503.43 million, up 399.6% year-over-year. In addition, its gross profit came in at $845.10 million, up 182.8% year-over-year.

TS’ revenue is expected to increase 63.6% year-over-year to $10.67 billion in 2022. Its EPS is estimated to increase 69.9% year-over-year to $3.16 in 2022. It surpassed EPS estimates in each of the trailing four quarters. The stock has gained 19.4% year-to-date to close the last trading session at $24.90.

TS has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Sentiment and a B for Momentum and Quality. Click here to check additional TS ratings (Growth, Value, and Stability). TS is ranked #13 out of 32 stocks in the A-rated Steel industry.

LAMR shares were trading at $91.44 per share on Friday morning, down $0.28 (-0.31%). Year-to-date, LAMR has declined -22.83%, versus a -17.84% 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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3 Top-Quality Air & Defense Stocks to Buy When Military Spending Picks Up

Amid the rising geopolitical tensions with the ongoing Russia-Ukraine war and emerging threats from China, increasing military spending globally should boost the air and defense industry’s growth. And we think top-quality air & defense stocks Moog (MOG.A), Brady Corporation (BRC), and Sturm, Ruger & Company (RGR) are well-positioned to capitalize on the industry’s tailwinds. Read on….

The escalating geopolitical tensions, primarily due to the Russia-Ukraine war, induced momentum in air & defense stocks since the beginning of 2022. Moreover, the emerging threats from China as it eyes Taiwan should boost the performance of defense stocks.

Last month, the U.S. House of Representatives Armed Services Committee backed a proposal to increase defense spending by $37 billion, on top of the $773 billion proposed by the Biden Administration. Moreover, the United States is the world’s largest arms exporter and is expected to benefit from the increased military budgets globally.

Given Russia’s full-scale invasion of Ukraine, Germany pledged to invest €100 billion ($102.14 billion) in defense spending. More European countries, including Belgium, Romania, Poland, Italy, Estonia, Latvia, Norway, Sweden, and Finland, increased their defense budgets for the fiscal year 2022.

Recently, Japan announced increasing its defense budget over the next five years. Britain’s Prime Minister, Boris Johnson, indicated boosting defense spending to 2.5% of its GDP by the end of this decade. The significant increase in military spending worldwide should benefit air & defense companies.

Given this backdrop, we think it could be wise to invest in fundamentally sound air & defense stocks Moog Inc. (MOG.A), Brady Corporation (BRC), and Sturm, Ruger & Company, Inc. (RGR).

Moog Inc. (MOG.A)

MOG.A designs, manufactures and integrates precision motion and fluid controls and control systems for original equipment manufacturers and end-users in the aerospace, defense, and industrial markets worldwide. The company operates through three segments: Aircraft Controls; Space and Defense Controls; and Industrial Systems.

On February 23, MOG.A completed the acquisition of Dublin, Ireland-based TEAM Accessories Limited. TEAM is an aerospace and industrial engineering business specializing in Maintenance, Repair, and Overhaul (MRO) with testing and repair services for airframe components and safety equipment.

TEAM’s core business is focused on high-value jet engine accessories used by commercial airlines and cargo carriers. This acquisition is expected to support Moog’s current Commercial Aftermarket service offerings and expand its global reach.

In the fiscal second quarter ended April 2, 2022, MOG.A’s net sales increased 4.7% year-over-year to $770.79 million, and its gross profit grew 6.6% year-over-year to $213.01 million. Its adjusted EBIT rose 12.7% year-over-year to $63.45 million. The company’s adjusted net earnings and adjusted net earnings per share came in at $47.94 million and $1.49, up 11.9% and 12%, respectively, from the prior-year period.

MOG.A’s trailing-12-months levered FCF margin of 6.16% is 89.2% higher than the industry average of 3.26%. Its trailing-12-months Capex/Sales of 4.24% is 71.2% higher than the industry average of 2.89%.

The $768.68 million consensus revenue estimate for the fiscal 2022 third quarter ended June 2022 represents an 8.7% improvement from the same period in 2021. Analysts expect MOG.A’s EPS for the to-be-reported quarter to increase 28.6% year-over-year to $1.44

The stock has declined 3.4% year-to-date to close the last trading session at $78.26.

MOG.A’s POWR Ratings reflect this promising outlook. It has an overall A grade, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

MOG.A has a grade of B for Quality, Stability, and Value. Within the Air/Defense Services industry, it is ranked #1 of 77 stocks. To see additional POWR Ratings (Growth, Momentum, and Sentiment) for MOG.A, click here.

Brady Corporation (BRC)

BRC manufactures and supplies identification solutions (IDS) and workplace safety (WPS) products in the United States and internationally. The company operates through two segments: Identification Solutions; and Workplace Safety. The company serves various industries, including aerospace, governments, industrial and electronic manufacturing, healthcare, chemical, telecommunications, and others.

On May 24, BRC’s Board of Directors authorized an additional $100 million of Class A Common Stock for repurchase under the company’s share buyback program, based on current share prices equating to nearly 2.2 million shares (approximately 4.5% of total outstanding shares). It might boost the company’s shareholder returns.

In March, BRC secured a license to Honeywell Global Shutter Barcode Technology. Honeywell’s patented global shutter technology has significant advantages, including improved motion tolerance, faster barcode reading, and versatility.

“We are thrilled to have been able to secure a license to Honeywell’s global shutter patent portfolio. Because of the global shutter technology, Brady’s industrial customers will be able to scan barcodes more efficiently and operate Brady’s products in a wider range of environments and situations,” said Russell Shaller, Present-Identification Solutions of Brady.

BRC’s net sales increased 14.6% year-over-year to $338.55 million in the fiscal 2022 third quarter ended April 30, 2022. Its operating income rose 13.2% from the year-ago value to $52.89 million. In addition, the company’s net income and net income per common share came in at $40.05 million and $0.78, registering increases of 7.4% and 9.9%, respectively, year-over-year.

BRC’s trailing-12-months gross profit margin of 47.97% is 62.6% higher than the industry average of 29.51%. Its trailing-12-month net income margin of 10.66% is 61.6% higher than the industry average of 6.60%.

The consensus revenue estimate of $337.45 million for fiscal 2022 fourth quarter ending July 2022 represents an increase of 10.2% from the prior-year period. The $0.83 consensus EPS estimate for the ongoing quarter indicates a 17.9% year-over-year rise. Furthermore, it has surpassed the consensus revenue estimates in each of the trailing four quarters, which is impressive.

BRC’s shares have gained 2.4% over the past three months and closed the last trading session at $46.34.

BRC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of B, translating to a Buy in our proprietary rating system.

BRC has a grade of A for Quality and B for Stability. Within the same industry, it is ranked #5 of 77 stocks. To see additional POWR Ratings (Growth, Value, Sentiment, and Momentum) for BRC, click here.

Sturm, Ruger & Company, Inc. (RGR)

RGR manufactures and sells firearms under the Ruger name and trademark in the United States. The company operates through two segments: Firearms; and Castings. The company sells its firearm products through independent wholesale distributors primarily to the commercial sporting market and castings and metal injection molding (MIM) parts directly or through manufacturers’ representatives.

In the fiscal 2022 first quarter ended April 2, 2022, RGR’s net other income grew 82.5% year-over-year to $792,000. Its cash provided by operating activities amounted to $18.76 million, while cash provided by investing activities came in at $19.10 million.

As of April 2, 2022, the company’s cash and current assets came in at $41.59 million and $336.25 million, compared to $21.04 million and $328.73 million, respectively, as of December 31, 2021.

RGR’s trailing-12-months EBITDA margin of 26.62% is 198.4% higher than the industry average of 8.92%. Its trailing-12-month net income margin of 20.75% is 218.1% higher than the industry average of 6.52%. Furthermore, its trailing-12-months ROTC of 35.35% compared with the industry average of 7.10%.

The stock has plunged 4.5% over the past month to close the last trading session at $63.51.

RGR’s POWR Ratings reflect a strong outlook. The stock has an overall rating of B, which translates to a Buy in our POWR Ratings system.

RGR has a grade of A for Quality and B for Value. It is ranked #9 of 77 stocks in the same industry. Click here to see RGR’s POWR Ratings for Sentiment, Growth, Stability, and Momentum.

MOG.A shares were trading at $80.02 per share on Thursday morning, up $1.76 (+2.25%). Year-to-date, MOG.A has declined -0.49%, versus a -17.81% rise in the benchmark S&P 500 index during the same period.

About the Author: Mangeet Kaur Bouns

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.

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Carvana Stock Just Had a 26% Gain in One Day – Time to Buy?

Online used car retailer Carvana (CVNA) reported disappointing first-quarter 2022 results, and its near-term prospects look bleak due to logistical disruptions, high used car prices, significant hikes in interest rates, and surging fuel prices. However, considering the stock’s impressive 26% gain on Tuesday, is CVNA a buy now? Read on to find out….

With a 4.67 billion market cap, Carvana Co. (CVNA) operates an e-commerce platform for buying and selling used cars in the United States. The company’s platform enables customers to research and identify a vehicle, inspect it using its 360-degree vehicle imaging technology, obtain financing and warranty coverage, purchase the vehicle, and schedule delivery or pick-up from their electronic devices.

Investors have been bearish about CVNA due to its disappointing financials and decelerating growth. The company has recently faced several headwinds, including reconditioning and logistics network disruptions, high used vehicle prices, rapid hikes in interest rates, surging fuel prices, and other macroeconomic uncertainties.

Analysts at Needham & Company LLC reduced their price target on the stock from $80.00 to $31.00.

However, surprisingly, CVNA witnessed head-turning gains on July 5. The stock gained 26.1% in price, closing the session at $27.58.

The stock has declined 88.7% year-to-date and 91.7% over the past year to close the last trading session at $26.30. It is currently trading 93% below its 52-week high of $376.83, which it hit on August 10, 2021.

Here’s what could shape CVNA’s performance in the near term:

Poor Financials

For its fiscal first quarter ended March 31, 2022, CVNA’s gross profit declined 11.8% year-over-year to $298 million. Its selling, general and administrative expenses amounted to $727 million, up 83.1% year-over-year. Also, the company’s net loss before income taxes widened by 517.1% from the year-ago value to $506 million.

CVNA’s adjusted EBITDA loss stood at $364 million, compared to a $37 million loss reported in the prior-year period. In addition, the company’s net loss and net loss per share of Class A common stock came in at $260 million and $2.89, respectively, worsening by 622.2% and 528.3% year-over-year.

Weak Growth Prospects

Analysts expect loss per share to widen 773.1% from the prior-year period to $1.75 in its fiscal 2022 second quarter (ended June 2022). Also, the $6.97 consensus loss per share estimate for the current year (ending December 2022) reflects a widening of 327.6% year-over-year.

Furthermore, Street expects CVNA’s EPS to decline 210.5% per annum over the next five years. The company has missed the consensus EPS estimates in three of the four trailing quarters, which is disappointing.

Low Profitability

In terms of trailing-12-months gross profit margin, CVNA’s 13.50% is 63% lower than the 36.51% industry average. Likewise, its trailing-12-months EBIT margin is negative 3.17%, and its trailing-12-months net income margin is negative 2.55%. Furthermore, the company’s trailing-12-months ROCE and ROTA are negative 161.35% and 4.73%, respectively.

POWR Ratings Reflect Bleak Prospects

CVNA’s overall rating of F translates to a Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

CVNA has an F grade for Stability and Quality. The stock’s relatively high beta of 2.34 justifies the Stability grade. In addition, CVNA’s F grade of Quality is consistent with its lower-than-industry profit margins.

CVNA is ranked #64 out of 65 stocks in the F-rated Internet industry.

Beyond what I have stated above, we have also given CVNA grades for Value, Sentiment, Growth, and Momentum. Get all the CVNA ratings here.

Bottom Line

CVNA reported disappointing fiscal 2022 first-quarter results. Moreover, bearish investors’ sentiments are evident from the stock’s substantial decline this year.

Furthermore, the stock is currently trading below its 50-day and 200-day moving averages of $35.20 and $164.11, respectively, indicating a downtrend. Also, the stock’s recent surprise gains were seemingly not backed by some positive news. And, given the challenging macro environment, we think it could be wise to avoid CVNA now.

How Does Carvana Co. (CVNA) Stack Up Against its Peers?

CVNA has an overall POWR Rating of F. One could also check out these other stocks within the Internet industry: Yelp Inc. (YELP) with a rating of A (Strong Buy) and trivago N.V. (TRVG), and Travelzoo (TZOO) with a B (Buy) rating.

CVNA shares were trading at $25.50 per share on Thursday morning, down $0.80 (-3.04%). Year-to-date, CVNA has declined -89.00%, versus a -17.88% rise in the benchmark S&P 500 index during the same period.

About the Author: Mangeet Kaur Bouns

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InfuSystem Holdings is Our Featured Stock of the Week…

Market conditions are changing. Concerns about recession are now more paramount than inflation. A winner of this changing dynamic is healthcare and biotech stocks. In today’s article, I want to talk about InfuSystem Holdings (INFU) which has these exact characteristics. .

2022 has been a year for the bears with the S&P 500 down more than 20% YTD. However, there is one interesting change under the surface.

After more than a year of rates rising, we are starting to finally see some weakness in longer-term rates as the market’s expectations for inflation ease, while the risk of recession is rising. In fact, some analysts believe the Fed may be forced to start cutting rates as soon as Q1 of 2023.

The dynamic of rising recession risk and moderating inflation means that investors should avoid cyclical stocks. Instead, this is the environment when quality growth stocks outperform. Among this group, healthcare and pharmaceutical stocks look particularly attractive as these companies’ earnings and operations are well-insulated from economic or monetary shocks.

In this sector, investors should look at companies with attractive valuations and improvements in operations that investors may have overlooked during the first half of the year. In today’s article, I want to talk about InfuSystem Holdings (INFU) which has these exact characteristics.

Company Background

INFU is a provider of infusion pumps, and services to hospitals, doctors, and healthcare providers. Some of its services include Integrated Therapy Services and Durable Medical Services.

Recently, the company signed a major contract with GE Healthcare for infusion pumps, becoming its most favored vendor. The deal is expected to contribute between $10 million and $12 million in 2023. Following the deal’s signing, analysts increased 2023 EPS forecast to $0.38 from $0.29 previously.

Value

INFU is a turnaround play, so the normal method of looking at valuations doesn’t apply. From its high last year, the stock price declined by more than 50% before modestly bouncing.

The company also has a $20 million buyback program with about $15 million. This is pretty meaningful given the company’s total market cap of $183 million.

However, the biggest determinant will be whether earnings will bounce back and exceed 2020 level. Currently, analysts are forecasting $0.44 in EPS for the next 12 months, giving it a forward P/E of 21.7.

Catalysts

As mentioned in the intro, one catalyst for INFU is the change in market conditions which should lead to more inflows for the healthcare sector.

For INFU, the GE Healthcare deal is an obvious needle-mover, and it should have an opportunity to add product sales beyond just infusion pumps. Another potential tailwind for the company is increased earnings from its pain management division.

One reason for its poor performance in 2021 was the company spent heavily to bolster its sales team. In the coming quarter, we will find out whether this was a good investment. However, management seems confident as they see Pain & Wound Care contributing $20 million in revenue in 2023.

POWR Ratings

The POWR Ratings are also bullish on INFU as it is rated a B which translates to a Buy. B-rated stocks have an average annual performance of 19.7% which compares favorably to the S&P 500’s annual performance of 7.3%.

What To Do Next?

If you’d like to see more top stocks under $10, then you should check out our free special report: 3 Stocks to DOUBLE This Year

What gives these stocks the right stuff to become big winners?

First, because they are all low priced companies with explosive growth potential, that excel in key areas of growth, sentiment and momentum.

But even more important is that they are all top Buy rated stocks according to our coveted POWR Ratings system, Yes, that same system where top-rated stocks have averaged a +31.10% annual return.

Click below now to see these 3 exciting stocks which could double (or more!) in the year ahead:

3 Stocks to DOUBLE This Year

INFU shares were unchanged in after-hours trading Friday. Year-to-date, INFU has declined -43.22%, versus a -19.14% rise in the benchmark S&P 500 index during the same period.

About the Author: Jaimini Desai

Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Jaimini’s background, along with links to his most recent articles.

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Wall Street Likes These 3 Entertainment Stocks, but are They Worth Buying?

The entertainment industry witnessed a strong recovery after the reopening of the economy, but the current macroeconomic headwinds are hurting entertainment stocks. Wall Street analysts are still bullish on entertainment stocks Six Flags Entertainment (SIX), Norwegian Cruise Line Holdings (NCLH), and Carnival Corporation & plc (CCL). But considering their fundamental weakness, is it worth investing in these stocks? Read more to find out….

Most outdoor entertainment companies suffered heavy losses due to the COVID-19 pandemic-led restrictions. Although the industry made a strong recovery with the reopening of the economy, many entertainment stocks have been hit hard by macroeconomic headwinds lately.

The soaring inflation, a spike in fuel prices, geopolitical concerns, and reduction in consumer spending have impacted the industry’s pace of recovery. Companies involved in travel, outdoor entertainment, and leisure like cruise lines, airlines, theaters, and theme parks will likely remain under pressure in the upcoming months.

Despite this backdrop, Wall Street analysts are bullish on Six Flags Entertainment Corporation (SIX), Norwegian Cruise Line Holdings Ltd. (NCLH), and Carnival Corporation & plc (CCL). But considering their weak financials, we do not think these stocks can survive the market’s downtrend. So, they are best avoided now.

Six Flags Entertainment Corporation (SIX)

SIX owns and operates regional themes and waterparks under the Six Flags name. Its parks offer thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues, and retail outlets.

In the fiscal first quarter ended April 3, 2022, SIX’s net loss narrowed 31.5% year-over-year to $65.66 million, while its adjusted EBITDA loss narrowed 65.9% year-over-year to $15.61 million. The company’s loss per common share amounted to $0.76, representing a decline of 32.1% year-over-year.

Analysts expect its consensus revenue estimate to decline marginally year-over-year to $316.25 million in the fourth quarter (ending December 2022). SIX has missed the consensus EPS estimates in three of the trailing four quarters.

SIX has declined 47.5% in price over the past year to close the last trading session at $23.04.

The 12-month median price target of $45.20 indicates a 96.2% potential upside from the last closing price of $23.04. The price targets range from a low of $24.00 to a high of $60.00.

However, SIX’s POWR Ratings reflect a bleak outlook. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

It has a D grade for Stability and Sentiment. Out of the 16 stocks in the Entertainment – Sports & Theme Parks industry, it is ranked #6.

Click here to see the POWR ratings of SIX for Growth, Value, Momentum, and Quality.

Norwegian Cruise Line Holdings Ltd. (NCLH)

NCLH is a leading global cruise company that operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. It offers itineraries ranging from three days to 180-days calling on various locations across the globe.

NCLH’s total cruise operating expenses increased 266.1% year-over-year to $735.41 million in the fiscal 2022 first quarter ended March 31, 2022. Its operating loss widened 20.6 % from its year-ago value to $688.76 million. The company’s net loss narrowed to $982.71 million compared to $1.37 billion in the same quarter last year. Its loss per share narrowed 43.5% year-over-year to $2.35.

Street expects NCLH’s loss per share to amount to $0.84 for the second quarter (ended June 2022), representing an increase of 56.6% from the prior-year period. It has missed the consensus EPS estimates in three of the trailing four quarters.

Shares of NCLH have declined 61.6% over the past year to close the last trading session at $11.33.

The 12-month median price target of $19.73 indicates a 74.14% potential upside from the last closing price. The price targets range from a low of $13.00 to a high of $33.00.

NCLH’s POWR Ratings reflect its poor prospects. The company has an overall F rating, equating to a Strong Sell in our proprietary rating system.

NCLH has an F grade for Stability and Sentiment and a D for Value and Quality. It is ranked last in the Travel – Cruises industry.

To see additional POWR Ratings (Growth and Momentum) for NCLH, click here.

Carnival Corporation & plc (CCL)

CCL functions as a leisure travel company. It owns and operates hotels, lodges, glass-domed railcars, and motor coaches and offers port destinations and other services. The company operates in the United States, Canada, Continental Europe, the United Kingdom, Australia, New Zealand, Asia, and internationally.

For its fiscal second quarter ended May 31, 2022, CCL’s operating loss and net loss came in at $1.47 billion and $1.83 billion, compared to losses of $1.62 billion and $2.07 billion, respectively, in the year-ago period. The company’s adjusted loss per share came in at $1.61, down 12% from the prior-year period.

Street expects the consensus loss per share estimate for fiscal 2022 (ending November 2022) to come in at $3.54, representing an increase of 49.8% year-over-year. CCL failed to surpass the consensus EPS estimates in each of the trailing four quarters.

The stock has slumped 66.5% over the past year to close the last trading session at $8.82.

The 12-month median price target of $14.85 indicates a 68.4% potential upside from the last closing price. The price targets range from a low of $7.00 to a high of $29.00.

CCL’s POWR Ratings are consistent with this bleak outlook. It has an overall F rating, equating to a Strong Sell in our proprietary rating system. The stock has an F grade for Stability, Sentiment, and Quality and a D for Value. It is ranked #2 in the same industry.

To see CCL’s POWR Ratings for Growth and Momentum, click here.

SIX shares were unchanged in premarket trading Tuesday. Year-to-date, SIX has declined -45.89%, versus a -19.14% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta’s profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.

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5 “Strong Buy” Stocks in The Top-Rated Industry

Amid a tight labor market, the heightened demand for labor in various industries should benefit the outsourcing and staffing services companies. The industry’s solid growth prospects helped it earn the top rating in our proprietary rating system. So, it could be wise to bet on quality stocks Kforce (KFRC), GEE Group (JOB), Resources Connection (RGP), RCM Technologies (RCMT), and Korn Ferry (KFY) from this top-rated industry. Our rating system has rated these stocks a Strong Buy. Read more….

In an effort to address the supply chain crisis, governments are providing policy support for enhancing domestic production, thus creating a huge demand for labor. However, the labor market remains tight.

This heightened need for labor in various industries has been driving the demand for outsourcing and staffing service providers that offer efficient and low-cost digital platforms and solutions and help improve operational efficiency.

Given the industry’s solid growth prospects, it has earned the top rating in our proprietary rating system. Therefore, it could be wise to invest in fundamentally strong outsourcing stocks Kforce Inc. (KFRC), GEE Group, Inc. (JOB), Resources Connection, Inc. (RGP), RCM Technologies, Inc. (RCMT), and Korn Ferry (KFY), which are rated Strong Buy in our POWR Ratings system.

Kforce Inc. (KFRC)

KFRC provides flexible and permanent professional staffing services and solutions. It specializes in the areas of IT, finance and accounting, human resources, engineering, pharmaceuticals, healthcare, legal, and scientific.

For its fiscal 2022 first quarter ended March 31, 2022, KFRC’s revenue increased 14.8% year-over-year to $416.97 million. The company’s gross profit came in at $22.45 million, indicating a 25.5% rise from the year-ago period. Its income from operations came in at $27.74 million, up 42.6% from the year-ago period.

KFRC’s net income came in at $19.18 million, representing a 44.6% year-over-year improvement. Its adjusted EPS increased 50% year-over-year to $0.93. As of March 31, 2022, the company had $116.63 million in cash and cash equivalents.

The consensus EPS estimate of $4.35 for its fiscal 2022 ending December 31, 2022, represents a 22.9% year-over-year improvement. It surpassed Street EPS estimates in each of the trailing four quarters. Analysts expect the company’s revenue to reach $1.74 billion for the same fiscal year, indicating a 10% rise from the prior-year period.

KFRC’s EPS is expected to grow at a 15% rate per annum over the next five years. The stock has gained 0.9% over the past nine months to close the last trading session at $62.08.

KFRC’s POWR Ratings reflect this promising outlook. The stock has an overall A grade, which equates to Strong Buy in our proprietary rating system.

It has a B grade for Value, Quality, Growth, and Stability. Click here to see the additional ratings for KFRC’s Sentiment and Momentum.

KFRC is ranked #2 of 18 stocks in the A-rated Outsourcing – Staffing Services industry.

GEE Group, Inc. (JOB)

JOB provides permanent and temporary professional and industrial staffing and placement services. It offers placement of IT, accounting, finance, office, engineering, and medical professionals for direct hire and contract staffing services; and temporary staffing services for light industrial clients.

It also provides medical scribes, which offer electronic medical record services for emergency departments, specialty physician practices, and clinics.

JOB’s net revenues for its fiscal 2022 second quarter ended March 31, 2022, increased 14.2% year-over-year to $39.63 million. The company’s gross profit came in at $14.51 million, indicating a 33.1% rise from the year-ago period. Its income from operations came in at $1.18 million for the quarter, representing an 84.8% rise from the prior-year period.

JOB’s adjusted net income came in at $2.24 million, compared to a loss of $1.74 million in the prior-year period. Its EPS came in at $0.01, versus a $0.10 loss per share in the year-ago period. As of March 31, 2022, the company had $14.18 million in cash.

Analysts expect the company’s revenue to hit $166.77 million for its fiscal 2022 ending September 30, 2022, representing a 12% rise from the prior-year period. The stock has gained 19% over the past nine months to close the last trading session at $0.55.

JOB’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.

It has an A grade for Value and a B for Growth, Sentiment, and Quality. Click here to see the additional ratings for JOB’s Stability and Momentum.

JOB is ranked #4 in the Outsourcing – Staffing Services industry.

Resources Connection, Inc. (RGP)

RGP provides consulting services to business customers in the areas of transactions and regulations internationally. It also provides services comprising finance transformation, digital transformation, supply chain management, cloud migration, and data design and analytics.

On April 12, 2022, RGP announced plans to expand the digital staffing platform HUGO into the Texas and California markets in fiscal 2023. With positive feedback from clients, talent, and RGP team members, this expansion should benefit RGP.

RGP’s revenue for its fiscal 2022 third quarter ended February 26, 2022, increased 30.6% year-over-year to $204.61 million. The company’s gross profit came in at $76.79 million, indicating a 34.6% rise from the prior-year period. Its income from operations came in at $17.50 million, representing a 756.2% rise from the prior-year period.

RGP’s net income came in at $19.42 million for the quarter, up 2714.6% from the year-ago period. Its adjusted EPS rose 364.3% year-over-year to $0.65. As of February 26, 2022, the company had $82.19 million in cash and cash equivalents.

Analysts expect the company’s revenue to hit $827.40 million for its fiscal 2023 ending May 31, 2023, representing a 3.3% rise from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters.

Its EPS is expected to grow at a rate of 8% per annum over the next five years. The stock has gained 28.9% over the past nine months to close the last trading session at $20.67.

RGP’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.

It has a B grade for Value, Sentiment, and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see RGP’s Growth, Momentum, and Stability ratings here.

RGP is ranked #3 in the Outsourcing – Staffing Services industry.

RCM Technologies, Inc. (RCMT)

RCMT provides business and technology solutions through its Engineering, Specialty HealthCare, and Life Sciences and Information Technology segments in the United States, Canada, Puerto Rico, and Serbia. It serves aerospace and defense, energy, financial services, health care, life sciences, manufacturing and distribution, technology industries, educational institutions, and the public sector.

RCMT’s revenue for its fiscal 2022 third quarter ended April 2, 2022, increased 84% year-over-year to $81.96 million. The company’s gross profit came in at $23.42 million, representing a 115.9% year-over-year improvement. Its operating income came in at $9.04 million for the quarter, up 557.1% from the year-ago period.

While its net income increased 547.5% year-over-year to $6.52 million, its EPS grew 675% to $0.62. As of April 2, 2022, it had $859,000 in cash and cash equivalents.

Analysts expect the company’s EPS to improve 139.8% year-over-year to $1.99 for fiscal 2022 ending December 31, 2022. It surpassed Street EPS estimates in each of the trailing four quarters.

The consensus revenue estimate of $311.41 million for the same fiscal year represents a 52.7% rise from the prior-year period. Its EPS is expected to grow at a 15% rate per annum over the next five years. The stock has gained 202.8% over the past nine months to close the last trading session at $19.23.

RCMT’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.

It has an A grade for Growth and a B grade for Value and Quality. Click here to see the additional ratings for RCMT’s Stability, Momentum, and Sentiment.

RCMT is ranked #4 in the same industry.

Korn Ferry (KFY)

KFY provides organizational consulting services through its Consulting; Digital; Executive Search; and Recruitment Process Outsourcing (RPO) & Professional Search segments. The company provides executive search services, organizational strategy, leadership, RPO, business project, professional search, and outsourced recruiting solutions.

It serves public and private companies, middle-market and emerging growth companies, and government and non-profit organizations.

KFY’s total revenue for its fiscal 2022 fourth quarter ended April 30, 2022, increased 30.4% year-over-year to $727 million. The company’s operating income came in at $138.75 million, indicating a 60.9% rise from the prior-year period.

KFY’s adjusted net income came in at $94.43 million for the quarter, up 42.7% from the year-ago period. Its adjusted EPS rose 44.6% year-over-year to $1.75. As of April 30, 2022, the company had $978.07 million in cash and cash equivalents.

Analysts expect the company’s revenue to hit $2.78 billion for its fiscal 2023 ending April 30, 2022, representing a 5.8% rise from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. Its EPS is expected to grow at a rate of 15% per annum over the next five years. The stock has lost 22% over the past nine months to close the last trading session at $58.41.

KFY’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.

It has a B grade for Value, Sentiment, and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see KFY’s Growth, Momentum, and Stability ratings here.

KFY is ranked #5 in the Outsourcing – Staffing Services industry.

KFRC shares were unchanged in premarket trading Tuesday. Year-to-date, KFRC has declined -16.75%, versus a -19.14% rise in the benchmark S&P 500 index during the same period.

About the Author: Sweta Vijayan

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