Is Arrow Electronics (ARW) a Great Value Stock Right Now?

This story originally appeared on Zacks

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system’s “Value” category. Stocks with “A” grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Arrow Electronics (ARW) is a stock many investors are watching right now. ARW is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 8.75. This compares to its industry’s average Forward P/E of 9.16. Over the past 52 weeks, ARW’s Forward P/E has been as high as 11.80 and as low as 7.78, with a median of 9.52.

Investors should also note that ARW holds a PEG ratio of 0.32. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. ARW’s PEG compares to its industry’s average PEG of 0.39. ARW’s PEG has been as high as 1.20 and as low as 0.28, with a median of 0.47, all within the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can’t really be manipulated, so sales are often a truer performance indicator. ARW has a P/S ratio of 0.28. This compares to its industry’s average P/S of 0.33.

Finally, we should also recognize that ARW has a P/CF ratio of 8.20. This figure highlights a company’s operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company’s current P/CF looks solid when compared to its industry’s average P/CF of 13.02. ARW’s P/CF has been as high as 11.10 and as low as 6.76, with a median of 8.66, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Arrow Electronics is likely undervalued currently. And when considering the strength of its earnings outlook, ARW sticks out at as one of the market’s strongest value stocks.

Zacks Top 10 Stocks for 2022

In addition to the investment ideas discussed above, would you like to know about our 10 top picks for the entirety of 2022?

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Should Value Investors Buy LaZBoy (LZB) Stock?

This story originally appeared on Zacks

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the “Value” category. When paired with a high Zacks Rank, “A” grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is LaZBoy (LZB). LZB is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 9.09, while its industry has an average P/E of 15.31. Over the last 12 months, LZB’s Forward P/E has been as high as 18.03 and as low as 8.35, with a median of 12.52.

Investors should also recognize that LZB has a P/B ratio of 2.02. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. This stock’s P/B looks solid versus its industry’s average P/B of 3.92. LZB’s P/B has been as high as 2.73 and as low as 1.84, with a median of 2.20, over the past year.

Finally, investors should note that LZB has a P/CF ratio of 9.73. This figure highlights a company’s operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock’s P/CF looks attractive against its industry’s average P/CF of 20.33. Over the past 52 weeks, LZB’s P/CF has been as high as 16.27 and as low as 8.87, with a median of 12.35.

These figures are just a handful of the metrics value investors tend to look at, but they help show that LaZBoy is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, LZB feels like a great value stock at the moment.

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Are These Oils-Energy Stocks Undervalued Right Now?

This story originally appeared on Zacks

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

One company to watch right now is Suburban Propane Partners (SPH). SPH is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 6.96 right now. For comparison, its industry sports an average P/E of 11.36. Over the past 52 weeks, SPH’s Forward P/E has been as high as 13.53 and as low as 6.71, with a median of 10.16.

Investors should also recognize that SPH has a P/B ratio of 2.14. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. This company’s current P/B looks solid when compared to its industry’s average P/B of 2.68. SPH’s P/B has been as high as 2.64 and as low as 1.83, with a median of 2.16, over the past year.

Finally, investors will want to recognize that SPH has a P/CF ratio of 4.01. This metric focuses on a firm’s operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company’s current P/CF looks solid when compared to its industry’s average P/CF of 8.34. SPH’s P/CF has been as high as 5.84 and as low as 3.87, with a median of 4.52, all within the past year.

Another great Oil and Gas – Refining and Marketing – Master Limited Partnerships stock you could consider is Sunoco (SUN), which is a # 1 (Strong Buy) stock with a Value Score of A.

Sunoco sports a P/B ratio of 5.03 as well; this compares to its industry’s price-to-book ratio of 2.68. In the past 52 weeks, SUN’s P/B has been as high as 5.48, as low as 4.43, with a median of 4.88.

These are only a few of the key metrics included in Suburban Propane Partners and Sunoco strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, SPH and SUN look like an impressive value stock at the moment.

Zacks Top 10 Stocks for 2022

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Is Unilever a Good Stock to Add to Your Dividend Portfolio?

Global consumer goods giant Unilever (UL) has attained a solid market position based on its robust operational performance over the past years. In addition, the company has an impressive dividend payout history and expects double-digit growth in the coming year as the market recovers from pandemic disruptions. So, is the stock worth betting on now? Read on to learn our view.

London-based Unilever PLC (UL) is one of the world’s leading suppliers of beauty and personal care, home care, and food & refreshment goods, with sales in more than 190 countries and products used by 2.5 billion people every day. The company reported 2.5% underlying sales growth for the third quarter, ended September 30, 2021. In addition, its turnover increased 4%, including 1.6% from acquisitions, net of disposals. The stock has gained 1.6% in price over the past month.

UL’s $2.03 trailing-12-months annual dividend payout translates to a 3.79% yield, versus the 2.14% industry average. This compares to its 3.23% four-year average dividend yield. Its dividend payouts have grown at a 7.7% CAGR over the past five years.

The company’s operational excellence continues to drive its growth. In addition, its strong top-line growth, driven by improvements across all business segments, should further boost the company’s overall performance.

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

Positive Developments

In August, Unilever launched its Positive Beauty Growth Platform, an initiative designed to collaborate with scale-ups and startups to drive innovation and brand growth. Unilever’s Beauty & Personal Care Division, which includes global brands Dove, AXE, and Love Beauty & Planet, and The Unilever Foundry, the company’s collaborative innovation network, are driving the Positive Beauty Growth Platform. To date, the Foundry has tested more than 400 startup projects, including partnerships with AI-powered skincare engine HelloAva and cleaning services marketplace Helpling.

Also in August, Unilever announced that its ice cream facility in TaiCang, China, has joined the World Economic Forum’s Lighthouse Network, a community of manufacturing sites. Lighthouse sites embrace and utilize Fourth Industrial Revolution technology to change corporate operations via innovation, sustainable practices, and increased efficiency. The TaiCang plant is Unilever’s third factory to achieve this designation.

Strong Profitability

UL’s 20.3% trailing-12-months EBITDA margin is 48.1% higher than the 13.7% industry average. Also, its respective ROC, net income margin and ROA are 77.8%, 100.3%, and 67.2% higher than the industry averages. Furthermore, its $10.17 billion cash from operations is 1833.2% higher than the $526 million industry average.

POWR Ratings Reflect Solid Prospects

UL has an overall B grade, which equates to a Buy rating in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. UL has a B grade for Stability, which is justified given the Stock’s beta of 0.16.

Of the 68 stocks in the Consumer Goods industry, UL is ranked #11.

Beyond what is stated above, we have graded UL for Growth, Quality, Value, Sentiment, and Momentum. Get all UL ratings here.

Bottom Line

UL’s strategic choices and sharp focus on operational excellence have boosted its performance over the past years despite challenging market conditions. Moreover, it is expected to benefit from solid demand recovery across its priority markets of the United States, India, and China. So, considering the company’s solid profitability and remarkable dividend history, we think the stock could be an excellent addition to one’s dividend portfolio.

How Does Unilever PLC (UL) Stack Up Against its Peers?

UL has an overall grade of B in our proprietary rating system. This rating is superior to its peers, YAMAHA Corporation (YAMCY), Franchise Group Inc. (FRG), and Puma SE (PUMSY), which have a C (Neutral) rating.

UL shares were trading at $53.57 per share on Thursday morning, down $0.05 (-0.09%). Year-to-date, UL has declined -8.02%, versus a 29.55% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.

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Grab These 2 Stocks Under $10 Rated ‘Strong Buy’ in the POWR Ratings

Although the major stock indexes hit record highs this week, rising inflation could perplex investors in the coming weeks. So, we think the stocks of VAALCO Energy (EGY) and Blueknight Energy (BKEP), which are currently trading at less than $10, could be great picks now. They are rated “Strong Buy” in our proprietary ratings system, and we think hold significant upside potential owing to their impressive fundamentals and solid growth attributes. Read on to learn more.

Although reports pointing to reduced risks from the COVID-19 omicron variant, and easing pandemic restrictions, have powered the S&P 500 this week, inflation concerns remain at the top of investors’ minds as a turbulent 2021 comes to a close. Economists fear that the coronavirus pandemic has ushered in a new age of inflation disparity, with poor people bearing the brunt of rising prices. In addition, as pandemic-related federal benefits phase out and President Biden’s massive care spending bill languishes in Congress, investors are taking a cautious approach going forward.

Considering the current market uncertainty, low-priced stocks with strong growth potential could be appropriate bets now. A significant rise in retail trading activity could assist low-priced stocks in outperforming their pricier counterparts because retail investors tend to dabble in low-priced companies due to their limited cash and desire to own more shares.

VAALCO Energy Inc. (EGY) and Blueknight Energy Partners L.P. (BKEP) are two such stocks, which are trading at less than $10 and we think can generate substantial returns going into 2022 based on their strong revenue and earnings outlook. They are currently rated “Strong Buy” in our proprietary POWR ratings systems.

VAALCO Energy Inc. (EGY)

Houston, Tex.-based EGY acquires, explores for, develops, and produces crude oil and natural gas. The company holds an Etame production sharing contract for the Etame Marin block, which is located offshore in the West African Republic of Gabon.

Last month, EGY reported the completion of the two previously announced workovers at the Etame field offshore Gabon, adding roughly 1,050 gross barrels of crude oil per day.

During the third quarter, ended September 30, 2021, BKEP’s revenue increased 206.2% year-over-year to $55.89 million. Its operating income grew 328.2% from its year-ago value to $20.03 million. The company’s net income increased 316.4% year-over-year to $31.72 million, while its EPS surged 307.7% from the prior-year quarter to $0.53 over this period.

The company is expected to generate 62.7% revenue growth next year. In addition, its EPS is estimated to increase 152.9% year-over-year to $0.43 in fiscal 2022. EGY’s stock has gained 93.7% in price over the past year and 19% over the past three months, closing yesterday’s trading session at $3.35.

EGY’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

EGY is also rated an A grade for Sentiment, Momentum, and Quality. Within the B-rated Energy – Oil & Gas industry, it is ranked #1 of 78 stocks. To see additional POWR Ratings for Stability, Growth, and Value for EGY, click here.

Blueknight Energy Partners L.P. (BKEP)

BKEP in Oklahoma City, Okla., provides integrated terminalling services to businesses in the United States involved in producing, distributing, and handling liquid asphalt. It had 53 terminals across 26 states as of March 4, 2021.

This month, BKEP agreed to acquire an asphalt terminal, a 200-acre industrial park in Colorado, and a separate deal to organically expand the storage, planning, and product capabilities of the BKEP-owned asphalt terminal. The project is consistent with the company’s expansion plan and will also help grow its asphalt terminalling portfolio.

During the third quarter, ended September 30, 2021, BKEP’s revenue increased 4.6% year-over-year to $30.34 million. Its operating income increased 8.5% year-over-year to $11.41 million. The company reported a net income of $12.6 million, while its EPS came in at $0.14 over this period.

BKEP is expected to generate 18.8% revenue growth next year. Its EPS is estimated to increase at a 4% rate over the next five years. Over the past year, BKEP’s stock has gained 64.9% in price. Furthermore, it has gained 7.8% over the past three months, closing yesterday’s trading session at $3.26.

BKEP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. BKEP has an A grade for Quality and a B for Value. Among the 11 stocks in the A-rated MLPs Other industry, it is ranked #4.

In total, we rate BKEP on eight distinct levels. Beyond what we have stated above, we have also given BKEP grades for Growth, Momentum, Stability, and Sentiment. Get all the BKEP ratings here.

EGY shares rose $0.07 (+2.09%) in premarket trading Thursday. Year-to-date, EGY has gained 93.22%, versus a 29.59% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.

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3 Foreign Fintech Stocks Wall Street Loves for 2022

Fintech has facilitated significant changes in the way the financial industry functions, and its application is expected to expand further. Given this backdrop, we think it could be wise to add foreign fintech stocks MercadoLibre (MELI), PagSeguro Digital (PAGS), and StoneCo (STNE) to one’s watchlist. Wall Street analysts expect them to gain more than 60% in price in the coming months. So, let’s discuss these names.

Fintech has ushered in significant changes in the way the financial industry functions. It has allowed governments to introduce essential financial services to unbanked and underbanked communities. In addition, the industry has helped improve payments processing, insurance, and lending.

The fintech industry has played a significant role, helping the world adapt to the rapid ongoing digitalization. Fintech innovations have brought down the transaction costs of financial services. Due to its easy accessibility and application and integrated technological advancements, fintech companies are also helping to create a more financially inclusive world. According to a Kenneth Research report, the global fintech market is expected to reach $305.70 billion by 2023, growing at a 22.2% CAGR.

So, we think foreign fintech stocks such as MercadoLibre, Inc. (MELI), PagSeguro Digital Ltd. (PAGS), and StoneCo Ltd. (STNE) could be great additions to one’s watchlist. Wall Street analysts expect them to gain more than 60% in price in the near term.

MercadoLibre, Inc. (MELI)

MELI is an e-commerce company based in Buenos Aires, Argentina. The company enables commerce through its marketplace platform, which is designed to provide users with a portfolio of services to facilitate commercial transactions. It offers e-commerce services such as MercadoLibre Marketplace, MercadoPago payments solution, and MercadoLibre advertising program.

On December 13, 2021, MELI announced the acquisition of Redelcom, which operates as a payment services provider and provides point-of-sale terminals in Chile. The acquisition will likely strengthen its payments operation in Chile and the business position of its MercadoPago unit.

MELI’s revenue for the fiscal third quarter, ended September 30, 2021, increased 66.5% year-over-year to $1.85 billion. The company’s net income increased 533.3% year-over-year to $95.22 million. Also, its EPS came in at $1.92, up 585.7% year-over-year.

Analysts expect MELI’s EPS and revenue for its fiscal 2021 to increase 3,887.5% and 75.4% year-over-year to $3.03 and $6.97 billion, respectively. Over the past three months, the stock has declined 21.7% in price to close yesterday’s trading session at $1,316.28. However, Wall Street analysts expect the stock to hit $2,142.86 in the near term, indicating a potential 62.8% upside.

PagSeguro Digital Ltd. (PAGS)

Headquartered in Sao Paulo, Brazil, PAGS is a fintech company that offers multiple digital payment solutions to micro-merchants, and to small- and medium-sized companies. Its end-to-end digital ecosystem helps its customers to accept payments and manage their businesses.

During Black Friday on November 26, 2021, PAGS marked another all-time daily high, with its TPV reaching more than R$1.10 billion ($0.19 billion). From November 1 till November 29, its TPV grew more than 45% year-over-year, according to the Brazilian Cards Association data. This reinforces its commitment to keep helping its merchants grow their businesses.

For the fiscal third quarter ended September 30, 2021, PAGS’ total revenue and income increased 56% year-over-year to R$2.77 billion ($0.49 billion). The company’s net income increased 22% year-over-year to R$321.55 million ($57.08 million). In addition, its EPS came in at R$0.96, up 21% year-over-year.

For its fiscal year 2022, PAGS’ EPS is expected to increase by 38.5% year-over-year to $1.08. Its revenue for the quarter ending December 31, 2021, is expected to increase 40.8% year-over-year to $540.28 million. The stock has declined 53.8% in price year-to-date to close yesterday’s trading session at $26.28. However, Wall Street analysts expect the stock to hit $50.83 in the near term, indicating a potential upside of 93.4%.

StoneCo Ltd. (STNE)

Headquartered in George Town, Cayman Islands, STNE is a fintech company that provides an end-to-end, cloud-based technology platform to conduct electronic commerce across in-store, online, and mobile channels. It has designed a cloud-based platform that helps clients connect, get paid, and grow their businesses while meeting the rapidly changing demands of omnichannel commerce.

STNE’s TPV for the fiscal third quarter, ended September 30, 2021, increased 7.6% year-over-year to R$75 billion ($13.31 billion). The company’s total revenue and income increased 57.3% year-over-year to R$1.46 billion ($0.26 billion).

Analysts expect STNE’s EPS and revenue for its fiscal 2022 to increase 170.4% and 67.4%, respectively year-over-year to $0.73 and $1.38 billion. The stock has declined 80.4% year-to-date to close yesterday’s trading session at $16.39. However, Wall Street analysts expect the stock to hit $31.67 in the near term, indicating a potential 93.2% upside.

MELI shares were unchanged in premarket trading Wednesday. Year-to-date, MELI has declined -21.43%, versus a 29.25% 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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Is Antero Resources a Good Independent Oil & Gas Company to Invest In?

The shares of oil and natural gas company Antero Resources’ (AR) have rallied more than 200% in price over the year, fueled by bullish industry trends. However, oil and natural gas prices have tumbled from their multi-year highs lately. Furthermore, given uncertainties concerning the continuing spread of the COVID-19 omicron variant, is AR an ideal investment now? Read on to learn our view.

Denver, Colorado-based independent oil and natural gas company Antero Resources Corporation (AR) acquires, explores for, develops, and produces natural gas, natural gas liquids, and oil properties in the United States. AR shares have gained 231.7% in price over the past year and 249.9% year-to-date, driven by the sky-high oil and natural gas prices and investors’ optimism surrounding the energy space.

However, the newly identified coronavirus variant has slowed the sector’s momentum. Oil prices tumbled earlier this month, marking oil’s longest decline since 2018. Oil prices are currently below the $80 per barrel they reached in November and way below the $100 mark that analysts had projected. Natural gas prices also plunged from multi-year highs. The U.S. benchmark for the price of natural gas inched lower early in the last session despite a weather forecast of extreme cold.

The demand uncertainty due to the omicron variant, along with OPEC’s increasing production volumes, are weighing down prices and do not bode well for AR. The stock has gained approximately 4% over the past month to close its last trading session at $18.77. Furthermore, AR’s weak bottom line and negative profit margins are a concern. Its trailing-12-months net loss was $1.02 billion, while its net loss per share was $3.43. And according to analysts’ estimates, the company needs to grow 110% year-on-year, on average, to break even by 2022. Given the demand uncertainties and the volatile oil and natural gas prices, we think it might take AR longer to become profitable.

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

Poor Profitability

AR’s 18.34% and 19.51% respective negative net income and EBIT margins are substantially lower than the 1.89% and 7.55% industry averages.

Furthermore, AR’s ROE, ROA, and ROTC of negative 19.37%, 7.56%, and 6.09%, respectively, compare with the 2.79%, 1.04%, and 3.51% industry averages.

Effective Debt Reduction

AR reduced its net debt by $70 million to $2.3 billion during the third quarter ending September 30 and redeemed $175 million of its 108.375% senior notes due 2026 at par in July. The company also announced that it intends to redeem $116 million in 107.625% notes at par. As of September 30, 2021, Antero had $98 million drawn on its credit facility. The company plans to reduce its absolute debt to below $2.0 billion. “We anticipate achieving our debt target in early 2022, with leverage falling below 1.0x during the first quarter of 2022,” said Michael Kennedy, Chief Financial Officer and Senior Vice President of Finance of AR.

In October, Moody’s Investors Service upgraded Antero’s Corporate Family Rating to Ba2 from Ba3, and its senior unsecured notes to Ba3 from B1. The upgrade reflects AR’s material debt reduction. S&P Global Ratings upgraded Antero’s issuer credit rating to BB from BB- and its unsecured notes to BB from BB-.

Mixed Financials

AR’s total revenues increased 40.4% year-over-year to $534.42 million in its fiscal third quarter, ended September 30. However, its operating loss stood at $684.07 million, down 9.3% from the same period last year. Its net loss and comprehensive loss attributable to AR grew 2.6% from the year-ago value to $549.32 million. The company’s adjusted EPS came in at $0.19, versus the $0.31 consensus estimate, reflecting an earnings surprise of negative 38.7%.

POWR Ratings Reflect Uncertain Prospects

AR has an overall C rating, which translates to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a C grade for Growth, consistent with its mixed financials in its last reported quarter.

AR has a D grade for Stability. Its beta of 4.41 justifies this grade.

Of 13 stocks in the Energy – Drilling industry, AR is ranked #9.

Beyond what I have stated above, one can also view AR’s grades for Quality, Value, Momentum, and Sentiment here.

View the top-rated stocks in the Energy – Drilling industry here.

Bottom Line

AR has gained significantly over the past year. However, the company’s profit margins worrisome. Also, analysts expect its EPS to decline 29.8% per annum over the next five years. The company’s near-term prospects look uncertain owing to the omicron variant’s threat to energy demand and declining oil and gas prices. Also, considering AR’s negative ROE, we think it could be wise to wait for a better entry point in the stock.

How Does Antero Resources Corporation (AR) Stack Up Against its Peers?

While AR has an overall POWR Rating of C, one might want to consider looking at its industry peers, SandRidge Energy, Inc. (SD) and Whiting Petroleum Corp. (WLL), which have a B (Buy) rating.

Note that SD is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.

AR shares rose $0.03 (+0.16%) in premarket trading Wednesday. Year-to-date, AR has gained 244.40%, versus a 29.25% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.

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Best Growth Stocks to Buy for December 29th

This story originally appeared on Zacks

Here are four stocks with buy ranks and strong growth characteristics for investors to consider today, December 29th:

ArcBest ARCB: This company that provides freight transportation services and solutions carries a Zacks Rank #1 (Strong Buy), and has witnessed the Zacks Consensus Estimate for its next year earnings increasing 26.3% over the last 60 days.

ArcBest has a PEG ratio of 0.35 compared with 0.88 for the industry. The company possesses a Growth Score of A.

Berry Global Group BERY: This company that manufactures and distributes nonwoven specialty materials, engineered materials and consumer packaging products flaunts a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its next year earnings increasing 15.4% over the last 60 days.

Berry Global has a PEG ratio of 0.97 compared with 1.69 for the industry. The company possesses a Growth Score of B.

Avis Budget Group CAR: This company that operates as a leading vehicle rental operator in North America, Europe and Australasia carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its next year earnings increasing 130.9% over the last 60 days.

Avis Budget has a PEG ratio of 0.54 compared with 6.51 for the industry. The company possesses a Growth Score of B.

Dillard’s DDS: This large departmental store chain featuring fashion apparel and home furnishings flaunts a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its next year earnings increasing 30.2% over the last 60 days.

Dillard’s has a PEG ratio of 0.55 compared with 0.59 for the industry. The company possesses a Growth Score of A.

See the full list of top ranked stocks here.

Learn more about the Growth score and how it is calculated here.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don’t buy now, you may kick yourself in 2022.

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Avis Budget Group, Inc. (CAR): Free Stock Analysis Report

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Red Cat Holdings: A Good Drone Stock to Invest In?

Drone-related solutions provider Red Cat Holdings’ (RCAT) top line surged more than 300% in its last quarter, but its losses increased. So, let’s evaluate if it is wise to bet on the stock now based on its increased contracts from several organizations. Read on.

Puerto Rico-based Red Cat Holdings, Inc. (RCAT) provides products, services, and solutions to the drone industry through its five subsidiaries: Teal Drones, Fat Shark Holdings, Rotor Riot, Skypersonic, and Red Cat Propware. The company made its stock market debut on April 30, 2021, and has received several contracts. Skypersonic was awarded a five-year contract with NASA on September 27. Also, Teal Drones was awarded a firm-fixed-price, multiple-award blanket purchase agreement (BPA) by the United States Customs and Border Protection on December 22, which helped the stock soar in price after hitting its 52-week low of $1.78 on December 21.

However, the stock has declined 41.7% in price over the past three months and 1.9% over the past month to close yesterday’s trading session at $2.21.

In July, RCAT closed a $60 million public offering of its shares. The company is expected to use the proceeds to provide funding for services, sales, and marketing efforts for its Red Cat Drone Services, strategic acquisitions, related expenses, and general working capital. However, the stock issue could lead to share dilution. Also, the company reported losses in the last quarter. So, RCAT’s near-term prospects look bleak.

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

Adverse Impact of Growing U.S.-China Tensions

According to the prospectus filed by RCAT on April 30, it obtains components for its drones from a limited number of suppliers, primarily from China. But China has been engaged in a trade war with the United States over the past few years, and RCAT does not have long-term agreements with these suppliers that obligates them to sell components to it. So, its reliance on these suppliers entails significant risks and uncertainties.

In July 2021, the Biden administration blamed China for the hacking activities that exploited Microsoft’s email software. And China’s Personal Information Protection Law (PIPL) came into effect on November 1, 2021, outlining data processing requirements for companies outside China, including passing a security assessment conducted by state authorities. According to a Bloomberg report, drones took center stage amid the U.S.-China war on data harvesting. So, RCAT’s operations could be hurt by the growing tension between the world’s two largest economies.

Increased Competition

RCAT faces intense competition with established and well-known diversified consumer electronics manufacturers, such as Samsung Electronics Co. and Sony Group Corporation (SONY), and software and other products companies, such as Microsoft Corporation (MSFT). It also competes with additional established, well-known First Person View (FPV) drone manufacturers, such as Seiko Epson Corporation (SEKEY) and MicroLED.

Top Line Growth Does Not Translate into Bottom Line Improvement

For its fiscal second quarter, ended October 31, 2021, RCAT’s revenues increased 335.5% year-over-year to $1.86 million. However, its operating expenses increased 394.6% year-over-year to $2.91 million. And its operating loss came in at $2.76 million, representing a 463.4% year-over-year rise, while its net loss increased 279.4% year-over-year to $2.74 million. Also, its loss per share was $0.05 compared to $0.04 in the year-ago period.

POWR Ratings Reflect Bleak Prospects

RCAT has an overall F rating, which equates to a Strong Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. RCAT has an F grade for Quality, which is in sync with its low profitability.

It has an F grade for Stability, given its highly volatile nature compared to the market.

RCAT is ranked #160 of 169 stocks in the Software – Application industry. Also, click here to see the additional POWR Ratings for RCAT (Growth, Value, Momentum, and Sentiment).

Click here to check out our Software Industry Report

Bottom Line

RCAT has been awarded several contracts over the past few months and has made several acquisitions. However, its stock is currently trading below its 50-day and 200-day moving averages of $2.42 and $3.10, respectively, indicating a downtrend. Moreover, it could keep losing with U.S.–China tensions impacting its operations. So, we think it could be wise to avoid the stock now.

How Does Red Cat Holdings (RCAT) Stack Up Against its Peers?

While RCAT has an overall POWR Rating of F, one might want to consider investing in A-rated (Strong Buy) Software – Application stocks, such as Commvault Systems, Inc. (CVLT), Open Text Corporation (OTEX), and eGain Corporation (EGAN).

RCAT shares fell $0.13 (-5.88%) in premarket trading Wednesday. Year-to-date, RCAT has declined -26.33%, versus a 29.25% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.

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Investment Themes to Play Heading Into 2022: 4 Fund Picks

The year 2021 has been a roller coaster ride, with the pandemic still disrupting economies, leading to supply-chain bottlenecks, labor shortage and stagflation. Investors had to scout better investment vehicles as the low interest rates made traditional avenues less attractive. However, 2021 was more inclined toward the macro theme of the reopening of the global economy, while 2022 will continue to piggy back on it. This is because with the Delta and Omicron variants still ragging havoc and pushing administration to enforce restrictions, record-high inflation, supply-chain hurdles and labor supply shortages may impact the economic and financial market’s growth.

Let’s discuss three themes heading into 2022 that investors pick for the upcoming year. As investors consider these themes, they can pick the following mutual funds– Fidelity Select Biotechnology Portfolio FBIOX, Calvert Equity Fund Class A CSIEX, New Alternatives Fund Class A NALFX and Parnassus Mid Cap Growth Fund – Investor PARNX.

The first theme we can maintain our focus on for next year is clean energy transition. President Joe Biden’s plan to make America achieve net-zero greenhouse gas emissions by no later than 2050 will push renewables, battery technology and more. Biden’s plan includes 100% of the federal government’s electricity to be generated through carbon pollution-free means by 2030. Also by 2035, all new vehicle purchases must be zero-carbon emission cars and trucks.

Next, the boom in the biotech space will continue because of the ongoing pandemic that is boosting research for vaccines and cures and other branches like gene therapy and gene editing to fight cancer and other chronic diseases. Per a Grand View Research report, the global biotechnology market was valued at $752.88 billion in 2020 and is expected to see a CAGR of 15.83% from 2021 to 2028. In fact, government initiatives in modernizing the drug regulatory pathway and standardizing clinical studies, and growing demand for orphan drugs and personalized medicine will continue to boost this space.

Lastly, impact investing, which had a global market valued at $255.1 billion in 2020, per Research and Markets data, will reach $791.2 billion by 2027, at a CAGR of 17.6%. The pandemic has helped investors focus more on socially responsible impact investing, helping environmental, social, and governance (ESG) funds to gain prominence. Impact investing securities have outperformed the broader market over the past year and have an overall asset under management of $4 trillion. Impact investing is also not restricted to environmental or climate concerns. Corporates’ impact on the surrounding community, role in developing the said community and creation of a better value chain for the society are the other social causes it focuses on.

4 Funds to Buy

With strong prospects for 2022, we have shortlisted four mutual funds that have a significant investment in the aforementioned themes and carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform peers in the future.

The question here is: why should investors consider mutual funds? Reduced transaction costs and portfolio diversification without several commission charges associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity Select Biotechnology Portfolio fund aims for capital appreciation. This non-diversified fund invests most net assets in common stocks of companies mostly engaged in researching, developing, and distributing biotechnological products.

This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 13.7% and 12.4% over the past three and five-year period, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Fidelity Select Biotechnology Portfolio, a Zacks Mutual Fund Rank #1 fund, has an annual expense ratio of 0.70%, below the category average of 1.03%.

Calvert Equity Fund Class A aims for capital growth through investment in stocks believed to offer opportunities for potential capital appreciation. The fund invests most assets in common stocks of companies that rank among the top 1,000 U.S.-listed companies.

This Zacks Large Cap Growth product has a history of positive total returns for more than 10 years. Specifically, Calvert Equity Fund Class A has a three and five-year returns of 24.5% and 22.4%, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Calvert Equity Fund Class A has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.94% compared to the category average of 0.99%.

New Alternatives Fund Class A aims for long-term capital growth with income as its secondary objective. It primarily invests in common stocks of companies and even in other equity securities, such as real-estate investment trusts and American Depository Receipts.

This Zacks sector – Other product has a history of positive total returns for more than 10 years. Specifically, NALFX has a three and five-year returns of 27.6% and 20.4%, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

New Alternatives Fund Class A has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.96% compared to the category average of 1.26%.

Parnassus Mid Cap Growth Fund – Investor aims for capital appreciation. The fund invests the majority of assets in mid-sized growth companies.

This Zacks Sector – Large Cap Value has a history of positive total returns for more than 10 years. Specifically, Parnassus Mid Cap Growth Fund – Investor has returned 16.2% and 13.7% for the three and five-year periods, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

Parnassus Mid Cap Growth Fund – Investor has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.83%, below the category average of 1.09%.

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More Stock News: This Is Bigger than the iPhone!

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don’t buy now, you may kick yourself in 2022.

Click here for the 4 trades >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Get Your Free (FBIOX): Fund Analysis Report

Get Your Free (CSIEX): Fund Analysis Report

Get Your Free (NALFX): Fund Analysis Report

Get Your Free (PARNX): Fund Analysis Report

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