The U.S. stocks ended a choppy trading session yesterday and remained low for a third straight session as investors considered hotter-than-expected inflation data for June. The S&P 500 slipped 0.5%, while the Dow Jones Industrial Average and the Nasdaq Composite closed roughly 0.7% and 0.2% lower, respectively.
The Bureau of Labor Statistics' Consumer Price Index (CPI) reflected a year-over-year increase of 9.1% last month, up from the prior 40-year high of 8.6% in May and above the 8.8% Dow Jones estimate.
The U.S. Federal Reserve is now expected to ramp up its battle against the 40-year high inflation and could consider a supersized 100 basis points rate hike this month.
According to Hernan Moscoso Boedo, an economist at the University of Cincinnati, the fresh inflation data "will put more pressure on the Fed to increase the interest rate more than expected, and that increases the possibility that the U.S. is going to enter a recession."
However, amid this scenario, we think Alpha Metallurgical Resources, Inc. (AMR), Bayer Aktiengesellschaft (BAYRY), Valhi, Inc. (VHI), and Veritiv Corporation (VRTV) possess the requisite financials and solid growth attributes to stay resilient. So, these stocks could be wise additions to your watchlist. These stocks are also rated Strong Buy in our proprietary POWR Ratings system.
Alpha Metallurgical Resources, Inc. (AMR)
AMR, a mining company, produces, processes, and sells met and thermal coal in Virginia and West Virginia. As of December 31, 2021, it operated twenty active mines and eight coal preparation and load-out facilities.
Last month AMR announced various positive financial updates, including eliminating its remaining term loan balance. The company made a voluntary prepayment of $99.4 million on its term loan, which eliminated all remaining principal and paid the loan in full. Its board of directors authorized a $600 million share repurchase program. As of June 3, the company purchased 860,934 shares of common stock at $126.3 million.
For the three months ended March 31, 2022, AMR's total revenues increased 177.5% year-over-year to $1.07 billion. Its income from operations amounted to $453.09 million compared to a loss of $16.50 million in the previous quarter.
Its net income stood at $400.89 million compared to a loss of $32.93 million in the prior-year quarter. The company’s EPS came in at $1.96 compared to a loss per share of $1.79 in the prior period.
Analysts expect AMR's revenue to increase 213.4% year-over-year to $1.24 billion for the second quarter ending June 2022. The company's EPS is expected to grow 493.3% year-over-year to $26.10 for the third quarter ending September 2022. The company's shares have soared 426.3% over the past year and 105.2% over the past nine months.
AMR's POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
AMR is also rated an A grade for Growth and Value and a B for Quality. Within the A-rated Coal industry, it is ranked #3 of 11 stocks. To see additional POWR Ratings for Momentum, Stability, and Sentiment for AMR, click here.
Bayer Aktiengesellschaft (BAYRY)
Headquartered in Leverkusen, Germany, BAYRY, along with its subsidiaries, functions as a life science company worldwide. It has three operational segments: Pharmaceuticals segments; Consumer Health; and Crop Science segments.
BAYRY's net sales increased 18.7% year-over-year to €14.64 billion ($14.64 billion) for the first quarter ending March 31, 2022. Its EBIT grew 36.7% from its year-ago value to €4.21 billion ($4.51 billion), while its net income improved 57.5% from its prior-year quarter to €3.29 billion ($3.52 billion). The company's EPS rose 57.3% year-over-year to €3.35.
The consensus EPS estimate of $0.32 for the third quarter ending September 2022 represents 4.6% year-over-year growth. Analysts expect revenue to increase 1.4% year-over-year to $49.42 billion for fiscal 2023. The stock has gained 6.6% year-to-date and 3.2% over the past nine months.
BAYRY's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Buy in our POWR Ratings system. The stock also has an A grade for Growth and Value and a B for Stability. Within the F-rated Medical – Pharmaceuticals industry, it is ranked #6 of 169 stocks.
In total, we rate BAYRY on eight different levels. Beyond what we've stated above, we have also given BAYRY grades for Sentiment, Momentum, and Quality. Get all the BAYRY ratings here.
Valhi, Inc. (VHI)
Headquartered in Dallas, Texas. VHI, Inc. is a subsidiary of Contran Corporation and is engaged in the chemicals, component products, and real estate management and development businesses in the Asia Pacific, Europe, North America, and internationally.
In April, VHI announced a multi-year regional licensing agreement of subsidiary Transforming Systems (TS) SHREWD suite of solutions with NHS England and NHS Improvement Midlands (NHSEI or the Customer). This transaction indicates a new customer sale for the company, with TS having engaged with NHSEI since July 2021.
VHI’s total net sales amounted to $509.00 million for the first quarter ending March 31, 2022. Its total operating income came in at $51.30 million over the period, while its net income stood at $14.50 million. The company’s EPS amounted to $0.52 over the period.
The consensus EPS estimate of $2.01 for the second quarter ending June 2022. represents a 168% year-over-year growth. The company’s shares have surged 69.2% over the past year and 75.4% over the past nine months.
VHI'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. The stock has an A grade for Growth and Value and a B grade for Sentiment. In the A-rated Chemicals industry, it is ranked #1 of 90 stocks.
In total, we rate VHI on eight different levels. Beyond what we've stated above, we have also given VHI grades for Quality, Stability, and Momentum. Get all the VHI ratings here.
Veritiv Corporation (VRTV)
VRTV functions as a business-to-business provider of value-added packaging products and services, facility solutions, and print and publishing products and services internationally.
The Packaging segment provides custom and standard packaging solutions; the Facility Solutions segment sources and sells cleaning, break-room, and other supplies; the Publishing segment sells and distributes coated and uncoated commercial printing papers to publishers and retailers, converters, printers, and specialty businesses.
In the first quarter ending March 31, 2022, VRTV's net sales increased 19.2% year-over-year to $1.86 billion. The operating income grew 152.8% from its year-ago value to $87.20 million, while its net income improved 268.5% from its prior-year quarter to $78.50 million. The company's EPS rose 300% from its previous period to $5.12.
Analysts expect VRTV's revenue to increase 8% year-over-year to $1.79 billion for the second quarter ending June 2022. The consensus EPS estimate of $4.50 for the second quarter ending June 2022 represents a 177.8% improvement year-over-year.
In addition, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters. The stock has gained 73.2% over the past year.
It is no surprise that VRTV has an overall A rating, which equates to Strong Buy in our POWR Ratings system. VRTV has an A grade for Value and Growth. Within the A-rated Industrial – Packaging industry, it is ranked #1 of 21 stocks.
Click here to see the additional POWR Ratings for VRTV (Momentum, Sentiment, Stability, and Quality).
AMR shares were trading at $122.10 per share on Thursday afternoon, down $2.57 (-2.06%). Year-to-date, AMR has gained 100.51%, versus a -19.91% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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