The macroeconomic and geopolitical uncertainty since the beginning of the year has led to several quality stocks trading at discounted valuations. The highly volatile market has compelled many investors to stay away from fundamentally strong stocks.

However, the macroeconomic picture might improve as inflation slightly eased in October. The consumer price index rose 7.7% year-over-year and 0.4% sequentially, both coming lower than expected last month. Also, the recently released minutes from the Fed’s policy meeting showed signs that the central bank might slow down the current pace of rate hikes.

As we’re getting closer to the end of the year, CNBC’s Jim Cramer expects the seasonal pattern to play out where the stocks in the benchmark S&P 500 will rally in December.

Given this backdrop, investors looking for bargains could consider buying fundamentally strong stocks like Albertsons Companies, Inc. (ACI), Berry Corporation (BRY), and Good Times Restaurants Inc. (GTIM), which are trading at discounts to their peers.

Albertsons Companies, Inc. (ACI)

ACI engages in the operation of food and drug stores. The company offers grocery, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services. It also manufactures and processes food products for sale in stores.

On October 14, 2022, Kroger (KR) and ACI announced that they had entered into a definitive merger agreement. CEO of ACI, Vivek Sankaran, believes that together with Kroger, they will be able to provide customers with greater value and access to fresh food and essential pharmacy services and positively impact their associates and communities.

In terms of forward non-GAAP P/E, ACI’s 7x is 64.1% lower than the 19.49x industry average. Likewise, its 8.51x forward EV/EBIT is 45.7% lower than the 15.69x industry average. In addition, its 0.15x forward P/S is 87.8% lower than the 1.19x industry average.

ACI’s net sales and other revenue for the second quarter ended September 10, 2022, increased 8.6% year-over-year to $17.92 billion. The company’s adjusted net income increased 13.2% year-over-year to $418.30 million. Moreover, its adjusted EBITDA increased 8.6% year-over-year to $1.05 billion, while its adjusted net EPS came in at $0.72, representing a 12.5% increase from the prior-year quarter.

Analysts expect ACI’s EPS for the quarter ending May 31, 2023, to increase 1.2% year-over-year to $0.85. Its revenue for the quarter ending November 30, 2022, is expected to increase 4.3% year-over-year to $17.45 billion. The stock has gained 1.9% over the past month to close the last trading session at $20.76.

ACI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It is ranked #6 out of 39 stocks in the A-rated Grocery/Big Box Retailers industry. It has an A grade for Value and a B for Quality.

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

Berry Corporation (BRY)

BRY, an independent upstream energy company, develops and produces conventional oil reserves. It operates in two segments, Development and Production and Well Servicing and Abandonment.

In terms of forward non-GAAP P/E, BRY’s 4.21x is 45.9% lower than the 7.78x industry average. Likewise, its 4.03x forward EV/EBIT is 48.7% lower than the 7.86x industry average. In addition, its 0.77x forward P/S is 44.6% lower than the 1.39x industry average.

BRY’s total revenues for the fiscal third quarter ended September 30, 2022, increased 162.5% year-over-year to $376.45 million. Its adjusted net income increased 294.5% year-over-year to $45.52 million. Its adjusted EBITDA increased 63.5% year-over-year to $96.98 million. In addition, its EPS on adjusted net income came in at $0.55, representing a 292.9% increase from the prior-year quarter.

Analysts expect BRY’s EPS for the quarter ending December 31, 2022, to increase 175% year-over-year to $0.33. Its revenue for the quarter ending March 31, 2023, is expected to increase 124.3% year-over-year to $211.05 million. It has a commendable earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters. The stock has gained 16.2% year-to-date to close the last trading session at $8.69.

It’s no surprise that BRY has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. Within the B-rated Energy – Oil & Gas industry, it is ranked #7 out of 92 stocks. The company has an A grade for Value and Momentum and a B for Growth.

Click here to see the additional POWR Ratings of BRY for Stability, Sentiment, and Quality.

Good Times Restaurants Inc. (GTIM)

GTIM is a company engaged in the restaurant business. It operates and franchises Good Times Burgers & Frozen Custard; and owns, operates, franchises, and licenses Bad Daddy’s Burger Bar.

On October 18, GTIM announced that same-store sales for the fourth fiscal quarter ended September 27, 2022, increased 5.9% for its Good Times brand and 3.7% for its Bad Daddy’s brand. Average weekly sales for the quarter for its Good Times brand and Bad Daddy’s brand came in at $29,896 and $49,945, respectively.

For the fiscal third quarter ended June 28, 2022, GTIM’s total net revenues increased 7.5% year-over-year to $36.50 million. Its cash and cash equivalents came in at $9.70 million, compared to $8.85 million for the fiscal year ended September 28, 2021. The company’s total long-term liabilities decreased 5.8% to $47.02 million, compared to $49.93 million for the fiscal year ended September 28, 2021.

In terms of trailing-12-month P/S, GTIM is trading at 0.23x, 73.3% lower than the industry average of 0.86x. Also, in terms of trailing-12-month P/B, the stock’s 1.11x is 46.8% lower than the industry average of 2.08x.

Over the past month, the stock has gained 11.1% to close the last trading session at $2.53.

GTIM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It is ranked first out of 47 stocks in the A-rated Restaurants industry. In addition, it has an A for Value and a B for Growth, Momentum, Sentiment, and Quality.

We have also given GTIM a grade for Stability. Get all GTIM ratings here.

ACI shares were trading at $20.80 per share on Tuesday morning, up $0.04 (+0.19%). Year-to-date, ACI has declined -6.54%, versus a -15.47% rise in the benchmark S&P 500 index during the same period.

About the Author: Malaika Alphonsus

Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions. More...

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