The Federal Reserve has been trying to tame the surging inflation by raising the interest rates. After the second straight 75-basis point hike last week, at least four regional Fed presidents have indicated that a large interest rate increase is on the table in September and in coming months to bring the surging inflation down to around the 2% target, despite the threat of an impending economic slump.
Moreover, the U.S. economy contracted for two consecutive quarters this year, making many analysts believe that a recession has arrived. However, better-than-expected corporate profits and some favorable economic data are providing great support to the stock market lately.
Given this backdrop, we think it could be wise to invest in under-the-radar penny stocks ARC Document Solutions, Inc. (ARC), Dynagas LNG Partners LP (DLNG), and TransGlobe Energy Corporation (TGA). These stocks are also rated Strong Buy in our proprietary POWR Ratings system.
ARC Document Solutions, Inc. (ARC)
ARC, a digital printing company, provides digital printing and document-related services in the United States. It provides managed print services that place, manage, and optimize print and imaging equipment in customers’ offices, job sites, and other facilities; and cloud-based document management software and other digital hosting services.
For the third quarter ending June 30, 2022, ARC’s net sales increased 8.4% year-over-year to $74.56 million. Its income from operations came in at $5.56 million, up 32.9% from its prior-year quarter, while its net income grew 26.7% year-over-year to $3.26 million. The company’s EPS increased 33.3% from the year-ago value to $0.08.
The stock has gained 26.2% over the past year to close its last trading session at $2.84.
ARC’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.
The stock also has an A grade for Quality and Value and a B for Sentiment. Within the B-rated Outsourcing – Business Services industry, it is ranked #2 of 41 stocks. Click here to see additional POWR Ratings for Growth, Stability, and Momentum for ARC.
Dynagas LNG Partners LP (DLNG)
DLNG operates in the seaborne transportation industry worldwide. The company owns and operates liquefied natural gas (LNG) carriers. As of April 29, 2022, its fleet consisted of six LNG carriers with an aggregate carrying capacity of approximately 914,100 cubic meters.
During the quarter ending March 31, 2022, DLNG’s revenues amounted to $33.45 million. Its operating income amounted to $12.56 million, while its net income grew 50.5% from its year-ago value to $23.88 million. The company’s EPS rose 58.3% from its prior-year quarter to $0.57.
The consensus EPS estimate of $0.24 for the fourth quarter ending December 2022 represents a 4.4% year-over-year growth. Analysts expect revenue to increase 0.9% year-over-year to $133.45 million for fiscal 2023. The stock has gained 17.7% year-to-date and 15.3% over the past six months to close its last trading session at $3.40.
DLNG’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 also has an A grade for Sentiment and Momentum and a B for Value. Within the A-rated Shipping industry, it is ranked #4 of 44 stocks.
In total, we rate DLNG on eight different levels. Beyond what we’ve stated above, we have also given DLNG grades for Stability, Growth, and Quality. Get all the DLNG ratings here.
TransGlobe Energy Corporation (TGA)
Headquartered in Calgary, Canada, TGA is involved in the acquisition, exploration, development, and production of crude oil and natural gas in Egypt and Canada. The company holds interests in four production sharing concessions, which include West Gharib, West Bakr, NW Gharib, and South Ghazalat, Egypt.
TGA’s revenue increased 193.3% year-over-year to $52.95 million for the first quarter ended March 31, 2022. Its net earnings amounted to $48.81 million compared to a net loss of $11.02 million. The company’s EPS improved 14.3% year-over-year to $0.08.
Analysts expect TGA’s revenue to increase 100.9% year-over-year to $339.50 million for fiscal 2022. The company’s EPS is expected to grow 348.8% year-over-year to $1.23 for December 2022. Closing its last trading session at $3.18, the stock has gained 92.7% over the past year.
It is no surprise that TGA has an overall A rating, equating to Strong Buy in our POWR Ratings system. TGA has an A grade for Momentum and a B grade for Growth and Quality.
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ARC shares were trading at $2.88 per share on Thursday afternoon, up $0.04 (+1.41%). Year-to-date, ARC has declined -13.71%, versus a -12.15% 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. More...
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