The stock market has been volatile of late owing to the resurgence of COVID-19 cases, surging inflation, and rising geopolitical tensions. Because concerns over a slowing economic recovery could lead to a market correction in the near term, we think it could be wise to bet on fundamentally sound mid-cap stocks that have business momentum.
Historically, mid-cap stocks have delivered better returns than large-cap stocks and remained more stable than small-cap stocks. Looking at recent performance, the SPDR Portfolio S&P 400 Mid Cap ETF (SPMD) delivered 1.6% returns over the past month, outperforming the SPDR S&P 500 Trust ETF’s (SPY) 1.2% returns.
So, investors seeking to dodge market volatility could consider betting on mid-cap stocks AGC Inc. (ASGLY), Isuzu Motors Limited (ISUZY), ICL Group Ltd (ICL), and ManpowerGroup Inc. (MAN). We think these companies are well-positioned to capitalize on their respective industry tailwinds and outperform the broader market.
AGC Inc. (ASGLY)
Headquartered in Tokyo, Japan, ASGLY manufactures and sells glass, electronics, chemicals, and ceramics worldwide. The company produces architectural glass, automotive glass, applied glass materials, and other products. It is also involved in the provision of logistics and financial services. ASGLY has a $10.35 billion market capitalization. In an announcement dated August 4, 2021, ASGLY, in collaboration with the Japan Agency for Marine-Earth Science and Technology (JAMSTEC), succeeded in simulating the fracture patterns of chemically strengthened glass in detail using a numerical analysis method for the first time ever. The companies expect this breakthrough to receive widespread recognition across the industry in the coming months.
ASGLY’s biopharmaceutical CDMO subsidiary, AGC Biologics, signed an agreement with Novartis AG’s (NVS) Novartis Gene Therapies to purchase a cell and gene therapy manufacturing facility located in Longmont, Colo. AGC Biologics is expanding its network in the U.S. to meet customers’ needs in the fast-growing field of gene and cell therapy by providing commercial GMP-compliant cell, gene therapy CDMO services, and end-to-end cell and gene services.
ASGLY’s net sales for its half-year ended June 30, 2021, came in at ¥811.33 billion ($7.38 billion), representing a 24% year-over-year improvement. The company’s operating profit has been reported ¥95.21 billion ($865.75 million) for the quarter, up 362.6% from the prior-year period. While its net profit increased 495% year-over-year to ¥78.91 billion ($717.58 million), its EPS increased 457.8% year-over-year to ¥287.20. ($2.62). As of June 30, 2021, the company had ¥248.06 billion ($2.26 billion) in cash and cash equivalents.
ASGLY surpassed consensus revenue estimates in three of the trailing four quarters. The $3.63 billion consensus revenue estimate for the current quarter, ending September 30, 2021, represents a 5.9% gain from the prior-year period. The stock has gained 64.7% in price over the past year and 10.1% over the past month. It closed yesterday’s trading session at $9.26.
It’s no surprise that ASGLY has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Growth, Stability, and Sentiment, and a B grade for Value and Quality. Click here to see the additional ratings for ASGLY’s Momentum.
ASGLY is ranked #1 of 95 stocks in the A-rated Chemicals industry.
Isuzu Motors Limited (ISUZY)
With a $8.92 billion market capitalization, ISUZY is a Japan-based company that manufactures and sells automobiles, components, and industrial engines, as well as the provision of logistics-related services. It sells commercial vehicles, light commercial vehicles, light and heavy-duty trucks, sport utility vehicles, diesel engines, and components worldwide.
On July 29, 2021, ISUZY agreed with Hino Motors, Ltd., a Japanese manufacturer of commercial vehicles and diesel engines, on OEM supply for the Isuzu N-series light-duty diesel trucks for the North American market. Rising demand for trucks due to the re-engagement of economic activities should enable the companies to now capitalize on the surging demand.
On June 8, ISUZY, Hino Motors, Ltd., and Toyota Motor Corporation’s (TM) Woven Alpha, Inc., agreed to explore the Automated Mapping Platform (AMP) developed by Woven Alpha. AMP is a connected crowdsourced software platform that provides high-precision data-driven maps. Its HD map includes data-rich information regarding road objects and topography that delivers an accurate and updated representation of the road. To realize smarter and safer logistics through automated driving and advanced driver assistance (ADAS) using HD maps, ISUZY and Hino will examine the potential application of AMP in the small commercial-purpose trucks domain.
For its fiscal first quarter, ended June 30, 2021, ISUZY’s net sales revenue increased 61.7% year-over-year to ¥529.61 billion ($4.81 billion). The company’s gross profit came in at ¥107.34 billion ($975.83 billion), up 136.8% from the prior-year period. Its operating income has been reported ¥59.34 billion ($539.45 billion) for the quarter, representing a 2613.1% year-over-year improvement. ISUZY’s net income came in at ¥53.92 billion ($490.18 million), compared to a ¥10.87 billion ($98.82 million) loss in the prior-year period. Its EPS came in at ¥60.05 ($0.55), versus a ¥13.23 ($0.12) loss per share in the year-ago period. As of June 30, 2021, the company had cash and cash equivalents of ¥463.05 billion ($4.21 billion).
Analysts expect ISUZY’s revenue to improve 28% in the current quarter, ending September 30, 2021, to $5.77 billion. The stock has gained 27.9% in price over the past year and 14.8% over the past six months. It ended yesterday’s trading session at $12.08.
ISUZY’s POWR Ratings reflect its solid prospects. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system.
ISUZY has an A grade for Value, and a B grade for Growth, Stability, and Quality. In addition to the POWR Ratings grades we’ve just highlighted, one can see ISUZY’s ratings for Momentum and Sentiment here.
Of the 62 stocks in the Auto & Vehicle Manufacturers industry, ISUZY is ranked #3.
ICL Group Ltd (ICL)
Headquartered in Tel Aviv, Israel, ICL produces and markets fertilizers, specialty minerals, and chemicals worldwide. The company operates through four segments: Industrial Products; Potash; Phosphate Solutions; and Innovative Ag Solutions. It has an $8.85 billion market capitalization.
On July 1, 2021, ICL acquired Compass Minerals International, Inc.’s (CMP) Compass Minerals América do Sul S.A., including its South American Plant Nutrition Business, for approximately $420 million. CMP’s South American Plant Nutrition business offers a broad range of plant nutrition and stimulation solutions, covering all key Brazilian crops. This acquisition positions ICL as the leading specialty plant nutrition company in Brazil, one of the world’s fastest-growing agriculture markets.
As part of their five-year supply agreement, ICL signed a contract with Indian Potash Limited (IPL) on April 5 to supply an aggregate of 600,000 metric tons of potash through December 2021. As tight supply creates solid global demand for potash, this contract reflects ICL’s leading position in the market.
ICL’s sales came in at €1.27 billion ($1.50 billion) for its fiscal second quarter, ended June 30, 2021, representing a 55.5% year-over-year rise. The company’s gross profit was $570 million, up 78.1% from the year-ago period. Its adjusted operating income has been reported at $236 million, up 84.4% from the prior-year period. ICL’s adjusted net income increased 87.5% year-over-year to $135 million, and its EPS came in at $0.11, compared to a $0.13 loss in the prior-year period. As of June 30, 2021, the company had $318 million in cash and cash equivalents.
Analysts expect the stock’s EPS to improve 158.4% year-over-year to $0.13 in the current quarter, ending September 30, 2021. It surpassed the Street’s EPS estimates in each of the trailing four quarters. A $1.82 billion consensus revenue estimate for the current quarter represents a 51% gain from the prior-year period. The stock’s EPS is expected to grow at a rate of 3.9% per annum over the next five years. The stock has gained 76.2% in price over the past year and 20.9% over the past six months. It closed yesterday’s trading session at $6.89.
ICL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
The stock has a B grade for Growth, Value, Stability, Sentiment, and Quality. We have also graded ICL’s for Momentum. Click here to access all ICL’s ratings.
ICL is ranked #4 of 95 stocks in the A-rated Chemicals industry.
ManpowerGroup Inc. (MAN)
With a market capitalization of $6.55 billion, MAN in Milwaukee, Wis., provides workforce solutions and services via its network of 2,200 offices worldwide. It offers various assessment services, career management, administrative and industrial positions, and outsourcing services related to human resources functions, primarily in the areas of large-scale recruiting and workforce-intensive initiatives.
On August 24, 2021, MAN agreed to acquire ettain group, a talent solution company that delivers recruitment solutions and managed solutions in various sectors. The acquisition should provide increased strength in delivering IT services to the higher growth financial services and healthcare industries.
MAN’s revenue from services for its fiscal second quarter, ended June 30, 2021, increased 41% year-over-year to $5.28 billion. The company’s gross profit came in at $860.10 million, up 49.1% from the prior-year period. Its operating profit came in at $169.90 million, compared to a $50 million loss in the prior-year period. MAN’s net income has been reported at $111.60 million for the quarter, versus a $64.40 million loss from the year-ago period. Its EPS was $2.02, compared to a $1.11 loss in the prior-year period. The company had $1.46 billion in cash and cash equivalents as of June 30, 2021.
A $1.89 billion consensus EPS estimate for the current quarter, ending September 30, 2021, represents a 57.7% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect MAN’s revenue to be $5.30 billion for the current quarter, representing a 15.7% rise from the prior-year period. The stock’s EPS is expected to grow at a 43.2% rate per annum over the next five years.
MAN has gained 62.9% in price over the past year and 6.5% over the past month. It closed yesterday’s trading session at $120.70.
MAN’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has an A grade for Growth and Value. Click here to see the additional ratings for MAN’s Momentum, Stability, Sentiment, and Quality.
Of the 19 stocks in the A-rated Outsourcing – Staffing Services industry, MAN is ranked #5.
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ASGLY shares were trading at $9.26 per share on Friday afternoon, down $0.03 (-0.32%). Year-to-date, ASGLY has gained 33.24%, versus a 21.22% 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. More...
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