Yesterday, U.S. stocks closed their worst-performing quarter since the advent of the COVID-19 pandemic. Concerns over surging inflation, logistical disruptions, the possibility of aggressive interest rate hikes, and geopolitical issues have driven this performance. However, overall, the market seems to have absorbed most of the negatives over the past couple of weeks and regained some stability. The progress in peace talks between Russia and Ukraine, primarily, has boosted investor sentiment.
While the possibility of aggressive interest rate hikes by the Federal Reserve could dampen economic growth, a hot job market indicates a steady economic recovery. According to DOW Jones, the unemployment rate is expected to fall to 3.7% from 3.8%. This is expected to boost investor sentiment further.
Given this backdrop, we think it could be wise to bet on beaten-down stocks Carlsberg A/S (CABGY), Masimo Corporation (MASI), and The Goodyear Tire & Rubber Company (GT) which hold solid rebound potential.
Carlsberg A/S (CABGY)
Headquartered in Copenhagen, Denmark, CABGY produces and sells beer and other beverages in Denmark and exports its products to approximately 100 countries worldwide. It offers core, craft, and specialty beers, and alcohol-free brews.
On Feb. 4, 2022, CEO Cees ’t Hart said, “We have also launched our new strategy, SAIL’27, with clear priorities for our portfolio, geographies, execution and culture and with ambitious long-term growth aspirations for the Group. Building on the strong foundation of SAIL’22 and our ambitions for the next strategy period, we’re convinced that we can continue our sustainable long-term value creation.”
CABGY’s revenue increased 17.6% year-over-year to DKK 34.95 billion ($5.20 billion) for its 2021 second half ended Dec. 31, 2021. Its consolidated profit came in at DKK 4.50 billion ($668.40 million), up 26.7% year-over-year. Also, its EPS came in at DKK 26.50, up 21.6% year-over-year.
Analysts expect CABGY’s revenue to increase 4.6% year-over-year to $10.70 billion in 2023. Its EPS is estimated to increase 3.8% per annum over the next five years. The stock has declined 29.8% in price year-to-date to close yesterday’s session at $24.36.
CABGY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
CABGY has a B grade for Stability and Quality. In the B-rated Beverages industry, it is ranked #9 of 37 stocks. Click here to see the additional POWR Ratings for Growth, Value, Momentum, and Sentiment for CABGY.
Masimo Corporation (MASI)
A global medical technology company, MASI in Irvine, Calif., develops, manufactures, and markets noninvasive monitoring technologies and hospital automation solutions worldwide. It aims to simultaneously improve patient outcomes while reducing the cost of care.
On Feb. 15, 2022, MASI agreed to acquire Viper Holdings Corporation, which owns Sound United, a consumer technology company. Joe Kiani, MASI’s chairman and CEO, said, “The technology and expertise within Sound United will serve us well as we aim to augment our Masimo SafetyNet strategy. Their well-established reputation and presence in the home can help us accelerate adoption of our wearables, and integrated, home-based telemedicine solutions.”
MASI’s product revenue increased 11% year-over-year to $327.58 million for its fourth fiscal quarter, ended Jan. 1, 2022. Its non-GAAP net income came in at $70.06 million, up 22.3% year-over-year, while its non-GAAP EPS came in at $1.21, up 23.5% year-over-year.
Analysts expect MASI’s revenue to increase 20.6% to $1.49 billion in 2022. Its EPS is expected to increase 13.1% to $4.58 in 2023. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has declined 50.3% in price year-to-date to close yesterday’s trading session at $145.54.
MASI has an overall B grade, which equates to a Buy in our POWR Ratings system. It has a B grade for Quality. Within the Medical – Devices & Equipment industry, it is ranked #21 of 161 stocks. Click here to see the additional POWR Ratings for Value, Sentiment, Momentum, Growth, and Stability for MASI.
The Goodyear Tire & Rubber Company (GT)
GT and its subsidiaries develop, manufacture, distribute, and sell tires and related products and services worldwide. It operates approximately 1,000 retail outlets, which offer products for retail sale, and provides repair and other services. GT is headquartered in Akron, Ohio.
On March 30, 2022, GT’s venture capital arm, Goodyear Ventures, added Nova Labs, formerly Helium Inc., to its growing investment portfolio. Abhijit Ganguly, managing director of Goodyear Ventures, said, “At Goodyear we are committed to enabling mobility, and we can’t wait to see what we can accomplish with Nova Labs and the Helium Network.”
For its fiscal fourth quarter, ended Dec. 31, 2021, GT’s net sales came in at $5.05 billion, up 38.2% year-over-year. Its net income came in at $553 million, up 777.8% year-over-year, while its adjusted EPS was $0.57, up 29.5% year-over-year.
Analysts expect GT’s revenue to increase 17.1% to $20.47 billion in 2022. Its EPS is estimated to increase 34.7% to $2.99 in 2023. It surpassed the EPS estimates in each of the trailing four quarters. The stock has declined 33% in price year-to-date to close yesterday’s trading session at $14.29.
It is no surprise that GT has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Value and a B grade for Growth and Quality.
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CABGY shares were trading at $24.83 per share on Friday morning, up $0.47 (+1.93%). Year-to-date, CABGY has declined -27.01%, versus a -4.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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