The Federal Reserve officials last week indicated that interest rates would be hiked further to tame the skyrocketing inflation. And Nobel Prize-winning economist Joseph Stiglitz believes that the Fed’s hawkish tilt has the potential to intensify inflationary pressures further.
Moreover, fresh lockdowns in China are raising global growth concerns. Also, high energy costs are weighing on European markets.
On the other hand, the job market is showing resilience, with 315,000 jobs added in August. Non-farm payrolls rose steadily for the month. However, the unemployment rate ticked higher than expectations, largely due to a rising labor force participation rate.
Amid these uncertain times, investing in fundamentally strong stocks Casey’s General Stores, Inc. (CASY), Flowers Foods, Inc. (FLO), and TravelCenters of America Inc. (TA) might be ideal for the long run. These stocks are rated Strong Buy in our proprietary POWR Ratings system.
Casey’s General Stores, Inc. (CASY)
CASY operates convenience stores under the Casey’s and Casey’s General Store names. Its stores offer a selection of food, beverages, tobacco and nicotine products, health and beauty aids, automotive products, and other non-food items. The company’s stores also provide motor fuel for sale on a self-service basis.
On June 14, CASY announced the launch of MTN DEW OVERDRIVE™, the newest addition to the MTN DEW flavor line-up, exclusively available at Casey’s convenience stores. This might add to the company’s revenue.
CASY’s total revenue came in at $3.46 billion for the fourth quarter that ended April 30, 2022, representing a 45.4% year-over-year growth. Its adjusted EBITDA grew 17.8% from the prior-year quarter to $165.51 million, while its net income rose 43.4% from the same period last year to $59.78 million. The company’s EPS increased 42.9% from the prior-year period to $1.60.
Analysts expect CASY’s revenue for the first quarter ended July 2022 to be $4.52 billion, indicating a 41.9% year-over-year growth. The company’s EPS for the same quarter is expected to increase 9.3% from the prior-year quarter to $3.49. Additionally, CASY has topped consensus EPS estimates in three of the trailing four quarters, which is impressive.
CASY has gained 16.3% over the past three months to close its last trading session at $215.70. The stock has gained 4.9% over the past month.
CASY’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.
CASY has a B grade for Growth and Quality. It is ranked #11 out of 38 stocks in the A-rated Grocery/Big Box Retailers industry.
Beyond what we’ve stated above, we have also given CASY grades for Value, Momentum, Stability, and Sentiment. Get all CASY ratings here.
Flowers Foods, Inc. (FLO)
FLO produces and markets packaged bakery products under the brands: Nature’s Own, Dave’s Killer Bread, Wonder, Canyon Bakehouse, Mrs. Freshley’s, and Tastykake in the United States. The company distributes its products through a direct-store-delivery distribution and a warehouse delivery system, as well as operates bakeries.
On August 19, FLO declared a quarterly dividend of $0.22 per share, which indicates an increase of 4.8% over the same quarter last year. The dividend is payable to shareholders on September 16. This reflects the cash generation ability of the company.
On July 12, FLO announced that it had made an investment in Base Culture, a brand offering gluten-free and grain-free sliced bread and baked goods. This investment might provide returns for FLO.
For the second quarter ended July 16, FLO’s sales increased 11% year-over-year to $1.13 billion. Adjusted net earnings and adjusted net earnings per share came in at $65.21 million and $0.31. For the six months ended July 16, FLO’s net income increased 8.8% to $ 139.27 million.
The consensus EPS estimate of $0.25 for the fiscal quarter ending December indicates a 24.6% improvement year-over-year. The consensus revenue is expected to increase 11.3% from the prior-year period to $1.09 billion for the same period. Additionally, FLO has topped consensus EPS estimates in three out of the trailing four quarters, which is impressive.
The stock has gained 12.7% over the past year to close its last trading session at $27.28.
It is no surprise that FLO has an overall A rating, which translates to Strong Buy in our POWR Ratings system. It is rated an A in Growth and a B in Quality. Within the B-rated Food Makers industry, it is ranked #6 out of 86 stocks.
To see additional POWR Ratings for Value, Momentum, Stability, and Sentiment for FLO, click here.
TravelCenters of America Inc. (TA)
TA operates travel centers, truck service facilities, and restaurants in the United States and Canada. The company operates travel centers that offer various products and services, operates quick-service restaurants, and travel stores that provide general merchandise.
In June, Service Management Group (SMG) announced a new customer experience management program with TA. This partnership is expected to help TA improve guest satisfaction, leveraging SMG’s expertise.
In the second quarter ended June 30, TA’s total revenues increased 67.9% year-over-year to $3.08 billion. Its income from operations grew 89.3% year-over-year to $94.23 million. The company’s adjusted net income rose 117% year-over-year to $64.40 million, while its adjusted net income per share came in at $4.34, increasing 108.7% from its prior-year quarter value.
Analysts expect TA’s revenue for the quarter ending September 2022 to be $2.72 billion, indicating a 40% year-over-year growth. The company’s EPS for the same quarter is expected to increase 68.5% from the prior-year quarter to $2.56. Additionally, TA has an excellent record of surpassing the consensus EPS estimates in each of the trailing four quarters
TA has gained 44.7% over the past three months and 29.7% over the past month to close its last trading session at $55.05.
TA’s overall A rating translates to Strong Buy in our POWR Ratings system. It has an A grade for Growth and Value and a B for Sentiment and Quality. In the Specialty Retailers industry, it is ranked #1 out of 46 stocks. Click here to get TA’s grade for Momentum and Stability.
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CASY shares were trading at $213.24 per share on Friday afternoon, down $2.46 (-1.14%). Year-to-date, CASY has gained 8.64%, versus a -16.80% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...
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