With the United States now experiencing a surge in average COVID-19 cases per day, the stock market has been volatile of late. Also, 10-year Treasury yields have fallen to 1.17%, putting them near their recent lows from mid-July as investors move to safer alternative investment. Concerns surrounding the spread of the COVID-19 Delta variant have kept investors on edge, which could lead to several overpriced stocks suffering corrections in the near term.
Amid this market uncertainty, quality stocks that are trading at affordable prices can be better bets. For example, low-priced stocks Celestica Inc. (CLS) and Alliance Resource Partner L.P (ARLP) possess robust balance sheets and exhibit strong fundamentals. So, we think it could be wise to bet on these stocks now.
Celestica Inc. (CLS)
Headquartered in Canada, CLS offers hardware platforms and supply chain solutions in North America, Europe, and Asia. Advanced Technology Solutions and Connectivity & Cloud Solutions are the two segments through which the company operates. It offers services to various industries, including aerospace and defense, industrial, energy, healthtech, capital equipment, original equipment manufacturers (OEMs), cloud-based, and other service providers.
Last month, CLS opened its AbelConn Electronics plant in Maple Grove, Minnesota. With this additional capacity, the company aims to assist its customers in defense, aerospace, and other highly regulated industries, such as healthtech, industrial, and smart energy.
For the second quarter, ended June 30, 2021, CLS gross profit increased 8.7% from its year-ago value to $118 million. Its operating income surged 40.9% year-over-year to$42.4 million.
The company’s net income increased 97.7% from its year-ago value to $26.3 million over this period. Its EPS increased 110% year-over-year to $0.21.
The company’s EPS is expected to grow 7.1% year-over-year to $1.05 in its fiscal year 2021. Analysts expect CLS’s revenue to increase 5% year-over-year to $5.78 billion next year. The stock has gained 7.9% over the past year and 50.4% over the past nine months to close yesterday’s trading session at $8.92.
CLS’ POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CLS is also rated an A for Value and a B for Sentiment. In addition, within the Technology services industry, it is ranked #13 of 73 stocks.
To see additional POWR Ratings for Growth, Stability, Quality, and Momentum for CLS, click here.
Alliance Resource Partner L.P. (ARLP)
ARLP produces and markets coal in the United States, primarily to utilities and industrial customers. Illinois Basin; Appalachia; and Minerals are the Tulsa, Okla.-based company’s three operational segments. In addition, the company provides a wide range of industrial and mining technology products and services, including miner and equipment tracking systems and proximity detection systems.
ARLP’s total revenue increased 42% year-over-year to $362.44 million in the second quarter, ended June 30, 2021. Its operating income came in at $55.01 million for this period, versus a $35.10 million operating loss in the first quarter of 2020. The company reported $44.04 in net income , compared to a $46.66 million net loss in the prior-year quarter. The company’s EPS totaled $0.34, versus a $0.37 loss per share in the prior-year period.
A $0.78 consensus EPS estimate for the current year represents a 176.5% increase year-over-year. The $1.43 million consensus revenue estimate for the current year represents a 7.4% increase from the same period last year. The stock has gained 137.2% over the past year and 73.7% year-to-date to close yesterday’s trading session at $7.78.
ARLP’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. ARLP also has an A grade for Momentum, Quality, and Sentiment. In addition, the stock is ranked #1 of 12 stocks in the B-rated MLPs – Others industry.
Beyond the POWR Ratings grades we have just highlighted, one can see the ARLP ratings for Growth, Value, and Stability here.
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CLS shares were trading at $8.94 per share on Tuesday morning, up $0.02 (+0.22%). Year-to-date, CLS has gained 10.78%, versus a 17.78% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...
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