The Fed is expected to increase rates further in the upcoming months to achieve its target inflation level. However, according to John R. Mowrey, a chief investment officer of NFJ Investment Group, “78% of the time, when the Fed is hiking, stocks are rising.”

Therefore, investors could consider buying momentum stocks Celestica Inc. (CLS - Get Rating) and Unit Corporation (UNTC - Get Rating), which are worth holding for the long term.

Additionally, as the labor market remains resilient, recession odds are gradually dwindling. JPMorgan Chase & Co. economists projected the U.S. would enter a mere “mild” recession next year if at all a recession remains a possibility that long. Also, a Wharton professor, Jeremy Siegel, believes the Fed could avoid a recession and a slowdown.

Amid rising optimism, lets discuss the under-the-radar stocks mentioned above in detail:

Celestica Inc. (CLS - Get Rating)

Headquartered in Toronto, Canada, CLS provides hardware platform and supply chain solutions in North America, Europe, and Asia. It operates through two segments, Advanced Technology Solutions and Connectivity & Cloud Solutions.

CLS’ forward EV/Sales of 0.26x is 90.7% lower than the industry average of 2.83x, while its forward Price/Sales of 0.21x is 92.3% lower than the industry average of 2.71x.

Its trailing-12-month ROCE and ROTC of 9.27% and 7.14% are 86.4% and 122.7% higher than the industry averages of 4.97% and 3.21%.

CLS’ revenue came in at $2.04 billion for the fourth quarter that ended December 31, 2022, up 35.1% year-over-year. Its net earnings increased 32.9% year-over-year to $42.40 million, while its EPS increased 34.6% year-over-year to $0.35.

Analysts expect CLS’ revenue to increase 4.8% year-over-year to $7.60 billion in the current fiscal year 2023. Its EPS is expected to increase 6.3% year-over-year to $2.02 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 13.1% to close the last trading session at $13.01.

CLS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

CLS has an A grade for Growth, Value, and Momentum and a B for Sentiment. Within the Technology – Services industry, it is ranked #2 out of 80 stocks. Click here for the additional POWR Ratings for Stability and Quality for CLS.

Unit Corporation (UNTC - Get Rating)

UNTC and its subsidiaries engage in the exploration, acquisition, development, and production of oil and natural gas properties in the United States. It operates through three segments: Oil and Natural Gas, Contract Drilling, and Mid-Stream.

UNTC’s trailing-12-month EV/Sales of 0.44x is 75.2% lower than the industry average of 1.76x. Its trailing-12-month Price/Sales of 0.70x is 43.3% lower than the industry average of 1.23x.

Its trailing-12-month gross profit margin of 48.23% is 5% higher than the industry average of 45.95%. Its trailing-12-month EBITDA margin of 34.51% compares with the industry average of 34.14%.

UNTC’s oil and natural gas revenues came in at $80.03 million for the third quarter that ended September 30, 2022, up 51.3% year-over-year. Its net income increased 786.7% year-over-year to $55.82 million. Moreover, its EPS came in at $5.60, representing a 918.2% year-over-year rise.

Street expects UNTC’s EPS to rise 44% per annum for the next five years. The stock has gained 8.7% over the past year to close the last trading session at $48.00.

It’s no surprise that UNTC has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Value, Momentum, and Quality.

UNTC is ranked #5 out of 91 stocks in the B-rated Energy – Oil & Gas industry. Get additional POWR Ratings for UNTC (Growth, Stability, and Sentiment) here.

Consider This Before Placing Your Next Trade…

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CLS shares were trading at $12.97 per share on Thursday morning, down $0.04 (-0.31%). Year-to-date, CLS has gained 15.08%, versus a 3.01% 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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