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) and Unit Corporation (UNTC), 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)

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)

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…

We are still in the midst of a bear market.

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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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