This year has been a promising one for the tech sector thanks to pandemic-led changes in consumer and business behavior. Most tech stocks skyrocketed with the onset of the pandemic before losing some value in the recent market sell-off. With positive news regarding the development of coronavirus vaccines there has been a market rotation out of tech stocks into other non-tech stocks. Despite growing at a decent pace, many of these stocks received little investor attention earlier.
There is a strong chance that many non-tech stocks will experience solid rebounds next year once the spread of the virus is under control with the help of the vaccines. So, betting on some affordable stocks now could be a capital idea.
Cronos Group Inc. (CRON), FuelCell Energy, Inc. (FCEL), Aphria Inc. (APHA), United Microelectronics Corporation (UMC), and Aluminum Corporation of China Limited (ACH) are five such stocks that are trading below $10 and have the ability to generate huge returns going into 2021 based on their strong revenue and earnings outlook.
Cronos Group Inc. (CRON)
Based in Toronto, Canada, CRON operates as a cannabinoid company. The Company is focused on cannabis research, technology, and product development. Its portfolio includes PEACE NATURALS, a global wellness platform, COVE and Spinach, two adult-use brands, and Lord Jones, Happy Dance and PEACE+, three hemp-derived CBD brands. The stock closed yesterday’s trading session at $8.55, gaining 56.6% over the last three months. The stock is currently trading 6.6% below its 52-week high of $9.15.
The company’s net revenue increased 96.3% year-over-year to $11.4 million for the third quarter ended September 2020. CRON’s revenue from the United States increased 142.8% year-over-year to $1.6 million. Revenue from the rest of the world increased 90.2% year-over-year to $9.7 million primarily due to the continued growth in the adult-use Canadian cannabis market and growth in the Israeli medical cannabis market.
The consensus revenue estimate of $41.59 million for the current quarter ending December 2020 indicates a 75.2% increase year-over-year. In fact, CRON’s earnings-surprise history is impressive, with the company missing the consensus estimate in just one of the trailing four quarters.
In October, CRON announced the launch of Happy Dance, which is a CBD skincare brand, co-founded with actress Kristen Bell. The company launched PEACE NATURALS, its leading medical brand, in pharmacies throughout Israel through Cronos Israel. The cannabis usage rate in Israel is among the highest in the world providing the company an excellent growth opportunity.
How does CRON stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
B for Industry Rank
A for Overall POWR Rating
The stock is also ranked #4 out of 27 stocks in Agriculture industry.
FuelCell Energy, Inc. (FCEL)
Based in Danbury, Connecticut, FCEL delivers fuel cell power solutions. The company manufactures, sells, installs, operates, and services stationary fuel cell power plants for distributed power generation. FCEL’s SureSource power plants are located across three continents. They generate millions of megawatts of ultra-clean power. The company offers its services to various sectors, including utility companies, municipalities, universities, government entities and a range of industrial and commercial enterprises. FCEL has gained 214.8% over the past six months to close yesterday’s trading session at $7.24.
The company’s advanced technology revenue increased 19.5% year-over-year to $6.9 million for the fiscal third quarter ended July 2020. The company’s operating expenses decreased 16% year-over-year to $7.6 million. Analysts expect FCEL’s revenue to increase 56.1% for the quarter ended October, 17.1% this year, and 25.3% next year. The company’s EPS is expected to increase 73.1% this year, 48.7% next year, and at a rate of 15% per annum in the next five years.
The company received an $8 million funding award by the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy, in collaboration with the Office of Nuclear Energy. FCEL announced several developments on October 8th as it celebrated the National Hydrogen and Fuel Cell Day. The company’s SureSource Hydrogen systems are being modified to produce extra hydrogen. A standard SureSource Hydrogen system generates enough electricity to supply roughly 2,350 average-sized homes.
FCEL’s POWR Ratings reflect this promising outlook. It has an overall rating of “Buy” with an “A” for Trade Grade, and a “B” for Industry Rank. Among the 59 stocks in the Industrial – Equipment industry, it’s ranked #31.
Aphria Inc. (APHA)
Founded in 2013, APHA is a cannabis company. Headquartered in Leamington, Canada, the company has operations in Canada, Germany, Italy, Malta, Colombia, and Argentina. With the objective of producing high-quality cannabis in the most natural growing conditions, the company is engaged in the production and supply of medical marijuana. APHA has gained 59% so far this year to close yesterday’s trading session at $8.30. The stock is currently trading 4.3% below its 52-week high of $8.68.
The company’s net revenue increased 15.5% year-over-year for the quarter ended August 2020. The company continues to invest in the medical cannabis space within Canada and international markets through the development of innovative product offerings, state‐of‐the‐art facilities, and the expansion of its global supply chain. Cannabis revenue increased 134.4% year-over-year. Gross profit increased 65.7% year-over-year.
The consensus EPS estimate for the fiscal period ending May 2021 indicates a 75.9% increase year-over-year. The consensus revenue of $535.08 million over the same period indicates a 31.4% increase from the same period last year.
On November 30th, APHA closed the accretive, strategic acquisition of SW Brewing Company, LLC (SweetWater Brewing Company or SweetWater) which is one of the largest independent craft brewers in the United States. The company expanded 510 vapes across its brand portfolio, including Broken Coast’s first cannabis 2.0 product.
It is no surprise that APHA is rated “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank. In the 240-stock Medical – Pharmaceuticals industry, it is ranked #12.
United Microelectronics Corporation (UMC)
A leading semiconductor foundry, UMC has been in business for nearly four decades. The company provides advanced integrated circuit (IC) production for applications spanning across the major sectors in the electronics industry. The Taiwan-based company primarily operates through Wafer Fabrication and New Business segments. UMC has gained 171.6% year-to-date to close yesterday’s trading session at $7.28. It is currently trading 2.9% below its 52-week high of $7.50.
For the third quarter ended September 2020, the company’s revenue increased 18.9% year-over-year to $1.5 billion due to the increasing trend in work-from-home and homeschooling. Gross profit increased 52% year-over-year to $336 million. Net income increased 362.7% year-over-year to $310 million. UMC’s Earnings per ADS increased 200% year-over-year to $0.129. The company’s monthly net sales revenue for October increased 4.8% year-over-year.
Analysts expect UMC’s revenue to increase 14.4% for the quarter ending December, 25.2% in 2020, and 9.5% in 2021. The company’s EPS is expected to increase 138.5% this year, 19.4% next year, and at a rate of 20% per annum in the next five years.
In November, UMC was selected as a global component for the 13th consecutive year by the Dow Jones Sustainability Index (DJSI). Earlier this year, UMC and Cadence Design Systems, Inc. (CDNS) announced that the Cadence millimeter wave reference flow achieved certification for UMC’s 28HPC+ process technology.
UMC’s strong fundamentals are reflected in its POWR Ratings, it has a “Strong Buy” rating with an “A” in Trade Grade, Buy & Hold Grade, Peer Grade, and Industry Rank. Within the Semiconductor & Wireless Chip industry, it’s ranked #20 out of 86 stocks.
Aluminum Corporation of China Limited (ACH)
Founded in 2001, ACH is an aluminum producer with operations in bauxite and coal mining, alumina refining and primary aluminum smelting. The company operates in the Alumina, Primary Aluminum, Trading, and Energy sectors. With 39 subsidiaries, ACH plays an important role in the application of aluminum in the defense industry, aeronautics and space industry, rail transport, and the production of high-end alloys for civil purposes. The stock closed Wednesday’s trading session at $9.74, gaining 102.9% in the last six months. The stock is currently trading just 2.1% below its 52-week high.
For the quarter ended September 2020, the company’s output of alumina (10,000 tonnes) increased 5% year-over-year. The output of refined alumina (10,000 tonnes) increased 4.3% year-over-year. Output of coal (10,000 tonnes) increased 3.9% year-over-year. Total comprehensive income increased 520% year-over-year.
The consensus revenue estimate of $28.28 billion for December 2021 indicates a 5.3% increase year-over-year. ACH’s EPS is expected to increase at a rate of 218.7% in the next five years.
A couple of months ago, ACH announced a New Labor and Engineering Services Framework Agreement to continue to regulate the labor and engineering services between the company and Chalco Steering. Mr. Zhu Runzhou was appointed as the president of the Company in October following the resignation of Mr. He Zhihui.
ACH’s POWR Ratings reflect this promising outlook. It has an overall rating of “Strong Buy” with an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade. Among the 5 stocks in the Aluminum industry, it’s ranked #1.
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CRON shares were trading at $8.74 per share on Thursday afternoon, up $0.19 (+2.22%). Year-to-date, CRON has gained 13.95%, versus a 15.66% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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