July turned out to be the best month for Wall Street investors since November 2020. Despite the turbulent macro environment, the S&P 500 gained 9.1% on the backs of better-than-expected corporate earnings reports.
The Fed has lifted its benchmark interest rate by 225 basis points so far this year to control the four-decade high inflation. However, Wall Street found relief in cooling down inflation, raising the assumption that rate hikes might ease.
Moreover, Veronica Willis, an investment strategy analyst at Wells Fargo Investment Institute, said, “During a downturn, the market is at its most volatile and will experience both sharp up and down days.” Hence, it might be better to stay invested rather than exit the market.
Given this backdrop, we think fundamentally strong stocks Extreme Networks, Inc. (EXTR), Genie Energy Ltd. (GNE), Nature’s Sunshine Products, Inc. (NATR), NextGen Healthcare, Inc. (NXGN), and United Microelectronics Corporation (UMC), which are currently trading under $20 might be solid buys now.
Extreme Networks, Inc. (EXTR)
EXTR operates as a software-driven networking solutions provider that designs, develops, and manufactures wired and wireless network infrastructure equipment and engages in software development.
On August 18, EXTR introduced the Extreme AP5050; an outdoor Wi-Fi 6E Outdoor Access Point optimized for deployment across outdoor venues, convention centers, hospitals, university campuses, and large stadiums. In June, the company introduced a suite of new solutions, extending its ExtremeCloud portfolio to include new SD-WAN and AIOps with digital twin capabilities. The new offerings might significantly add to the company’s revenue stream.
EXTR’s revenue increased 10.2% year-over-year to $1.11 billion in the fiscal year ended June 30. Its non-GAAP operating earnings grew 23.5% from the year-ago value to $136.18 million, while its non-GAAP net income improved 43.2% year-over-year to $103.45 million. The company’s non-GAAP net earnings per common share rose 35.1% year-over-year to $0.77.
Analysts expect EXTR’s revenue for the fiscal year ending June 2023 to be $1.23 billion, indicating an increase of 10.6% year-over-year, while its EPS is expected to improve 26.8% from the prior year to $0.98. In addition, EXTR has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
EXTR has gained 30.2% over the past year and 48.4% over the past three months to close its last trading session at $13.79.
EXTR’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.
The stock has a B grade for Growth, Value, and Quality. It is ranked #2 out of the 53 stocks in the Technology – Communication/Networking industry.
Beyond what we’ve stated above, we have also given EXTR grades for Momentum, Stability, and Sentiment. Get all EXTR ratings here.
Genie Energy Ltd. (GNE)
GNE supplies electricity and natural gas to residential and small business customers internationally. It operates in three segments, Genie Retail Energy (GRE); GRE International; and Genie Renewables.
On August 8, GNE’s Board of Directors declared a dividend of $0.075 per share of Class A and Class B common stock, payable on or about August 26. This reflects upon the cash generation ability of the company.
GNE’s gross profit increased 218.2% year-over-year to $67.47 million in the second quarter ended June 30. Its operating income grew 968.7% from the year-ago value to $48.48 million, while its net income attributable to common stockholders improved 578.3% year-over-year to $33.90 million. The company’s net earnings per common share increased 584.2% from its year-ago value to $1.30.
Over the past six months, GNE’s stock has gained 77.8 % to close its last trading session at $10.72. It has gained 92.5% year-to-date.
This promising prospect is reflected in GNE’s POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
GNE has an A grade for Value and a B for Momentum, Sentiment, and Quality. It is ranked #1 of 66 stocks in the Utilities – Domestic industry.
Click here for the additional POWR Ratings for Growth and Stability for GNE.
Nature’s Sunshine Products, Inc. (NATR)
NATR is a natural health and wellness company that primarily manufactures and sells nutritional and personal care products globally. It offers general health products related to blood sugar support, bone health, cellular health, cognitive function, joint health, mood, sexual health, sleep, and vision.
On July 20, NATR announced that its US manufacturing facility had converted to 100% solar energy to power its operations. Terrence Moorehead, the CEO of NATR, said, “Transitioning our manufacturing facility to renewable energy one year ahead of our goal is just one of the sustainability-focused milestones Nature’s Sunshine is implementing as we focus on becoming the supplement company of the future.”
NATR’s net sales came in at $104.16 million for the second quarter of 2022 ended June 30. Its adjusted EBITDA amounted to $8.98 million. The company’s adjusted net income came in at $930 thousand and non-GAAP EPS for the period amounted to $0.03.
Analysts expect NATR’s revenue for the fiscal year ending December 2023 to be $451.00 million, indicating a 7.5% year-over-year growth. The company’s EPS for the same year is expected to increase 256% from the prior year to $0.89.
NATR has declined marginally over the last five days to close its last trading session at $10.16.
It is no surprise that NATR has an overall A rating, which translates to Strong Buy in our POWR Rating system.
NATR has an A grade for Value, Sentiment, and Quality and a B for Stability. It is ranked #1 of 9 stocks in the B-rated Medical – Consumer Goods industry.
Beyond what we’ve stated above, we have also given NATR grades for Growth and Momentum. Get all NATR ratings here.
NextGen Healthcare, Inc. (NXGN)
NXGN operates as a provider of healthcare technology solutions. The company offers clinical care solutions, financial solutions, patient engagement solutions, integrated clinical care, and financial solutions, interoperability solutions, data and analytics solutions, and value-based care solutions.
On August 9, NXGN also announced the addition of increased functionality to NextGen Virtual Visits, which is expected to allow practices and patients to participate in virtual group visits and invite additional stakeholders to telehealth appointments. The enhancement might benefit the company.
In July, NXGN announced that it had expanded its long-term relationship with InstaMed, a J.P. Morgan company, in a deal that should modernize payment processing. This solution expands payment options and convenience for patients who can pay online when visiting providers that utilize the NextGen Practice Management solution. The convenient payment option might be beneficial for NXGN.
For the first quarter of 2022, NXGN’s total revenues increased 4.9% year-over-year to $153.30 million. Its income from operations amounted to $1.19 million. Non-GAAP net earnings and non-GAAP net earnings per share came in at $10.67 million and $0.16.
Street EPS estimate for the fiscal third quarter (ending December 2022) of $0.28 reflects a rise of 16% year-over-year. Likewise, Street revenue estimate for the same quarter of $158.37 million indicates an improvement of 5.8% from the prior-year period. Additionally, NXGN has topped consensus EPS estimates in three of the trailing four quarters.
Over the past year, NXGN’s stock has gained 17.1% to close its last trading session at $17.58.
This promising prospect is reflected in NXGN’s POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system.
NXGN has a B grade for Growth, Value, Stability, and Quality. It is ranked #7 out of 83 stocks in the Medical – Services industry.
Click here to see the additional POWR Ratings for NXGN (Momentum and Sentiment).
United Microelectronics Corporation (UMC)
UMC operates as a semiconductor wafer foundry internationally. The company provides circuit design, mask tooling, wafer fabrication, and assembly and testing services. It is headquartered in Hsinchu City, Taiwan.
On June 23, UMC announced that the Science Based Targets initiative (SBTi) had approved its emissions reduction targets, making the company the first semiconductor foundry globally to obtain SBTi validation of climate goals. The company believes that this marks a critical step in its roadmap to achieve net zero emissions by 2050.
UMC’s operating revenues came in at $2.43 billion for the second quarter of 2022, representing a 41.5% year-over-year growth. Its operating income grew 148.8% from the prior-year quarter to $948.00 million, while its net income rose 81.2% from the same period last year to $723 million. The company’s earnings per ADS increased 77.6% from the prior-year period to $0.29.
Analysts expect UMC’s revenue for the third quarter ending September 2022 to be $2.40 billion, indicating a 20.3% year-over-year growth. The company’s EPS for the same quarter is expected to increase 78.7% from the prior-year quarter to $0.35.
UMC has declined 4.7% over the past month to close its last trading session at $6.96.
It is no surprise that UMC has an overall A rating, which translates to Strong Buy in our POWR Rating system.
UMC has an A grade for Value and Quality and a B for Momentum. It is ranked #2 out of 96 in the Semiconductor & Wireless Chip industry.
Beyond what we’ve stated above, we have also given UMC grades for Growth, Stability, and Sentiment. Get all UMC ratings here.
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REVISED: 2023 Stock Market Outlook (includes top 7 picks)
EXTR shares were trading at $13.73 per share on Monday afternoon, down $0.06 (-0.44%). Year-to-date, EXTR has declined -12.55%, versus a -12.33% 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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