The fast-paced macroeconomic recovery and solid corporate earnings have allowed stock markets to remain bullish this year. The Fed’s recent announcement that it is in no rush to hike the interest rates caused the benchmark indexes to close at record highs yesterday. 

The S&P 500 index increased for seven straight months to hit 53 record closes so far this year, while the tech-heavy Nasdaq Composite has rallied for three consecutive  months.

This trend is expected to continue, given the strong investor sentiment and favorable government policies. Thus, we think fundamentally strong stocks Genesco Inc. (GCO), SilverBow Resources, Inc. (SBOW), LSI Industries Inc. (LYTS), and Ultralife Corporation (ULBI), which look undervalued at their current price levels, could witness strong momentum in the near term.

Genesco Inc. (GCO)

GCO in Nashville, Tenn., is a retailer and wholesaler of footwear, apparel, and accessories. The company operates through four segments: Journeys Group; Schuh Group; Johnston & Murphy Group; and Licensed Brands.

In terms of forward Price/Sales, GCO is currently trading at 0.42x, which is 67.5% lower than the 1.29x industry average. GCO’s 0.63 forward EV/Sales multiple is 59% lower than the 1.55 industry average.

GCO’s net sales increased 92.9% year-over-year to $538.70 million in its fiscal first quarter ended May 1. Its operating income grew 110% from its  year-ago value to $15.53 million, while its net earnings improved 106.6% year-over-year to $8.88 million over the period. The company’s EPS increased 106.3% year-over-year to $0.60.

A $2.31 billion  consensus revenue estimate for the current year indicates a 29.5% improvement from the last year. In addition, the company’s EPS is expected to come in at $4.81 in the current year, indicating a 507.6% rise year-over-year. Furthermore,  GCO surpassed the Street’s EPS estimates in each of the trailing four quarters.

GCO has gained 110.2% in price year-to-date. Over the past year, the stock has gained 231.6% to close yesterday’s trading session at $63.24. Also, GCO is currently trading above its 50-Day and 200-Day moving averages.

GCO has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

GCO has an A grade  for Momentum and Value, and B for Growth, Quality, and Sentiment. Of the 64 stocks in the A-rated Fashion & Luxury industry, GCO is ranked #2.

Beyond what we’ve stated above, we have also rated GCO for Stability. Click here to view all GCO ratings and additional details.

SilverBow Resources, Inc. (SBOW)

Houston, Tex.-based SBOW is an oil and gas company that acquires and develops assets in the Eagle Ford shale located in South Texas.

On August 13, SBOW announced  definitive agreements to acquire oil and gas assets in the Eagle Ford shale. This acquisition should bolster SBOW’s position in the industry and improve its financials. As Sean Woolverton, the company’s Chief Executive Officer, commented, “Today’s announcement expands our gas portfolio in the Western Eagle Ford, while also adding oil acreage in three new counties. Each transaction is accretive to adjusted EBITDA and further reduces our pro forma leverage ratio via the assets’ incremental cash flow.”

SBOW’s 3.36 non-GAAP forward P/E multiple  is 67.6% lower than the 10.36 industry average. In terms of forward Price/Cash Flow, SBOW is currently trading at 1.21x, which is 75.6% lower than the 4.97x industry average.

SBOW’s net sales increased 181.2% year-over-year to $69.86 million in its  fiscal second quarter, ended June 30. Its operating income grew 112.6% from the year-ago value to $33.54 million. The company’s adjusted EBITDA improved 64.7% year-over-year to $42.79 million.

Analysts expect SBOW’s revenues to increase 70.3% year-over-year to $302 million in the current year. A $7.77  consensus EPS estimate for the current  year represents  a 46.9% rise from the last year. In addition, SBOW surpassed the Street’s EPS estimates in three of the trailing four quarters. The stock has gained 274.1% in price over the past year and 245.2% year-to-date.

The company’s strong fundamentals are reflected in its POWR Ratings. SBOW has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. The stock also has a grade of A for Growth, Value and Momentum, and a B for Sentiment and Quality. Among the 92 stocks in the Energy – Oil & Gas industry, SBOW is ranked #1.

To see the SBOW rating for Stability and additional details, click here.

LSI Industries Inc. (LYTS)

LYTS provides corporate visual image solutions in the United States, Canada, Mexico, Australia, and Latin America. It operates through Lighting and Graphics segments. LYTS is based in Cincinnati, Ohio.

On May 24, LYTS announced the acquisition of privately held JSI Store Fixtures from RFE Investment Partners for $90 million in cash. The acquisition is expected to significantly increase LYTS’ total addressable markets within the grocery and convenience store verticals, while driving meaningful revenue synergies across its product portfolio.

In terms of non-GAAP forward PEG, LYTS is currently trading at 0.56x, which is 67% lower than the 1.70x industry average. In addition, its 0.58 forward Price/Sales multiple  is 62.2% lower than the 1.54 industry average.

LYTS’ net sales increased 53% year-over-year to $97.02 million in its  fiscal fourth quarter, ended June 30. The sales growth can be attributed to improved demand across both its lighting and display markets and its continued expansion within higher growth and higher-margin verticals. Its adjusted operating income stood at $4.65 million, up 82% from the same period last year. Its adjusted net income grew 82% from the year-ago value to $3.32 million. The company’s adjusted EPS rose 71% from the prior-year quarter to $0.12.

A $315.61 million consensus revenue estimate for the current year represents a 3.3% increase year-over-year. The Street expects the company’s EPS to rise 125% from the prior-year quarter to $0.27 in the current year. LYTS has a notable earnings surprise history; it beat the consensus EPS estimates in three out of the trailing four quarters.

LYTS gained 16.2% in price over the past year to close yesterday’s trading session at $8.12. The stock has gained 7.8% over the past month.

It’s no surprise that LYTS has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. LYTS also has an A grade  for Value, Sentiment, and Momentum, and a B for Quality. It is ranked #2 among the 91 stocks in the Industrial – Equipment industry.

Click here to view additional LYTS ratings for Growth and Stability.

Click here to check out our Industrial Sector Report for 2021

Ultralife Corporation (ULBI)

ULBI designs, manufactures, installs, and maintains power and communication, and electronics systems. The Newark, N.Y.-based company serves the government, defense, and commercial sectors. It operates in two segments: Battery & Energy Products; and Communications Systems.

ULBI’s 1.17 forward Price/Sales ratio is 24.8% lower than the 1.55 industry average. In terms of forward EV/Sales, ULBI is currently trading at 1.04x, which is 46.1% lower than the 1.94x industry average.

For the six months ended June 30, ULBI’s revenues declined 3% year-over-year to $52.74 million. The company estimates that delayed shipments due to COVID-19 related logistics matters adversely impacted its revenue for the period. However, its cash and cash equivalents balance rose 88.7% from its year-ago value to $15.83 million.

The Street expects ULBI’s revenues to rise 17% year-over-year to $129.50 million in the next year. The $0.50 consensus EPS estimate for the following year indicates a 47.1% improvement year-over-year. Moreover, its EPS is expected to grow 17.5% per annum over the next five years. Shares of ULBI have gained 27.8% in price over the past year and 24.4% year-to-date to close yesterday’s trading session at $8.05.

The stock has an overall B rating, translating to Buy in our POWR Ratings system. In addition, ULBI has an A  grade for Momentum and Value, and a B for Sentiment and Quality. It is ranked #22 in the  Industrial – Equipment industry.

Get additional POWR Ratings for Growth and Stability here.

Click here to check out our Industrial Sector Report for 2021

GCO shares were trading at $61.59 per share on Tuesday afternoon, down $1.65 (-2.61%). Year-to-date, GCO has gained 104.69%, versus a 21.60% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...

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