The stock market has been extremely turbulent over the past few months. Skyrocketing inflation, the Fed’s aggressive interest rate hikes, political instability, the resurgence of COVID-19 cases in China, and the possibility of an economic slowdown have fostered bearish sentiment recently. Yesterday, U.S. stocks plunged in response to U.S. inflation data, further deepening investors’ worries about the interest rate outlook and the economy. Over the past month, the S&P 500 Index has slumped 11.5%, while the Nasdaq Composite Index has declined 16.7%.
Amid the market downturn, it could be profitable to invest in companies with strong financials and solid growth prospects. These companies have managed to survive the intense market fluctuations. Because the macroeconomic and geopolitical factors are not expected to change anytime soon, investing in fundamentally solid stocks with high resilience, robust financial strength, and pricing power could ensure solid returns to investors.
Against the backdrop, we think the stocks of fundamentally solid companies Harmonic Inc. (HLIT), Computer Task Group, Incorporated (CTG), Vista Energy, S.A.B. de C.V. (VIST), and The ONE Group Hospitality, Inc. (STKS) could be ideal investments now. These stocks are currently trading at less than $10 and have a Buy rating in our proprietary POWR Ratings system.
Harmonic Inc. (HLIT)
HLIT provides video delivery software products, system solutions, and services. The San Jose, Calif., company operates through two segments: Video; and Cable Access. Its Video segment provides video processing, production, playout solutions and services, and software-as-a-service (SaaS) solutions. Its Cable Access segment offers CableOS software-based cable access solutions and CableOS central cloud services. In addition, it provides technical support and professional services.
Last month, HLIT added support for HDR10+ technology to its VOS®360 cloud streaming platform and XOS software-based advanced media processing solution to boost streaming video experiences. HDR10+ is a high dynamic range (HDR) technology that adds dynamic metadata to HDR10 source files to optimize the color contrast and image details of each frame of HDR video. This new addition is expected to boost the company’s growth and profitability.
Also last month, HLIT was selected by Alabama-based cable operator CTV Beam to power its lightning-fast broadband services with Harmonic’s CableOS FTTx solution. CTV Beam has deployed HLIT’s CableOS Platform in a distributed access architecture with Harmonic’s Remote PHY and PLT devices. In addition, CTV Beam is using Harmonic’s CableOS Central analytics with AI and real-time network visibility to improve broadband services.
In its fiscal 2022 first quarter, ended April 1, 2022, HLIT’s net revenue increased 32.1% year-over-year to $147.40 million, while its gross profit improved 24.1% from its year-ago value to $69.70 million. Its income from operations grew 122.5% year-over-year to $11.28 million. The company’s adjusted EBITDA rose 59.3% year-over-year to $14.50 million. And its net income and earnings per share came in at $8.90 million and $0.08, respectively, registering an increase of 97.8% and 100% from the prior-year period.
Analysts expect HLIT’s EPS to grow 80.8% year-over-year to $0.09 for its fiscal 2022 second quarter, ending June 30, 2022. It has surpassed the consensus EPS estimates in three of the trailing four quarters. The $150.33 million consensus revenue estimate for the ongoing quarter represents a 32.5% rise from the prior-year period. It is no surprise that the company has surpassed revenue estimates in each of the trailing four quarters.
The stock has gained 25.6% in price over the past year and closed yesterday’s trading session at $8.83.
HLIT’s POWR Ratings reflect this promising outlook. It has an overall B grade, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
HLIT has a B grade for Growth. Within the B-rated Technology-Communication/Networking industry, it is ranked #10 of 53 stocks. To see additional POWR Ratings (Value, Momentum, Quality, Stability, and Sentiment) for HLIT, click here.
Computer Task Group, Incorporated (CTG)
CTG provides information and technology services in North America, South America, Western Europe, and India. The Buffalo, N.Y. company operates through three segments: North America IT Solutions and Services; Europe IT Solutions and Services; and Non-Strategic Services. CTG offers business process transformation solutions, technology transformation solutions, and operations transformation solutions. It serves financial services, manufacturing, healthcare, energy industries, and technology service providers.
This March, CTG collaborated with VCU Health System to support the system-wide deployment of Epic, an electronic health record (HER), to provide patient-centered care and a fully connected network across the enterprise. CTG provided solutions for legacy applications, go-live readiness activities, workflow optimization, and end-user application support for the VCU Health enterprise throughout the partnership. This collaboration might boost the company’s revenue streams.
CTG’s revenue from its North America IT Solutions and Services segment increased 10.7% year-over-year to $20.44 million in its fiscal 2022 first quarter, which ended April 1, 2022. CTG’s contribution profit rose 5.7% year-over-year to $11.43 million. Its non-GAAP operating income improved 26.2% year-over-year to $3.46 million. Its adjusted EBITDA grew 16.3% from the year-ago value to $4.33 million. And its non-GAAP net income came in at $2.44 million and $0.16, respectively, registering an increase of 21.6% and 23.1% year-over-year.
The $97.50 billion consensus revenue estimate for its fiscal 2022 second quarter, ending June 30, 2022, represents a 5.8% increase from the prior-year period. The $0.18 consensus EPS estimate for the current quarter indicates a 38.5% year-over-year rise.
Shares of CTG have increased 3.4% in price over the past six months and closed yesterday’s trading session at $8.72.
CTG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B grade, which translates to Buy in our proprietary rating system.
CTG has a grade of A for Value and a B for Stability and Sentiment. Within the Technology – Services industry, it is ranked #3 of 74 stocks.
To see additional POWR Ratings (Momentum, Quality, and Growth) for CTG, click here.
Vista Energy, S.A.B. de C.V. (VIST)
Headquartered in Mexico City, Mexico, VIST explores and produces oil and gas in Latin America. The company’s primary assets are in Vaca Muerta, with more than 183,100 acres. In addition, it owns producing assets in Mexico and Argentina. VIST has a total of 181.6 MMBOE proved reserves.
In April, VIST announced successful results in its first two shale oil wells drilled in the Bajada del Palo Este concession. The average peak production of wells BPE-2101h and BPE-2103h reached more than 2,400 boe/d per well in April 2022. Also, the pore pressure gradient of both wells is in line with the results in Bajada del Palo Oeste to date. This announcement reflects the company’s strong business growth.
This January, VIST, through its subsidiary Vista Oil & Gas Argentina SAU, acquired a 50% working interest in the Aguada Federal and Bandurria Norte concessions in Vaca Muerta from Wintershall DEA Argentina S.A. VIST acquired 25,231 net acres through the transaction and added up to 150 new well locations in its Vaca Muerta portfolio. The deal is expected to expand the company’s leadership in Vaca Muerta and accelerate its growth and development by incorporating high-potential assets.
In its fiscal 2022 first quarter, ended March 31, 2022, VIST’s total revenues grew 79.4% year-over-year to $207.92 million, while its gross profit improved 245.3% from its year-ago value to $103.74 million. Its operating profit increased 505.1% year-over-year to $80.01 million and its net profit for the period rose 219.8% year-over-year to $15.53 million. Its adjusted EBITDA rose 117.9% year-over-year to $127.10 million. And the company’s net income came in at $39.06 million, registering an increase of 463.1% from the prior-year period.
Analysts expect VIST’s revenue for its fiscal year 2022, ending Dec. 31, 2022, to come in at $914.40 million, representing a 40.2% rise year-over-year. The Street expects the company’s EPS for the current year to come in at $1.62, representing a 200% increase year-over-year.
The stock has increased 50.2% year-to-date and 197.1% over the past year and closed yesterday’s trading session at $8.05.
VIST’s POWR Ratings reflect a strong outlook. The stock has an overall B rating, which translates to Buy in our POWR Ratings system.
VIST has an A grade for Momentum and a B for Sentiment, Growth, and Value. It is ranked #13 of 42 stocks in the A-rated Foreign Oil & Gas industry.
Click here to see VIST’s POWR Ratings for Stability and Quality.
The ONE Group Hospitality, Inc. (STKS)
STKS is a hospitality company that owns, operates, manages, and licenses restaurants and lounges worldwide. The company operates through three segments: STK; Kona Grill; and ONE Hospitality. It offers food and beverage services for hospitality venues, and hospitality advisory and consulting services. It operates restaurants under the STK and Kona Grill brands. The company owns, operates, and licenses more than 60 venues.
STKS’ total revenues increased 46.9% year-over-year to $74.18 million in its fiscal 2022 first quarter, ended March 31, 2022. Its restaurant operating profit improved 40.8% year-over-year to $13.04 million. In addition, its adjusted EBITDA grew 65.7% from the prior-year period to $10.68 million. The company’s adjusted net income attributable to STKS and adjusted net income per share amounted to $4.99 million and $0.15, respectively, indicating an increase of 219% and 200% year-over-year.
The $326.04 million consensus revenue estimate for its fiscal year 2022, ending Dec. 31, 2022, represents 17.6% growth from the previous year. It is no surprise that STKS has surpassed the consensus revenue estimates in each of the trailing four quarters. The consensus EPS estimate of $0.98 for fiscal 2023 indicates a 43.4% year-over-year rise.
The stock plunged 15.2% in price over the past year and closed yesterday’s trading session at $8.51.
STKS’ POWR Ratings reflect a promising outlook. The stock has an overall grade of B, which equates to Buy in our proprietary rating system.
STKS has a grade of B for Value and Sentiment. Within the B-rated Restaurants industry, it is ranked #8 of 44 stocks.
To see additional POWR Ratings (Momentum, Stability, Quality, and Growth) for STKS, click here.
What To Do Next?
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What gives these stocks the right stuff to become big winners?
First, because they are all low-priced companies with explosive growth potential, that excel in key areas of growth, sentiment and momentum.
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HLIT shares were trading at $8.86 per share on Thursday morning, up $0.03 (+0.34%). Year-to-date, HLIT has declined -24.66%, versus a -17.17% 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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