Following a sell-off due on the confirmation of the first COVID-19 omicron case in the United States, the equity benchmarks rebounded sharply on Thursday, with the S&P 500 rising 1.4% and the Dow Jones Industrial Average gaining 617.75 points. The NASDAQ Composite also gained marginally, and the small-cap Benchmark Russell 2000 added 2.7%.
The Biden administration has tightened rules regarding travel, adding the requirement that all in-bound passengers be tested within 24 hours of departure and mandating masks be worn on aircraft to fight against the new coronavirus variant. However, President Biden also assured the country he would not push for a resumption of an economic lockdown.
On November 19, the House passed the $1.7 trillion Build Back Better bill, which is expected to stimulate the broader economy along with the recently enacted infrastructure act. Given this scenario, the under-$10-stocks of ICL Group Ltd (ICL) and Information Services Group, Inc. (III) look like solid buys. These stocks have strong fundamentals and have an overall A (Strong Buy) rating in our proprietary POWR Rating system.
ICL Group Ltd (ICL)
Tel Aviv-based ICL, which was formerly known as Israel Chemicals Ltd., is a specialty mineral and chemicals company that operates worldwide through the segments of Industrial Products; Potash; Phosphate Solutions, and Innovative AG Solutions (IAS). The company markets its product portfolio through agents, distributors, and marketing enterprises.
On December 2, ICL opened its newest alternative-protein production facility in St. Louis, with the goal of transforming plant protein into meat-like fibers that can be used in various foods. The new facility should expand the company’s operational capability by catering to the growing demand for plant-based food and meat alternatives.
In October, ICL expressed its intention to expand its commercial relationship with chemical and refining industry supplier Haldor Topsoe by entering into a long-term supply agreement for potassium nitrate (NOP). The company expects to begin marketing the product in the first quarter of 2022.
For its fiscal third quarter, ended September 30, ICL’s sales increased 48.7% year-over-year to $1.79 billion. Its gross profit improved 88.8% from the prior-year quarter to $689 million. And its net income and EPS came in at $242 million and $0.17, respectively, up 310.2% and 325% from the same period last year.
The $0.51 consensus EPS estimate for the next year (fiscal 2022) indicates an 8.5% year-over-year increase. Likewise, the $6.67 billion consensus revenue estimate for the coming year reflects a 3.9% improvement from the current year. Moreover, ICL has an impressive surprise earnings history; it has topped consensus EPS estimates in three out of the trailing four quarters.
The stock has gained 92.9% in price over the past year and 73.1% year-to-date to close yesterday’s trading session at $8.74.
ICL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
ICL has a Growth, Momentum, Stability, Sentiment, and Quality grade of B. In the 90-stock Chemicals industry, it is ranked #6. The industry is rated A. Click here to see the additional POWR Ratings for ICL (Value).
Information Services Group, Inc. (III)
III is a technology research and advisory company operating in the Americas, Europe, and the Asia-Pacific. The Stamford, Conn., company’s offerings include digital transformation services, sourcing advisory, market intelligence, technology research, and analysis services.
On November 18, III announced that it will publish 42 major provider evaluation studies in 2022 and add several subject areas to its research series. Jan Erik Aase, partner and global leader, ISG Provider Lens Research, said, “We’re expanding our research to cover several areas in which enterprises are increasingly turning to technology and service providers to help them achieve their business goals.”
In September, the company and the National Association of State Procurement Officers (NASPO) announced the expansion of its ISG Provider Lens™ research program to help state and local governments and higher-education institutions evaluate and select their technology. The company aims to help organizations make decisions and get more value from taxes.
III’s revenues increased 15.3% year-over-year to $71.10 million in its fiscal third quarter, ended September 30. Its operating income rose 144.2% from the same period last year to $7.26 million. Its adjusted net income and adjusted EPS improved 14.1% and 20%, respectively, from the prior-year quarter to $5.95 million and $0.12.
The Street’s $0.43 EPS estimate for the current year (fiscal 2021) indicates a 53.6% year-over-year rise. Likewise, the Street’s $276.22 million revenue estimate for the current year reflects a 10.9% increase from the prior year. In addition, III has beaten consensus EPS estimates in each of the trailing four quarters.
Over the past year, III’s shares have gained 176.5% in price to close yesterday’s trading session at $8.10. It has gained 147% year-to-date.
It is no surprise that III has an overall A rating, which translates to Strong Buy in our POWR Rating system. The stock has an A grade for Sentiment, and a B grade for Growth, Value, and Quality. It is ranked #1 in the 5-stock Outsourcing – Management Services industry. The industry is rated A.
To see the additional POWR Ratings for Momentum and Stability for III, click here.
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ICL shares were trading at $8.61 per share on Friday afternoon, down $0.13 (-1.49%). Year-to-date, ICL has gained 73.04%, versus a 21.77% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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