For the third consecutive session, the major stock market indexes closed at record highs. The nation’s weekly jobless claim declined to 269,000 last week, versus a 275,000 estimate, which could be viewed as another indication of steady economic recovery. Jim Paulsen, chief investment strategist for the Leuthold Group, said “Fundamentals are probably at the epicenter of why the stock market keeps rising.”
While supply chain constraints and inflation remain concerns for investors, the central bank said it would begin to slow its bond-buying program later this month, indicating that the economy can now handle an unwinding of pandemic stimulus.
Against this backdrop, we think it could be wise to bet on Lee Enterprises, Incorporated (LEE), Educational Development Corporation (EDUC), Lifeway Foods, Inc. (LWAY), and Friedman Industries, Incorporated (FRD). These stocks can be fairly described as no-brainers, given their solid combination of value and quality. Also, these four stocks are rated ‘Strong Buy’ in our proprietary POWR Ratings system.
Lee Enterprises, Incorporated (LEE)
LEE is a digital media and advertising platform that provides local news and information in 77 markets and 26 states. The Davenport, Iowa, company offers print and digital editions of newspapers and publications, including Web hosting and content management for other content producers. Its associated digital products include the St. Louis Post-Dispatch and the Buffalo News. Also, LEE provides audience extension, search engine optimization, and social media services.
Last month, LEE entered a strategic partnership with Mudd Advertising, a full-service automotive advertising agency. With this partnership, a customized version of LEE’s revolutionary Vision platform will allow Mudd to assist the cross-channel marketing operations of retail car dealers and manufacturers across the United States.
LEE’s total operating revenue increased 7.6% year-over-year to $196.49 million for its fiscal third quarter, ended June 27, 2021. The company’s operating income grew 17.3% from its year-ago value to $13.78 million. Its net income came in at $3.74 million, compared to a $727,000 net loss in the prior-year quarter. Also, the company’s EPS amounted to $0.55, compared to a $0.23 loss per share in its fiscal third quarter of 2020.
Also, its EPS is expected to grow at a 3% rate per annum over the next five years. Its stock has increased 63.7% in price over year-to-date and 157.8% over the past year.
LEE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Value and Momentum. We have also graded LEE for Sentiment, Stability, Growth, and Quality. Click here to access all of LEE’s ratings. LEE is ranked #2 of 10 stocks in the A-rated Entertainment – Publishing industry.
Educational Development Corporation (EDUC)
EDUC is a publishing company that operates as a trade co-publisher of educational children’s books. The Tulsa, Okla.-based company markets its books through the Home Business Division (Usborne Books & More or UBAM); and Publishing Division (EDC Publishing) segments. EDUC offers activity books and flashcards, adventure books, art books, sticker books, foreign language books, science, math, chapter books, and novels.
This month, EDUC issued a letter of intent to purchase Learning Wrap-Ups, Inc. With this acquisition, EDUC should be able to increase its overall sales through EDUC’s existing Publishing and UBAM sales. In addition, it could improve its margins through this acquisition.
During its fiscal second quarter, ended August 31, 2021, EDUC’s net revenues were $32.94 million. The company’s net earnings amounted to $1.9 million, and its EPS came in at $0.23 for the period.
The stock has gained 0.4% in price over the past month.
EDUC’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. Also, the stock has a B grade for Momentum, Growth, and Sentiment.
In addition to the POWR Rating grades I have just highlighted, one can see EDUC’s ratings for Value, Stability, and Quality here. The stock is ranked #1 in the Entertainment – Publishing industry.
Lifeway Foods, Inc. (LWAY)
Morton Grove, Ill.-based LWAY is a provider of probiotic products that primarily delivers drinkable kefir and BioKefir. The company’s other products include European-style soft cheeses, farmer cheese, white cheese, and Sweet Kiss. LWAY offers ProBugs for children and provides Cupped Kefir, Icelandic Skyr, frozen kefir, and other dairy products.
In September, LWAY launched its new plant-based Lifeway Oat line and a new Chocolate Kefir flavor. The new products provide its customers with a dairy-free, certified vegan option. LWAY believes the new probiotic drinks will achieve substantial growth in the coming years.
LWAY’s net sales increased 16.6% year-over-year to $29.16 million. The company’s gross profit grew 10.8% from its year-ago value to $7.68 million. Its operating income rose 73.4% from the prior-year quarter to $2.49 million. Also, the company’s net income increased 65.1% year-over-year to $1.62 million.
LWAY’s EPS is expected to increase at a 10% rate per annum over the next five years. LWAY’s stock price has surged 17% over the past six months and 24.8% over the past year.
It is no surprise that LWAY has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has an A grade for Growth, and a B for Value and Quality.
Friedman Industries, Incorporated (FRD)
Incorporated in 1965, FRD, in Humble, Tex., is a manufacturer and processor of steel products that operates in two segments: Coil and Tubular. The company is involved in converting steel coils into flat sheet and plate steel and reselling coils. FRD serves Railroad Transportation, Steel Buildings, Containers & Tanks, OEM’s, Foundation Piling, and other industries.
For its fiscal first quarter, ended June 30, 2021, FRD’s net sales increased 180.2% year-over-year to $65.92 million. The company’s net earnings came in at $11.31 million, compared to a $860,000 net loss in the prior-year quarter. Also, its EPS amounted to $1.64, compared to a $012 net loss per share in the year-ago quarter.
The stock has gained 92.2% in price over the past nine months and 151.4% over the past year.
FRD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Rating system. Also, the stock has an A grade for Growth, Value, and Momentum.
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LEE shares were trading at $20.90 per share on Friday morning, up $0.27 (+1.31%). Year-to-date, LEE has gained 65.87%, versus a 27.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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