The U.S. economy achieved a stellar comeback during the first half of this year, driven by solid progress on the vaccination front, accommodative government policies, and strong corporate earnings. However, the recovery is slowing due to the phasing out of policy support and a dip in consumer confidence owing to the resurgence of COVID-19 cases.
Market volatility is on the rise on concerns about heightened inflation and the government’s delay in passing an infrastructure bill. Furthermore, 10-year Treasury yields have increased, making stocks relatively less attractive.
Given this backdrop, we think it could be wise to invest in fundamentally strong stocks that can weather the volatility. To that end, Liquidity Services, Inc. (LQDT), The Hackett Group, Inc. (HCKT), and Franklin Covey Co. (FC) could be solid bets now.
Liquidity Services, Inc. (LQDT)
LQDT is an e-commerce marketplace that allows buyers and sellers to complete transactions in an online environment. The Washington, D.C.-based company’s e-commerce platforms are liquidation.com and govdeals.com.
On September 27, the State of Alaska decided to sell the Nome Youth Facility through LQDT’s marketplace platform GovDeals. The State of Alaska also partnered with LQDT to sell an aluminum boat on the GovDeals platform. Earlier, Polk County Sheriff’s Office selected GovDeals to offer a 2013 McDonald Douglass 369E helicopter for sale to the public. And Louisville-Jefferson County Metro Government chose Govdeals to sell two of its Miniature 24 Gauge Passenger Trains. These transactions are examples of the company’s solid position in the industry.
In its third fiscal quarter, ended June 30, LQDT’s total revenue increased 46% year-over-year to $69.67 million. Its income from operations climbed 4,240.4% from the prior-year quarter to $8.59 million. Its non-GAAP adjusted net income and non-GAAP adjusted EPS stood at $10.94 million and $0.31, respectively, up 500.5% and 520% year-over-year, respectively.
A $0.65 consensus EPS estimate for the current year (fiscal 2021) indicates a 441.7% year-over-year increase. Likewise, the $217.51 million consensus revenue estimate for the current year reflects a 5.6%improvement from the prior year. LQDT also has an impressive earnings surprise history; it has topped consensus EPS estimates in each of the trailing four quarters.
LQDT’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.
LQDT has an A grade for Growth and Quality, and a B grade for Sentiment. In the 38-stock Internet – Services industry, it is ranked #1.
In addition to the POWR Rating grades we’ve stated above, one can see LQDT ratings for Value, Momentum, and Stability here.
The Hackett Group, Inc. (HCKT)
HCKT in Miami, Fla., is an intellectual property strategic consultancy firm. The company caters to global enterprises by offering digital transformation solutions that power workflow automation and analytics.
In August, HCKT subsidiary Answerthink achieved Amazon Web Services SAP competency status, recognizing the division as an AWS Partner network. The accreditation demonstrates its technical prowess and success in SAP implementation.
For its second fiscal quarter ended July 2, HCKT’s total revenue from continuing operations increased 38.8% year-over-year to $73.20 million. Its net income and net income per common share came in at $10.53 million and $0.32, respectively, representing a substantial increase from their negative year-ago value.
The Street’s $0.28 EPS estimate for the current quarter (ending December 2021) reflects a 21.7% rise from the same period last year, while the Street’s $66.89 million revenue estimate for the current quarter indicates an increase 12.8% from the prior-year quarter. In addition, HCKT has topped consensus EPS estimates in each of the trailing four quarters.
It’s no surprise that HCKT has an overall A rating, which translates to Strong Buy in our POWR Rating system. HCKT has a Growth and Quality grade of A, and a Momentum and Sentiment grade of B. It is ranked #1 out of the 11 stocks in the A-rated Outsourcing – Tech Services industry.
Click here to see the additional POWR Ratings for HCKT (Value and Stability).
Franklin Covey Co. (FC)
FC provides organizational performance improvement services globally. Its solutions are available in 21 languages and across multiple delivery modalities. The Salt Lake City, Utah, company also provides training for leadership development and individual efficiency enhancement.
In May, FC launched its new training solution platform called Jhana® for Individuals that serves as a virtual mentor for professional skill-development in individuals. Paul Walker, President and COO of FC, said of the launch, “In order to achieve critical objectives, organizations need talent with next-level skills to build effective relationships, solve difficult problems, innovate and communicate up, across and outside the organization. And now that Jhana for Individuals joins Jhana® for Leaders as an offering in our FranklinCovey All Access Pass®, every employee in an organization can develop these next-level skills and become a key asset in driving their organization forward and grow in their career.”
FC’s net sales climbed 58.3% year-over-year to $58.74 million in its fiscal third quarter, ended May 31, while its gross profit increased 71.2% from the prior-year quarter to $45.91 million. Its net income came in at $12.75 million, and its net income per common share stood at $0.90, both up considerably from their negative year-ago values.
Analysts expect its EPS to increase 116.7% year-over-year to $0.01 in the current quarter (ending November 2021). Likewise, the $55.05 million consensus revenue estimate for the current quarter indicates a 14.6% improvement from the same period last year. FC has beaten consensus EPS estimates in each of the trailing four quarters.
FC’s POWR ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. FC has a Growth, Sentiment, and Quality grade of A. It is ranked #2 out of 28 stocks in the Outsourcing – Education Services industry.
To see the additional POWR ratings for Value, Momentum, and Stability for FC, click here.
Want More Great Investing Ideas?
LQDT shares were unchanged in premarket trading Friday. Year-to-date, LQDT has gained 27.78%, versus a 19.51% 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...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|LQDT||Get Rating||Get Rating||Get Rating|
|HCKT||Get Rating||Get Rating||Get Rating|
|FC||Get Rating||Get Rating||Get Rating|