The major stock market indexes retreated yesterday because consumer price data indicated higher-than-expected inflation. The Consumer Price Index rose 6.2% in October from a year earlier, its biggest jump in more than 30 years. However, the major stock market indexes rallied at the beginning of the week.
Among the positive factors, Pfizer Inc. (PFE) announced on November 5 that its COVID-19 antiviral pill, when used with a widely used HIV drug, cut the risk of hospitalization or death from COVID-19 by 89% in high-risk adults who’ve been exposed to the virus. U.S. jobless claims declined to a 267,000 pandemic low. And, according to a Factset report, the S&P 500 reported the second-highest revenue growth in the third quarter since 2008. These factors have helped boost investor sentiment.
Given this backdrop, we think it could be wise to add fundamentally sound stocks Lufax Holding Ltd. (LU), Companhia Siderúrgica Nacional (SID), and Brinker International, Inc. (EAT) to one’s portfolio. They have declined by more than 20% in price year-to-date but are well-positioned to rebound in the coming months.
Lufax Holding Ltd. (LU)
Headquartered in Shanghai, China, LU is a technology-empowered personal financial services platform. It offers loan products that include unsecured and secured loans, and consumer finance loans. The company also provides wealth management platforms that include Lufax (Lu.com), Lu International (Singapore), and Lu International (Hong Kong).
On June 28, 2021, Lu International, a subsidiary of LU, established a strategic partnership with Schroders Singapore to address the fast-growing needs of retail investors in the region. The collaboration aims to revolutionize the digital investment landscape in the region, drawing on the robust capabilities of both powerhouses.
For the third quarter, ended September 30, 2021, LU’s total income increased 21.8% year-over-year to RMB15.92 billion ($2.49 billion). Its net profit increased 90.8% year-over-year to RMB4.12 billion ($643.53 million). And its net interest income increased 57.2% year-over-year to RMB3.80 billion ($594.59 million).
Analysts expect LU’s EPS for its fiscal year 2021 to increase 13.7% year-over-year to $1.08. For the quarter ending March 31, 2022, the company’s revenues are expected to be $2.73 billion, representing a 22.1% year-over-year rise. It has surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has lost 49.9% in price so far this year to close yesterday’s trading session at $7.12.
LU’s POWR Ratings reflect solid prospects. The company has an overall B rating, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
LU has an A grade for Sentiment, and a B grade for Value, Momentum, and Quality. Click here to see the additional ratings for LU (Growth and Stability). LU is ranked #1 of 12 stocks in the Foreign Consumer Finance industry.
Companhia Siderúrgica Nacional (SID)
Based in Sao Paulo, Brazil, integrated steel producer SID operates throughout the entire steel production chain, from iron ore mining to producing and selling a range of steel products, including coated galvanized flat steel and tinplate. The company is active in five sectors: steel, mining, logistics, cement, and energy.
SID announced in September 2021 that through CSN Cimentos SA it has agreed to acquire 100% of the shares issued by LafargeHolcim SA for$1.03 billion. This acquisition is expected to bolster CSN Cimentos’ production capacity by 10.30 million tons of cement per year through cement plants strategically located in the Southeast, Northeast, and Midwest.
For the third quarter, ended September 30, 2021, SID’s net revenues increased 18% year-over-year to R$10.25 billion ($1.87 billion), while its gross profit increased 20.2% year-over-year to R$4.31 billion ($785 million). Its adjusted EBITDA increased 22.5% year-over-year to R$4.30 billion ($783.43 million).
For its fiscal year 2021, analysts expect SID’s EPS and revenues to increase 298% and 62.3%, respectively, year-over-year to $2.03 and $8.97 billion. The stock has declined by 35.3% in price year-to-date to close yesterday’s trading session at $3.85.
SID’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system. It has an A grade for Value, Momentum, and Quality, and a B grade for Growth.
Brinker International, Inc. (EAT)
EAT and its subsidiaries own, develop, operate, and franchise casual dining restaurants internationally. It operates under the brands: Chili’s Grill & Bar and Maggiano’s Little Italy. The company also has two virtual brands: It’s Just Wings and Maggiano’s Italian Classics. EAT is based in Dallas, Tex.
On September 2, 2021, EAT acquired 23 Chili’s Grill & Bar restaurants in the Mid-Atlantic region from Chesapeake Foods, Inc. The executive vice president and CFO of EAT, Joe Taylor, said, “This acquisition aligns with our growth strategy and belief in the company-owned model.”
EAT’s sales increased 18% year-over-year to $859.60 million for its fiscal first quarter, ended September 30, 2021. The company’s operating income increased 4.9% year-over-year to $25.60 million, while its adjusted EBITDA increased 5.8% year-over-year to $69.40 million. Also, its non-GAAP EPS increased 21.4% year-over-year to $0.34.
Analysts expect EAT’s EPS to increase 65.7% year-over-year to $0.58 for the quarter ending December 31, 2021. The company’s revenues are expected to rise 14.4% year-over-year to $3.82 billion in its fiscal year 2022. The stock has lost 23% in price so far this year to close yesterday’s trading session at $43.60.
EAT’s POWR Ratings reflect solid prospects. It has a B grade for Value and Momentum. EAT is ranked #26 of 43 stocks in the B-rated Restaurants industry. Click here to see EAT’s ratings for Growth, Stability, Sentiment, and Quality as well.
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LU shares were trading at $7.54 per share on Thursday afternoon, up $0.42 (+5.90%). Year-to-date, LU has declined -46.90%, versus a 25.44% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...
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