Wall Street recorded its worst month of the year in September as investors dealt with a slew of concerns, including high inflation expectations, increasing bond yields, the pace of the economic recovery, America’s debt ceiling, and China’s corporate debt levels.

Furthermore, market experts anticipate a correction because higher yields could keep stocks under pressure by increasing corporate borrowing costs and reducing the present value of future earnings. So, this could be the right opportunity to invest in quality stocks holding exceptional growth potential and solid fundamentals.

Marsh & Mclennan Companies Inc. (MMC), William – Sonoma Inc. (WSM), Stantec Inc. (STN), and Sleep Number Corporation (SNBR) possess strong growth potential and are fundamentally well-positioned to generate significant returns in the coming months.

Marsh & Mclennan Companies Inc. (MMC)

MMC, a professional services company, advises clients on risk, strategy, and people worldwide. Risk and Insurance Services; and Consulting are the two operational segments of the company. In addition, the company has a collaboration with Chubb Limited to secure insurance coverage for the COVAX no-fault compensation program.

This month MMA acquired Vaaler Insurance, Inc., one of the largest independent agencies in North Dakota. This acquisition is projected to provide the company with new growth opportunities and further boost its revenue growth.

MMC’s revenue increased 19.8% year-over-year to $5.02 billion in the second quarter that ended June 30, 2021. Its operating income grew 120.1% from the year-ago value to $1.23 billion. The company’s net income surged 43.4% from the prior-year quarter to $820 million, while its EPS increased 42.9% year-over-year to $1.6 over this period.

The company’s EPS is expected to grow 21.7% year-over-year to $6.05 in fiscal 2021. Analysts expect MMC’s revenue to increase 11.7% year-over-year to $19.25 billion in the current year. The stock has gained 32% over the past year and 31.7% over the past nine months.

MMC’s POWR Ratings reflect this promising outlook. The company has an overall grade of B, which translates to a Buy rating in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

MMC has also rated a B grade for Growth, Stability, and Sentiment. Within the Insurance – Brokers industry, it is ranked #1 out of 14 stocks.

To see additional grades for Quality, Momentum, and Value for MMC, click here.

William – Sonoma Inc. (WSM)

WSM is an omnichannel specialty retailer that offers a variety of products for the home. The company markets its products through e-commerce websites, direct-mail catalogs, and retail stores. It operated 581 stores comprising 538 stores in 42 states as of January 31, 2021.

This month, WSM partnered with Capital One to launch The Key Rewards Credit Card Program, which will reward cardholders on purchases made at WSM brands and everywhere else the card is accepted. The new cards are designed to enhance and improve upon the company’s rewards program, The Key Rewards.

During the second quarter that ended August 1, 2021, WSM’s net revenue increased 30.7% year-over-year to $1.95 billion. Its operating income grew 74.3% from the year-ago value to $323.10 million, while its net income surged 83.9% year-over-year to $246.07 million over this period. The company’s EPS increased 88.8% from the year-ago value to $3.21.

The consensus EPS estimate of $13.46 for the current year represents a 48.9% improvement year-over-year. Analysts expect WSM’s revenue to increase 19.7% year-over-year to $8.12 billion in fiscal 2021. The stock has gained 96.1% over the past year and 74.1% year-to-date.

WSM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of B, which equates to a Buy rating in our POWR Ratings system. The stock also has an A grade for Quality. In the B-rated Home Improvement & Goods industry, it is ranked #20 out of 64 stocks.

In total, we rate WSM on eight different levels. Beyond what we’ve stated above, we have also given WSM grades for Growth, Value, Stability, Momentum, and Sentiment. Get all the WSM ratings here.

Stantec Inc. (STN)

Headquartered in Canada, STN is a professional services company that works worldwide in the infrastructure and facilities sectors. The company offers a wide range of consulting services in engineering, architecture, interior design, landscape architecture, project management, and project economics.

This month, STN was selected by the United States Agency for International Development (USAID) to provide global architect-engineer (A/E) services through a five-year, US$800 million multiple-award task order contract.

For the second quarter that ended June 30, 2021, STN’s net income increased 20.2% year-over-year to $63.2 million. Its EPS grew 21.3% year-over-year to $0.57. In addition, its adjusted EBITDA surged 2.9% from the prior-year quarter to $146.6 million.

Analysts expect STN’s EPS to grow 13.4% year-over-year to $2.11 next year. Over the past year, the stock has gained 54.7%. Also, it has returned 44.6% year-to-date.

STN’s POWR Ratings reflect this promising outlook. The company has an overall grade of B, which translates to a Buy rating in our proprietary ratings system. STN also has an A grade for Stability and Quality, and a B for Sentiment. Within the B-rated Outsourcing – Business Services industry, it is ranked #5 out of 47 stocks.

Click here to see additional grades for Growth, Value, and Momentum for STN.

Sleep Number Corporation (SNBR)

SNBR offers sleep solutions and services in the United States. The company designs, manufactures, markets, retails, and services beds, pillows, sheets, and other bedding products under the Sleep Number brand name. It operated 602 retail stores in 50 states as of January 2, 2021.

Last month, SNBR introduced My Sleep Health, the newest Sleep Number 360 smart bed feature, to advance the company’s purpose of improving the health and wellbeing of society via higher quality sleep.

SNBR’s net sales increased 70% year-over-year to $484.32 million in the second quarter that ended July 3, 2021. Its operating income came in at $29.72 million, compared to an operating loss of $12.13 million. The company reported a net income of $22.25 million, compared to a net loss of $12.63 million in the prior-year quarter. Its EPS amounted to $0.88, compared to a loss per share of $0.45 in the second quarter of 2020.

The consensus revenue estimate of $2.3 billion for the current year represents a 23.8% increase year-over-year. SNBR’s EPS is expected to increase 47.3% year-over-year to $7.22 in fiscal 2021. Also, the stock has returned 91.1% over the past year and 14.2% so far this year.

It is no surprise that SNBR has an overall grade of B, equating to a Buy rating in our POWR Ratings system. The stock also has an A grade for Quality, and a B for Value. In the B-rated Home Improvement & Goods industry, it is ranked #21 out of 64 stocks.

In addition to the POWR Ratings grades I have just highlighted, you can see SNBR’s grades for Growth, Momentum, Sentiment, and Stability here.

MMC shares were trading at $154.23 per share on Friday morning, up $2.80 (+1.85%). Year-to-date, MMC has gained 33.37%, versus a 16.48% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...

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