A year after the Feds’ aggressive interest rate hikes to curb sky-high inflation, the Consumer Price Index (CPI) for December increased 6.5% year-over-year. It decreased 0.1% over the prior month, slowing for the sixth consecutive month. This raised investor confidence, signaling that the Fed’s rate hikes are having the intended effect.
However, since the current inflation rate is still far more than the target, the central bank has given indications of continuing hikes at a slower pace until inflation falls below 2%. Post CPI report, the market is pricing a 0.25 percentage point rate increase next month.
Amid the toxic mix of the Fed’s hawkish stance, geopolitical tensions, and the shadow of a recession, the stock market slumped last year. As a result, investors seem more inclined to invest in cheaper stocks.
Jay Hatfield, chief executive officer at Infrastructure Capital Advisors in New York, said, “We do believe that value names will outperform this season as those companies tend to be much more domestically focused and are benefiting from the pandemic recovery.”
The Mosaic Company (MOS)
MOS and its subsidiaries manufacture and sell concentrated phosphate and potash crop nutrients globally. The company operates through its three broad segments of Phosphates; Potash; and Mosaic Fertilizantes.
On January 13, MOS announced that it had sold Streamsong Resort to Lone Windmill LLC, a Kemper Sports Management LLC subsidiary, for $160 million. The company intends to use the proceeds for funding for its global community investment activities and general corporate purposes.
In December, MOS declared a quarterly dividend of $0.20 per share on its common stock, payable to shareholders on March 16, 2023. This reflects the cash generation ability of the company.
In terms of forward non-GAAP P/E, MOS is trading at 3.98x, which is 71.4% lower than the 13.92x industry average. The stock’s forward EV/EBIT multiple of 3.63 is 66.7% lower than the industry average of 10.91, while its forward EV/EBITDA multiple of 3.03 is 60.3% lower than the industry average of 7.63.
MOS’ net sales increased 56.5% year-over-year to $5.35 billion in the fiscal third quarter that ended September 30, 2022. Net earnings attributable to MOS increased 126.3% year-over-year to $841.70 million.
In addition, adjusted net income per share attributable to MOS increased 138.5% year-over-year to $3.22, while its adjusted EBITDA increased 74% year-over-year to $1.69 billion.
Analysts expect the company’s EPS and revenue for the fiscal fourth quarter (ended December 2022) to grow 20.2% and 12.2% year-over-year to $2.34 and $4.31 billion, respectively.
The stock has gained 2.9% over the past six months to close the last trading session at $46.32. It has gained 2.3% over the past month.
MOS’ POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Value and a B for Growth and Quality. Within the Agriculture industry, it is ranked #9 out of the 28 stocks.
We’ve also rated MOS for Sentiment, Momentum, and Stability. Click here to see all the POWR Ratings of MOS.
Ryerson Holding Corporation (RYI)
RYI and its subsidiaries process and distribute industrial metals in the United States, Canada, Mexico, and China. It offers various products in carbon steel, stainless steel, alloy steel, aluminum, nickel, and red metals in different shapes and forms.
On November 1, 2022, RYI announced the acquisition of Excelsior, Inc, a full-service fabrication and machining company with advanced processing capabilities. Steve Bosway, RYI’s President, West Region, said, “This acquisition strengthens RYI’s network of value-added service centers, allowing us to provide better experiences and an extended suite of metal processing solutions for customers in the Western United States.”
On November 2, 2022, RYI declared a quarterly cash dividend of $0.16 per share of common stock that was payable on December 15, 2022. This reflects the company’s ability to pay back its shareholders.
RYI’s forward non-GAAP P/E multiple of 2.79 is 80% lower than the industry average of 13.92. The stock’s forward EV/EBIT multiple of 3.24 is 70.3% lower than the industry average of 10.91, while its 0.31x forward EV/Sales is 80.1% lower than the industry average of 1.54x.
RYI reported net sales of $1.54 billion in the fiscal third quarter that ended September 30, 2022. Net income attributable to RYI increased 10.9% year-over-year to $55.10 million, while its adjusted earnings per share stood at $1.48.
Street expects RYI’s revenue to increase 10.2% year-over-year to $6.25 billion in the fiscal year ended December 2022. Its EPS is expected to increase 59.1% year-over-year to $11.87 in the same year. Also, the company surpassed EPS and revenue estimates in three of the four trailing quarters.
The stock has gained 49.5% over the past six months to close the last trading session at $33.12. It has gained 13.5% over the past month.
It is no surprise that RYI has an overall B rating, which translates to Buy in our proprietary rating system.
RYI has an A grade for Value and a B for Quality. Within the Industrial – Metals industry, it is ranked #7 out of 37 stocks.
In addition to the POWR Ratings mentioned above, to see RYI ratings for Growth, Momentum, Sentiment, and Stability, click here.
VEON Ltd. (VEON)
Headquartered in Amsterdam, the Netherlands, VEON and its subsidiaries provide mobile and fixed-line telecommunications services. It offers voice, data, and other telecommunication services.
On December 15, 2022, VEON and Turkcell Iletisim Hizmetleri A.S. (TKC) announced their collaboration to enable 194 million mobile users in Pakistan to get access to TKC’s BiP App’s Media, Messaging, and Instant Translations. This might benefit the company.
On November 24, VEON announced the launch of a scheme of arrangement in England via the issuance of a Practice Statement Letter to extend the maturity of the 5.95% notes due February 2023 and 7.25% notes due April 2023 issued by the company by eight months from their respective maturity dates.
In terms of its forward EV/Sales, VEON is trading at 1.37x, 28% lower than the industry average of 1.90x, while its forward non-GAAP P/E multiple of 1.49 is 91.3% lower than the industry average of 17.12x. The stock’s forward EV/EBIT multiple of 7.14 is 53.1% lower than the industry average of 15.21.
VEON’s total operating revenue came in at $2.08 billion for the fiscal third quarter that ended September 30, 2022, up 3.6% year-over-year. Its operating profit increased 22.5% year-over-year to $506 billion, while its total adjusted EBITDA came in at $890 million, up marginally year-over-year.
Analysts expect VEON’s revenue and EPS for the fiscal year ending December 2023 to increase 4% and 10.3% year-over-year to $9.21 billion and $0.43, respectively.
The stock has gained 75.8% over the past three months to close the last trading session at $0.58. Moreover, it has gained 38.1% over the past month.
VEON’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, which equates to a Strong Buy in our proprietary rating system.
VEON has an A grade for Value and a B for Growth, Stability, and Quality. It is ranked first among the 46 stocks within the A-rated Telecom – Foreign industry. Click here for additional VEON ratings (Momentum and Sentiment).
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MOS shares were unchanged in premarket trading Monday. Year-to-date, MOS has gained 5.58%, versus a 4.20% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors. More...
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