Investors’ concerns over the Federal Reserve’s plans to tighten the monetary policy, the supply-chain disruption, and the likely increase in taxes has led to severe market volatility. In addition, consumer confidence slumped to a seven-month low in September.
However, promising data for a Merck & Co., Inc (MRK) oral treatment for the coronavirus has provided some support to the market. In August, Federal Reserve Chairman Jerome Powell indicated that “rate hikes aren’t imminent,” which should bode well for small-cap stocks. Moreover, last month, Jeff Mills, the chief investment officer at Bryn Mawr Trust, said that small-cap stocks could present the best opportunity.
Given this backdrop, it could be wise to bet on quality small-cap stocks such as Nature’s Sunshine Products, Inc. (NATR), Townsquare Media, Inc. (TSQ), ARC Document Solutions, Inc. (ARC), and Blueknight Energy Partners, L.P. (BKEP). They have an overall grade of A (Strong Buy) in our proprietary POWR Ratings system.
Nature’s Sunshine Products, Inc. (NATR)
NATR is a natural health and wellness company that primarily manufactures and sells nutritional and personal care products. The company offers general health products related to blood sugar support, bone health, cellular health, sleep, sports and energy, and vision. It has a market capitalization of $289.38 million.
On August 6, 2021, Terrence Moorehead, the CEO of NATR, said, “Looking forward to the second half of 2021, we expect our distributors and customers to continue responding positively to our transformed business model and new branding. Our customers are enjoying the revitalized packaging and labels as well as our new unboxing experience, which we will now start rolling out within our Synergy brand as well.”
NATR’s net sales surged 25% year-over-year to $109 million in the fiscal second quarter that ended June 30, 2021. The company’s adjusted EBITDA grew 38% year-over-year to $13.40 million, while its non-GAAP net income came in at $6.79 million, representing a 13.3% year-over-year increase. Also, its adjusted EPS came in at $0.32, up 14.3% year-over-year. The stock has gained 23.6% over the past year to close Friday’s trading session at $14.89.
NATR’s POWR Ratings reflect this promising outlook. The company has an overall grade of A, which translates into a Strong Buy rating in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Value and Quality, and a B grade for Growth and Stability. Within the B-rated Medical – Consumer Goods industry, NATR is ranked #1 out of 13 stocks. To see NATR’s grades for Momentum and Sentiment as well, click here.
Townsquare Media, Inc. (TSQ)
TSQ operates as a radio, digital media, entertainment, and digital marketing solutions company in small and mid-sized markets and has a market capitalization of $212.07 million. Its segments include Advertising; Townsquare Interactive; and Live Events segments. Also, it owns 322 radio stations and approximately 330 local Websites in 67 markets in the United States.
On August 3, 2021, TSQ’s CEO Bill Wilson, said, “I am incredibly optimistic about Townsquare’s future, and very proud that we are on the path to achieving 2019’s Adjusted EBITDA in 2021, on the verge of a full revenue recovery in 2021, and plan on delivering strong revenue and profit growth in 2022.”
TSQ’s net revenue surged 44.9% year-over-year to $107.30 million in the fiscal second quarter that ended June 30, 2021. The company’s adjusted EBITDA grew 1358.6% year-over-year to $30.29 million. Its non-GAAP net income came in at $10.03 million, compared to a loss of 7.95 million in the prior-year period. Also, its adjusted EPS came in at $0.53, compared to a loss per share of $0.43 in the year-ago period.
Analysts expect TSQ’s EPS to increase 400% year-over-year to $1.40 in fiscal 2021. In addition, the company’s revenue is expected to increase 12.1% year-over-year to $106.87 million for the quarter ending September 30, 2021. Over the past year, the stock has gained 175.6% to close Friday’s trading session at $12.87.
TSQ’s POWR Ratings reflect solid prospects. The company has an overall grade of A, which translates to a Strong Buy rating in our proprietary ratings system. In addition, it has an A grade for Growth, Momentum, and Sentiment, and a B grade for Value.
ARC Document Solutions, Inc. (ARC)
With a market capitalization of $127.37 million, ARC is a reprographics company that provides document solutions. In addition, it offers managed print services, construction document and information management services, and archive and information management services. It also resells printing, imaging, and related equipment primarily to architectural, engineering, and construction firms.
On August 4, 2021, Suri Suriyakumar, the Chairman, President and CEO of ARC, said, “Our sales teams capitalized on new opportunities often driven by targeted marketing campaigns. We are watching closely how various industry verticals are responding to changing business conditions, and we are adapting quickly to build momentum for the second half of the year.”
For the fiscal second quarter that ended June 30, 2021, ARC’s net sales surged 7% year-over-year to $68.80 million. The company’s adjusted EBITDA grew 3.7% year-over-year to $11.10 million, while its adjusted net income came in at $2.60 million, representing a 116.7% year-over-year increase. Also, its adjusted EPS came in at $0.06, up 100% year-over-year. The stock has gained 220.4% over the past year to close Friday’s trading session at $2.98.
It’s no surprise that ARC has an overall grade of A, which equates to a Strong Buy in our POWR Ratings system. The stock has an A grade for Quality and Value, and a B grade for Momentum.
Blueknight Energy Partners, L.P. (BKEP)
BKEP provides integrated terminal ling services for companies that produce, distribute, and handle liquid asphalt in the United States. The company has 53 terminals located across 26 states. It has a market capitalization of $126.61 million.
On August 4, 2021, Andrew Woodward, BKEP’s CEO, said, “Strategically, we are in the early stages of our growth efforts as we maintain a disciplined approach to maximizing long-term value for our stakeholders. I am excited by the types of projects we are evaluating and encouraged by our progress on a number of fronts, which is further supported by our enhanced liquidity position and successful refinance of our revolving credit facility.”
BKEP’s total revenue surged 7.7% year-over-year to $27.76 million in the fiscal second quarter that ended June 30, 2021. The company’s adjusted EBITDA grew 6.4% year-over-year to $12.03 million. Its net income came in at $7.28 million, representing a 439.1% year-over-year increase. Also, its EPS came in at $0.02, compared to a loss per share of $0.12 in the year-ago period.
BKEP’s revenue is expected to increase 18.8% year-over-year to $131 million in fiscal 2021. Over the past year, the stock has gained 120.1% to close Friday’s trading session at $3.06.
BKEP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of A, which equates to a Strong Buy rating in our proprietary ratings system.
In addition, it has an A grade for Quality, and a B grade for Value. We also have graded BKEP for Sentiment, Stability, Growth, and Momentum. Click here to access all of BKEP’s ratings. BKEP is ranked #4 out of 11 stocks in the A-rated MLPs – Other industry.
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NATR shares were trading at $14.70 per share on Monday afternoon, down $0.19 (-1.28%). Year-to-date, NATR has declined -1.67%, versus a 15.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...
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