The stock market remains under pressure due to the strong macroeconomic data and the collapse of Silicon Valley Bank and Signature Bank. With the stock market expected to remain volatile, it could be wise for investors to buy fundamentally strong stocks Nokia Oyj (NOK) and Overseas Shipholding Group, Inc. (OSG) without hesitation.
Before discussing why these stocks should be bought this year, let’s see why investors are jittery.
February’s inflation report came with the consumer price index (CPI) rising 0.4% for the month and 6% year-over-year, in line with market expectations. This marked the slowest annual increase in consumer prices since September 2021. However, the monthly core inflation rose from 0.4% in January to 0.5% last month.
On the other hand, the jobs market remained strong. Although the economy added lesser jobs last month than in January, nonfarm payrolls rose higher than analyst estimates.
Investors’ sentiments were hurt further by last week’s bank collapses. The Fed is expected to opt for a smaller rate hike to restore stability to the financial sector. Many analysts expect that the Fed might even go ahead with no hikes at all next week.
Amid the turbulent market conditions, it could be wise for investors to buy fundamentally strong stocks NOK and OSG.
Let’s examine why these stocks could be worth investing in.
Nokia Oyj (NOK)
Headquartered in Espoo, Finland, global telecommunications company NOK provides mobile, fixed, and cloud network solutions. The company operates through four segments: Network Infrastructure, Mobile Networks, Cloud and Network Services, and Nokia Technologies.
In terms of forward non-GAAP P/E, NOK’s 9.82x is 49.6% lower than the 19.47x industry average. Its 6.49x forward EV/EBIT is 60.4% lower than the 16.39x industry average. Likewise, its 0.81x forward EV/Sales is 70.3% lower than the 2.72x industry average.
On February 27, 2023, NOK announced its contract with MTN South Africa as one of its 5G Radio Access Network (RAN) equipment providers. President of Mobile Networks at NOK, Tommi Uitto, believes that this strengthens NOK’s market position in South Africa and helps MTN deliver superior 5G experiences to its subscribers.
Moreover, the company’s AirScale portfolio will improve the coverage and capacity of MTN’s network performance while contributing to reduced carbon emissions.
NOK’s net sales for the fourth quarter ended December 31, 2022, increased 16.1% year-over-year to €7.45 billion ($7.90 billion). Its gross profit increased 25.8% year-over-year to €3.19 billion ($3.38 billion).
Additionally, its profit for the period increased 363.5% year-over-year to €3.15 billion ($3.34 billion), while its EPS came in at €0.56, representing an increase of 366.7% from the prior-year quarter.
Analysts expect NOK’s EPS and revenue for the quarter ending March 31, 2023, to increase 10.9% and 9.5% year-over-year to $0.08 and $6.15 billion, respectively. It has a commendable earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters.
Over the past nine months, the stock has fallen 0.2% to close the last trading session at $4.57.
NOK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the B-rated Technology – Communication/Networking industry, it is ranked #3 out of 51 stocks. The company has an A grade for Value and a B for Growth, Momentum, and Sentiment.
We have also given NOK grades for Stability and Quality. Get all NOK ratings here.
Overseas Shipholding Group, Inc. (OSG)
OSG owns and operates a fleet of oceangoing vessels engaged in transporting crude oil and petroleum products in the United States flag trade. It serves independent oil traders, refinery operators, and the United States and international government entities.
In terms of its trailing-12-months Price/Cash flow, OSG’s 3.66x is 6.8% lower than the 3.93x industry average. Its 0.65x trailing-12-months Price/Sales is 39% lower than the 1.07x industry average. Likewise, its 0.78x trailing-12-months P/B is 48.2% lower than the 1.51x industry average.
On December 8, 2022, OSG announced that it had exercised options to extend its six bareboat charter agreements with American Shipping Company ASA for an additional three-year term commencing in December 2023.
“We believe the market continues to support attractive commercial opportunities for these vessel leases to supplement the strong and stable cash flow generation from our niche businesses,” said Sam Norton, OSG’s President and CEO.
For the fiscal fourth quarter ended December 31, 2022, OSG’s shipping revenues increased 27.5% year-over-year to $121.76 million. Its net income came in at $10.09 million, compared to a net loss of $3.68 million in the year-ago period. In addition, its net EPS came in at $0.11, compared to a loss per share of $0.03 in the prior-year quarter.
Over the past year, the stock has gained 60.7% to close the last trading session at $3.39.
OSG’s POWR Ratings reflect solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
Within the A-rated Shipping industry, it is ranked first out of 42 stocks. The company has an A grade for Momentum and Quality and a B for Growth, Value, and Sentiment. Click here to see OSG’s rating for Stability.
What To Do Next?
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What gives these stocks the right stuff to become big winners, even in this brutal stock market?
First, because they are all low-priced companies with the most upside potential in today’s volatile markets.
But even more important is that they are all top Buy rated stocks according to our coveted POWR Ratings system, and they excel in key areas of growth, sentiment and momentum.
Click below now to see these 3 exciting stocks that could double or more in the year ahead.
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NOK shares were trading at $4.50 per share on Friday morning, down $0.07 (-1.53%). Year-to-date, NOK has declined -2.73%, versus a 1.78% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions. More...
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