The COVID-19 Delta variant is spreading rapidly in several countries. According to the National Institute of Health director, the United States could soon witness more than 200,000 new COVID cases every day. Furthermore, the Senate’s recent approval of a $3.5 trillion budget plan framework amid rising consumer prices has raised concerns about the plan’s potential to exacerbate inflation.
Market volatility is expected to remain high for the foreseeable future as COVID-19 continues to ravage the country and prompt new distancing restrictions, fueling skepticism among investors about the economic recovery. In addition, geopolitical tensions caused by the collapse of the Afghan government could contribute to the market volatility. However, investors could dodge much market volatility by investing in stocks that have already gained momentum and have the potential to maintain it irrespective of market movements. Investors’ confidence in momentum stocks is evident in the Invesco DWA Momentum ETF’s (PDP) 9.3% returns over the past three months.
Philip Morris International Inc. (PM), Nippon Steel Corporation (NPSCY), Voestalpine AG (VLPNY), and Aperam S.A (APEMY) have gained robust momentum that they are well-positioned to maintain in the coming months. So, we think it could be wise to bet on these stocks now.
Philip Morris International Inc. (PM)
PM manufactures and distributes cigarettes, other nicotine-containing products, smoke-free products, and associated electronic devices and accessories. The New York City-based company offers IQOS smoke-free products, including heated tobacco and nicotine-containing vapor products under various brands, including Under the HEETS, HEETS Creations, HEETS Dimensions, HEETS Marlboro, HEETS FROM MARLBORO, Marlboro Dimensions, Marlboro HeatSticks, and Parliament HeatSticks.
This month, PM acquired OtiTopic, a U.S. respiratory drug development company that is developing an inhalable acetylsalicylic acid therapy for acute myocardial infarction. If authorized, the treatment will meet a substantial unmet medical need for more than 83 million people in the United States who are at moderate to high risk of myocardial infarction.
During the second quarter, ended June 30, 2021, PM’s net revenue increased 14.2% year-over-year to $7.59 billion. The company’s operating income increased 14.6% year-over-year to $3.13 billion over this period. Its net income increased 11.6% year-over-year to $2.17 billion, while its EPS grew 11.2% from the prior-year quarter to $1.39.
A $6.1 consensus EPS estimate for the current year represents an 18% improvement year-over-year. Furthermore, PM has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. The $31.27 billion consensus revenue estimate for the current year represents a 9% increase from the same period last year. PM’s stock has gained 23.7% year-to-date to close its last trading session at $102.39. Over the past year, the stock has returned 31.8%.
PM’s 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 distinct factors, each with its own weighting.
PM is also rated an A grade for Momentum and Quality, and a B for Stability. Within the A-rated Tobacco industry, it is ranked #3 of 11 stocks.
To see additional POWR Ratings for Growth, Value, and Sentiment for PM, click here.
Nippon Steel Corporation (NPSCY)
NPSCY is a Japan-based steelmaking and steel fabrication, engineering and construction, chemicals and materials company. In addition, it also offers engineering and construction services for urban infrastructure, environment and energy, and steel making plants; coal chemicals, chemicals, and functional and composite materials; and IT consulting and outsourcing services.
NPSCY’s revenue increased 32.8% year-over-year to ¥1503.15 billion ($13.75 billion) in the first quarter ended June 30, 2021. The company reported a ¥256.34 billion ($2.34 billion) operating profit , compared to a ¥27.51 billion ($251.63 million) operating loss in the prior-year quarter. Its net income came in at ¥162.13 billion ($1.48 billion) for this period, compared to a ¥42.07 billion ($384.82 million) net loss in the first quarter of 2020. Furthermore, the company’s gross profit increased 213.3% year-over-year to ¥248.47 billion ($2.60 billion).
The stock gained 102.2% over the past year to close yesterday’s trading session at $20.24. The price has surged 75% over the past nine months and 19.2% over the past month.
NPSCY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. NPSCY also has an A grade for Sentiment and Momentum, and a B for Growth and Value. The stock is ranked #7 of 34 stocks in the A-rated Steel industry.
Beyond the POWR Ratings grades we have just highlighted, one can see the NPSCY ratings for Stability and Quality.
Voestalpine AG (VLPNY)
Headquartered in Austria, VLPNY processes, develops, manufactures, and distributes steel products globally. Steel; High-Performance Metals; Metal Engineering; Metal Forming; and Other are the company’s five segments.
In June, VLPNY developed a large-scale technique for producing carbon-neutral steel without using fossil carbon and obtained intellectual property rights to the process from the European Patent Office. The patent covers the manufacture of sponge iron utilizing green hydrogen and biogas in the direct reduction process and is valid in all major European steel-producing countries.
During its first fiscal quarter, ended June 30, 2021, VLPNY’s revenue increased 45.6% year-over-year to €3.49 billion ($4.11 billion). The company reported a €339.6 million ($400.14 million) operating profit, compared to a €48.7 million ($57.38 million) operating loss in the prior-year quarter. Its net income came in at €252.7 million ($297.75 million) for this period, compared to a €70.5 million ($83.07 million) net loss in the first quarter of 2020. Its EPS totaled €1.42 ($1.67), compared to a €0.40 ($0.47) loss per share in the prior-year period.
A $16.63 billion consensus revenue estimate for 2022 represents a 21.2% increase from the same period last year. VLPNY’s stock has gained 106% over the past year to close yesterday’s trading session at $9.43. Also, the stock has returned 59.7% in the past nine months.
VLPNY’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. VLPNY has also rated an A for Momentum and Value, and a B for Growth and Stability. Within the Steel industry, it is ranked #2 of 34 stocks.
Click here to see additional POWR Ratings for Sentiment and Quality for VLPNY.
Aperam S.A (APEMY)
APEMY in Luxembourg City, Luxembourg, manufactures and sells stainless and specialty steel products worldwide. Stainless & Electrical Steel; Services & Solutions; and Alloys & Specialties are the company’s three operational segments. In addition, it develops, manufactures, and transforms a variety of specialty alloys and other stainless steels in various forms, including bars, semis, cold-rolled strips, wire and wire rods, and plates in a variety of grades.
Last month, APEMY announced a share repurchase program through which it intends to buy back 2.45 million shares over the next five months. This exhibits the company’s robust financial health.
For the second quarter, ended June 30, 2021, APEMY’s sales increased 8.1% year-over-year to €1.27 billion ($1.50 billion). Its operating income grew 67.9% from its €235 million ($276.89 million) year-ago value. The company’s net income increased 83.6% year-over-year to €213 million ($251 million). In addition, its EPS increased 84.7% year-over-year to €2.66 ($3.13) over this period.
Analysts expect APEMY’s revenue to increase 35.3% year-over-year to $5.93 billion in its fiscal year 2021. The stock has gained 73.4% over the past nine months to close its last trading session at $65.15. Over the past year, the stock has gained 110.8%.
It is no surprise that APEMY has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Momentum, and a B for Growth and Sentiment. In the Steel industry, it is ranked #5 of 34 stocks.
In addition to the POWR Ratings grades we have just highlighted, you can see the APEMY ratings for Stability, Value, and Quality.
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REVISED: 2023 Stock Market Outlook (includes top 7 picks)
PM shares were trading at $102.70 per share on Tuesday morning, up $0.31 (+0.30%). Year-to-date, PM has gained 27.24%, versus a 19.47% 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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