Fueled by a super-charged economic recovery, low interest rates and robust corporate earnings, stock markets are expected to attain record highs in the second half of 2021. Ethan Harris, head of global economics research at Bank of America Merrill Lynch Global Research, recently stated that Federal Reserve Chair Jerome Powell “has done a good job of calming the waves in the bond market, so this is Goldilocks for equities.”
With the Fed targeting an average inflation rate range around 2%, investors are optimistic about the potential for the stock markets’ to have a solid run in the coming months.
While Sony Group Corporation (SONY), STMicroelectronics N.V (STM), and SS&C Technologies Holdings, Inc. (SSNC) are underperforming the SPDR S&P 500 ETF Trust (SPY), we think they are well positioned to bounce back in the near term owing to their strong fundamentals and financials, and bullish investor sentiment. So, these stocks could be solid bets now.
Sony Group Corporation (SONY)
Leading technology conglomerate SONY develops, manufactures, and sells various electronic equipment for the consumer, professional, and industrial sectors. The company administers and licenses song lyrics and music, as well as creating and distributing animated films. It is also known for producing films, television content, and digital networks.
In its fiscal year ending March 31, 2021, SONY’s net sales have increased 9% year-over-year to ¥9 billion ($81.26 billion). Its operating income grew 15% year-over-year to ¥971.87 billion ($8.78 billion). The company’s net income increased 101.3% from its year-ago value to ¥1.17 billion ($10.58 billion) over this period.
SONY’s EPS is expected to grow 16.3% year-over-year to $6.42 next year. Analysts expect its revenue to increase 6.7% year-over-year to $90.45 billion in 2023. Also, the stock has surged 44.8% over the past year and 3.4% over the past month.
It is no surprise that SONY has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. The stock also has a B grade for Sentiment and Stability. In the Entertainment-Media Producers industry, it is ranked #4 of 18 stocks.
In total, we rate SONY on eight different levels. Beyond what we’ve stated above, we have also given SONY grades for Growth, Momentum, Quality, and Value. Get all the SONY ratings here.
STMicroelectronics N.V (STM)
Headquartered in Geneva, Switzerland, STM manufactures discrete and conventional commodity components, as well as application-specific integrated circuits (ASICs) for analogue, digital, and mixed-signal applications. Its Automotive and Discrete Group (ADG), Analog, MEMS and Sensors Group (AMS), and Microcontrollers and Digital ICs Group (MDG) are the segments through which the company operates.
This month, STM announced that it has collaborated with Feig Electronics to merge the two companies’ RFID expertise in a time-saving logistics solution. Vendors of high-tech items, such as new industrial, consumer, and medical gadgets, should benefit from the solution since it will reduce costs and increase flexibility.
STM’s net revenue increased 35.2% year-over-year to $3.02 billion in the first quarter ended March 31, 2021. Its operating income surged 90.5% year-over-year to $440 million. The company’s net income increased 89.6% from its year-ago value to $364 million over this period. STM’s EPS has increased 85.7% year-over-year to $0.39.
The company’s EPS is expected to grow 46.7% year-over-year to $1.76 in the current year. Analysts expect STM’s revenue to increase 19.4% from its year-ago value to $12.2 billion in the current year. STM’s stock has gained 36.5% over the past year.
STM’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. STM is also rated a B grade for Value, Growth, and Quality. Within the B-rated Semiconductor & Wireless Chip industry, it is ranked #5 of 99 stocks.
To see additional POWR Ratings for Stability, Momentum, and Sentiment for STM, click here.
SS&C Technologies Holdings, Inc. (SSNC)
SSNC is a software-enabled services company that works with the financial services and healthcare industries in the United States and internationally. The company’s IT infrastructure includes securities accounting, front-to-back-office operations, performance and risk analytics, regulatory reporting, and healthcare information processing. The company also offers consulting and implementation services as well as product support services to its clients.
This month, SSNC announced that CoreVest has chosen SSNC’s Precision LM loan management software to increase automation and operational efficiency, expedite data access and reporting, and minimize risk. SSNC will be able to provide CoreVest with advanced loan servicing and the tools and knowledge necessary to combine numerous applications across various business divisions.
During the first quarter ended March 31, 2021, SSNC’s revenue increased 5.1% year-over-year to $1.23 billion. Its operating income rose 23% from its year-ago value to $269.1 million. The company’s net income increased 76.3% year-over-year to $174.9 million, while its EPS grew 75.7% from the prior-year quarter to $0.65.
A $4.67 consensus EPS estimate for the current year represents an 8.6% increase year-over-year. The $4.91 billion consensus revenue estimate for the current year represents a 4.9% increase from the same period last year. The stock has gained 29.8% over the past year and 2.1% over the past three months.
It is no surprise that SSNC has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has a B grade for Growth, Value, and Stability. In the Software-Business industry, it is ranked #2 of 59 stocks.
In addition to the POWR Ratings grades I have just highlighted; you can see the SSNC rating for Momentum, Sentiment, and Quality.
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SONY shares were trading at $100.34 per share on Wednesday afternoon, down $0.74 (-0.73%). Year-to-date, SONY has declined -0.56%, versus a 16.86% 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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