The resurgence of COVID-19 cases due to the rapid spread of the highly contagious Delta variant has been worrying investors regarding the potential for it to slow down the economic recovery. In addition, the consumer price index increased 5.4% in June, and the International Monetary Fund (IMF) warned that inflation could be persistent.
However, Goldman Sachs (GS) equity strategist David Kostin said recently that “the new strain should not pose a major market risk.” The major stock market indexes continue to be supported by strong corporate earnings. In fact, more S&P 500 companies have beaten EPS estimates for the second quarter than the historical average. Also, the U.S. GDP came in at 6.5% in the second quarter, fueled by massive government aid and increased spending on services.
So, we think it could be wise to bet on fundamentally strong stocks SS&C Technologies Holdings, Inc. (SSNC) and Preformed Line Products Company (PLPC). In addition to overall A ratings in our POWR Ratings system, these stocks possess a solid combination of value, stability, and momentum attributes.
SS&C Technologies Holdings, Inc. (SSNC)
SSNC provides software products and services mainly to the financial and healthcare industries. Based in Windsor, Conn., the company’s software-enabled services include SS&C GlobeOp, SS&C Retirement Solutions, and Bluedoor, while its software products include portfolio management software, trading software, and banking and lending solutions.
SSNC announced on August 2, 2021, that Ninety One had extended its long-time relationship with SSNC. Spencer Baum, Head of Client Service & Relationship Management at SS&C GIDS, said, “SS&C is committed to helping our clients retain and capture new assets through the full spectrum of distribution channels with cutting-edge technology and industry-leading service.”
The company’s adjusted revenue increased 10.5% year-over-year to $1.26 billion for the second quarter, ended June 30, 2021. Its adjusted operating income grew 15.3% year-over-year to $495.80 million, while its total assets increased 9.5% year-over-year to $17.43 billion. The company’s adjusted EPS increased 19.2% year-over-year to $1.24.
The stock’s trailing-12-month non-GAAP P/E and P/B of 16.57x and 3.38x, respectively, are lower than the25.34x and 5.06x industry averages. For the current quarter, ending June 30, 2021, analysts expect SSNC’s EPS to increase 9.6% year-over-year to $1.14. It surpassed the consensus EPS estimates in each of the trailing four quarters. For the quarter ending September 30, 2021, its revenue is expected to be $1.21 billion, representing a 7.1% year-over-year rise. The stock surged 25.4% over the past year to close yesterday’s trading session at $72.62.
SSNC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. In addition, it has a B grade for Momentum, Stability, Growth, Quality, Sentiment, and Value.
Preformed Line Products Company (PLPC)
PLPC designs and manufactures products and systems to construct and maintain overhead, ground-mounted, and underground networks for the energy, telecommunication, cable operator, and information industries. In addition, the Mayfield Village, Ohio, company offers formed wire products to support, protect, terminate, and secure power conductor and communication cables and control cable dynamics.
On April 29, 2021, Rob Ruhlman, Chairman, and CEO of PLPC, said, “PLP USA continues to lead the increase driven by growth in the communications product family as well as the significance of our U.S.-based manufacturing and distribution facilities. Additional investments will be made within our PLP USA operations to support this growth both today and into the future.”
PLPC’s net sales increased 14% year-over-year to $117.55 million for its fiscal first quarter ended March 31, 2021. Its operating income grew 109% year-over-year to $10.77 million. Its net income came in at $7.18 million, which represents a 96.5% year-over-year increase. The company’s EPS came in at $1.45, up 95.9% year-over-year.
The stock’s 0.76x and 1.12x respective trailing-12-month EV/S and P/Bare lower than the 2.09x and 3.01x industry averages. Over the past year, the stock has gained 40.1% to close yesterday’s trading session at $69.00.
PLPC’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to a Strong Buy in our proprietary ratings system. In addition, the stock has an A grade for Value, and a B grade for Momentum, Stability, Quality, and Sentiment.
Note that PLPC is one of the few stocks handpicked by our Chief Value Strategist, David Cohne, currently in the POWR Value portfolio. Learn more here.
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SSNC shares were trading at $76.50 per share on Tuesday afternoon, down $0.56 (-0.73%). Year-to-date, SSNC has gained 5.63%, versus a 18.53% 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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