The U.S. economy continues to recover thanks to a fast-paced, nationwide vaccination program, impressive fiscal stimulus, and monetary policy support. However, rising concerns about the potential for inflation, President Biden’s tax proposal, and the resurgence of COVID-19 cases in several countries, are driving significant market volatility.
Against this backdrop, investors are focusing on momentum investing. This is because after gaining momentum a stock usually maintains it for some time irrespective of market conditions. Investors’ interest in momentum stocks is evidenced by iShares MSCI USA Momentum Factor ETF’s (MTUM) 8.1% gains over the past six months.
So, we think investors looking to dodge market volatility should consider betting on SS&C Technologies Holdings, Inc. (SSNC), Whirlpool Corporation (WHR), Vertiv Holdings Co (VRT), and Penske Automotive Group, Inc. (PAG). These stocks have already gained momentum, which is expected to continue for some time based on the strength in their financials.
SS&C Technologies Holdings, Inc. (SSNC)
SSNC is a provider of software and software-enabled services. The company owns and operates technology stacks across securities accounting, front-to-back-office operations, performance and risk analytics, regulatory reporting, and healthcare information processes. It serves various markets, including institutional asset and wealth management, healthcare, financial advisory and financial institutions markets.
The company’s $1.23 billion in net sales for its fiscal year 2021 first quarter, ended March 31, represents a 5.1% year-over-year rise. Its operating income has increased 23% year-over-year to $261.90 billion. Also, its EPS has increased by 75.7% year-over-year to $0.65.
For the current quarter, ending June 30, , analysts expect SSNC’s EPS to increase 9.6% year-over-year to $1.14. Also, it surpassed consensus EPS estimates in each of the trailing four quarters. Its revenue is expected to increase by 7.1% year-over-year to $1.21 billion for the quarter ending September 30, 2021.
On April 29, SSNC launched SS&C Chorus, a newly integrated intelligent automation platform that is designed to increase straight-through processing, reduce operational risk, and enhance digital customer journeys. The company’s consumer base is expected to increase on the back of this innovative offering. The stock has gained 28.8% over the past year to close yesterday’s trading session at $72.82. It has also gained 4.9% over the past three months and 12.1% over the past six months.
It’s no surprise that SSNC has an overall A 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 has an A grade for Momentum, and a B grade for Quality, Growth, Value, Sentiment and Stability. Get all SSNC’s ratings here.
SSNC is ranked #2 out of 59 stocks in the Software- Business industry.
Whirlpool Corporation (WHR)
WHR manufactures and markets home appliances and related products. The company operates through four geographical segments—North America, Europe, Middle East and Africa (EMEA), Latin America, and Asia. Its products include refrigerators, laundry appliances, cooking and other small domestic appliances, and dishwasher appliances.
For its fiscal year 2021 first quarter, ended March 31, WHR’s operating income increased 23.9% year-over-year to $5.40 billion. The company’s net earnings came in at $433 million, which represents an 181.2% year-over-year increase. Its EPS was $6.81, up 178% year-over-year.
Analysts expect the company’s EPS and revenue to increase 175.8% and 41.5%, respectively, year-over-year to $5.93 and $5.05 billion, , for the current quarter, ending June 30, 2021. Also, WHR surpassed the Street’s EPS estimates in each of the trailing four quarters.
In April, WHR authorized an additional $2 billion share repurchase program. It also declared a $1.40 quarterly dividend, payable on June 15. This reflects the company’s confidence in its ability to continue to generate strong levels of cash. The stock has rallied 125.9% over the past year and closed yesterday’s trading session at $246.85, after hitting its all-time high of $248.90. It has gained 36.8% year-to-date.
WHR’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. It has an A grade for Momentum and Growth, and a B grade for Value. In addition to , one can see WHR’s ratings for Stability, Sentiment and Quality here.
WHR is ranked #6 of 64 stocks in the A-rated Home Improvement & Goods industry.
Vertiv Holdings Co (VRT)
VRT designs, manufactures, and services critical digital infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments. It offers its products primarily under the Liebert, NetSure, Geist, and Avocent brands. The company serves social media, financial services, healthcare, transportation, retail, education, and government industries.
VRT’s $1.10 billion in net sales for its fiscal year 2021 first quarter (ended March 31, 2021) represents a 22.4% year-over-year rise. The company’s net income for the quarter came in at $31.70 million, up 115.2% year-over-year. Its EPS came in at $0.09, which represents a 110.3% year-over-year increase.
Analysts expect VRT’s EPS to increase 43.6% year-over-year to $1.12 in its fiscal year 2021. Its revenue is expected to increase 27.3% year-over-year to $1.21 billion for the quarter ending June 30. It surpassed consensus EPS estimates in three of the trailing four quarters.
In March, the company introduced the Liebert VIC–its first liquid immersion cooling solution for high density-data centers. It is available throughout India, Asia, Australia and New Zealand. The product’s introduction has increased VRT’s market reach considerably. The stock has gained 120.1% over the past year and 22.6% so far this year. It closed yesterday’s trading session at $22.89.
VRT’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Momentum, and a B Grade for Quality, Growth, Value and Sentiment. Click here to see VRT’s rating for Stability as well.
VRT is ranked #22 of 87 stocks in the B-rated Industrial-Equipment industry.
Penske Automotive Group, Inc. (PAG)
PAG is an international transportation services company. It operates through four segments—Retail Automotive, Retail Commercial Truck, Other, and Non-Automotive Investments. It operates dealerships under franchise agreements with various automotive manufacturers and distributors and is also engaged in the sale of new and used motor vehicles, and related products and services, among others.
For its fiscal year 2021 first quarter, ended March 31, 2021, PAG’s total revenue increased 15.3% year-over-year to $5.80 billion. Its gross profit increased 17.6% year-over-year to $913.2 million. The company’s net income increased 253% year-over-year to $182.5 million. Its EPS came in at $2.26, up 253.1% year-over-year.
For the quarter ending June 30, analysts expect PAG’s EPS and revenue to increase 237.5% and 59.7%, respectively, year-over-year to $1.89 and $5.83 billion. Furthermore, it surpassed consensus EPS estimates in each of the trailing four quarters.
On April 13, PAG completed the acquisition of Kansas City Freightliner, a retailer of medium and heavy-duty commercial trucks. The KCFL acquisition is expected to generate $450 million in annualized revenue. The stock has rallied 61.7% over the past six months to close yesterday’s trading session at $90.54, after hitting its all-time high of $91.88. It has also gained 10.3% over the past month.
It’s no surprise that PAG has an overall A rating, which translates to a Strong Buy. The stock has an A grade for Growth, Value and Momentum, and a B grade for Sentiment. Click here to see the additional POWR Ratings for PAG (Stability and Quality).
PAG is ranked #2 of 25 stocks in the B-rated Auto Dealers & Rentals industry.
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SSNC shares were trading at $72.76 per share on Thursday afternoon, down $0.06 (-0.08%). Year-to-date, SSNC has gained 0.25%, versus a 11.86% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand. More...
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