Investor concerns regarding the spread of the COVID-19 omicron variant have been fostering stock market volatility. The major stock market indexes ended lower yesterday as Federal Reserve Chairman Jerome Powell said that the Fed might consider accelerating the timing for the tapering of its monthly bond purchases.

Inflation climbed to a record high 6.2% in October, its highest level since December 1990. In its efforts to prevent inflation from spiraling out of control, the Fed is expected to cut its asset purchases and begin increasing interest rates. However, despite the market’s volatility, Goldman Sachs Group, Inc. (GS) expects the S&P 500 to hit 5,100 by the end of 2022. In addition, JPMorgan Chase & Co.’s (JPM) S&P 500 forecast for 2022 is among the most bullish on Wall Street.

Tredegar Corporation (TG), Educational Development Corporation (EDUC), and Core Molding Technologies, Inc. (CMT) are three stocks that have declined significantly in price on a year-over-date basis. However, based on their solid fundamentals, we think they could gain considerably in the near term.

Tredegar Corporation (TG)

TG, in Richmond, Va., manufactures aluminum extrusions, polyethylene plastic films, and polyester films. The company operates in PE films; flexible packaging films; and aluminum extrusion segments.

On November 29, TG announced that it is selling its 18% stake in Kaleo, Inc. TG expects to receive cash proceeds of $45.80 million from the sale, with the potential to receive additional cash within six months of the transaction closing. Based on Kaleo’s ability to achieve its net revenue targets, TG is also likely to receive an additional $5.50 million in cash in  2023 and $8.30 million in 2024. This could help TG improve its cash balance.

TG’s sales for the fiscal third quarter, ended September 30, 2021, increased 13.6% year-over-year to $209.51 million. The company’s net income came in at $6.20 million compared to a $65.21 million loss in the year-ago period. Also, its EPS was $0.19 compared to a $1.95 loss per share in the prior-year period. The stock has lost 34.1% in price year-to-date to close yesterday’s trading session at $11.

TG’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

It has an A grade for Momentum, and a B grade for Value and Quality. It is ranked #2 out of the 41 stocks in the B-rated Industrial – Manufacturing industry. Click here to check the other ratings of TG for Growth, Stability, and Sentiment.

Click here to check out our Industrial Sector Report for 2021

Educational Development Corporation (EDUC)

EDUC is a Tulsa, Okla.-based publishing company that operates as a trade co-publisher of educational children’s books in the United States. It works in two divisions: home business and publishing. The company offers various books, including touchy-feely board books, activity books and flashcards, sticker books, and foreign language books.

EDUC announced its purchase of Learning Wrap-Ups, Inc. on November 1. Learning Wrap-Ups’ products, such as its Learning Palette, have continued to appeal to pre-school and school-aged children. President and CEO of EDUC, Craig White, said, “We expect to increase the overall sales of Learning Wrap-Up products through EDC’s existing publishing and UBAM sales channels while also capitalizing on improved margins by owning Learning Wrap-Ups exclusively.”

For its fiscal second quarter, ended August 31, 2021, EDUC’s net revenues from its publishing division increased 48.6% year-over-year to $3.47 million. The company’s earnings before income tax for the publishing division increased 33% year-over-year to $0.98 million. Its operating expenses decreased 44.8% year-over-year to $201.39 million. Over the past year, the stock has lost 41.7% to close yesterday’s trading session at $9.17.

EDUC’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.

It has a B grade for Growth, Value, Momentum, Sentiment, and Quality. It is ranked #1 of the 11 stocks in the A-rated Entertainment – Publishing industry. To check the additional rating of Stability for EDUC, click here.

Core Molding Technologies, Inc. (CMT)

CMT is a manufacturer of sheet molding compounds and molders of fiberglass reinforced plastics. The Columbus, Ohio company produces and sells molded products for varied markets, including medium- and heavy-duty trucks, automobiles, marine, construction, and other commercial markets.

On November 5, CMT’s President and CEO, David Duvall, said, “We had success with our long-term strategy to diversify our business by winning new programs in multiple industries. In the third quarter, we signed over $40 million of new business which will be launched over the next twelve months.”

CMT’s net sales for its fiscal third quarter, ended September 30, 2021, increased 35.2% year-over-year to $81.03 million. The company’s product sales increased 24.7% year-over-year to $67.64 million. Furthermore, its total assets came in at $179.45 million for the period ended September 30, 2021, compared to $165.51 million for the period ended December 31, 2021. The stock has lost 35.7% so far this year to close yesterday’s trading session at $9.05.

CMT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.

It has an A grade for Growth and Value, and a B grade for Sentiment and Quality. It is ranked #1 in the Industrial – Manufacturing industry. To check the other ratings of CMT (Momentum and Stability), click here.

Click here to check out our Industrial Sector Report for 2021

TG shares were unchanged in premarket trading Wednesday. Year-to-date, TG has declined -32.53%, versus a 23.04% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...

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