The stock market ended the first week of the year in positive territory, boosting optimism. The Dow and S&P 500 each closed the week up 1.5%, while the Nasdaq advanced 1%.
The December nonfarm payrolls report showed that the U.S. economy added 223,000 jobs last month, a small decrease from the 256,000 gains in November. In addition, wages grew slower than anticipated, increasing 0.3% for the month while economists expected 0.4%.
This indicates that inflation may be cooling, and the Federal Reserve’s interest rate hikes are showing their intended effect. Moreover, ISM’s Non-Manufacturing Purchasing Managers’ Index showed that the services industry contracted in December, indicating a slowing economy.
While the interest rate hikes are expected to continue this year, the December jobs report and slowing economic activity might prompt the Fed to slow the pace of hikes.
As uncertainties remain, quality stocks trading at affordable prices could be wise bets now instead of the pricey options. We think fundamentally strong stocks trivago N.V. (TRVG), Gran Tierra Energy Inc. (GTE), and Data Storage Corporation (DTST), which are currently trading under $3, might be solid buys now.
trivago N.V. (TRVG)
Headquartered in Düsseldorf, Germany, TRVG operates as a global hotel and lodging search engine. It offers a meta-search engine for locating lodging online from individual hotels, hotel chains, and online travel agencies.
The company provides access to its platform via 53 regionally specific websites and applications in 31 languages.
TRVG’s forward EV/Sales of 0.51x is 73% lower than the industry average of 1.87x. Its forward non-GAAP P/E of 6.00x is 62.6% lower than the industry average of 16.02x.
For the fiscal year 2022 third quarter ended September 30, 2022, TRVG’s total revenue increased 32.5% year-over-year to €183.70 million ($195.51 million), and its net other income grew 63.6% from the year-ago value to €404 thousand ($430 thousand). Its adjusted EBITDA rose 116.1% year-over-year to €33.50 million ($35.65 million).
The consensus EPS estimate of $0.24 for the fiscal year ended December 2022 indicates a 327.7% year-over-year improvement. Likewise, the consensus revenue of $577.66 million for the same year indicates a rise of 40% from the prior year.
Moreover, the company has an impressive earnings surprise history as it surpassed the consensus EPS estimates in each of the four trailing quarters. The stock has gained 23% over the past three months to close the last trading session at $1.45.
TRVG’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Quality and a B for Growth and Value. Among the 59 stocks in the Internet industry, it is ranked #2.
Click here to access additional POWR Ratings for Stability, Momentum, and Sentiment for TRVG.
Gran Tierra Energy Inc. (GTE)
Headquartered in Calgary, Canada, GTE and its subsidiaries explore and produce oil and gas properties in Colombia and Ecuador.
In terms of forward non-GAAP P/E, GTE’s 1.90x is 76.3% lower than the industry average of 7.99x. Its forward Price/Cash flow of 0.87x is 78.5% lower than the industry average of 4.04x.
GTE’s oil sales rose 24.4% year-over-year to $168.40 million for the third quarter ended September 30, 2022. Its net and comprehensive income came in at $38.66 million, up 10.4% year-over-year, while its EPS remained constant at $0.10. Moreover, its adjusted EBITDA increased 48.2% year-over-year to $121.24 million.
GTE’s revenue is expected to increase 71% year-over-year to $810.03 million in the fiscal year ended December 2022. Its EPS is expected to rise 275% year-over-year to $0.45 in the same year.
The stock has gained 4.4% over the past year to close the last trading session at $0.85.
GTE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system.
GTE has an A grade for Value, Momentum, and Sentiment and a B for Quality. Within the A-rated Foreign Oil & Gas industry, it is ranked #11 out of 43 stocks.
Beyond what we’ve stated above, we have also given GTE grades for Growth and Stability. Get all GTE ratings here.
Data Storage Corporation (DTST)
DTST provides multi-cloud information technology solutions in the U.S. The company offers data protection and disaster recovery solutions, high availability, data vaulting, DRaaS, IaaS, message logic, standby server, support, maintenance, and internet solutions.
DTST’s forward EV/Sales of 0.06x is 97.8% lower than the industry average of 2.55x, while its forward Price/Sales of 0.46x is 82.1% lower than the industry average of 2.57x.
DTST’s sales came in at $4.42 million for the third quarter that ended September 30, 2022, up 14.5% year-over-year. Its gross profit came in at $1.85 million, up 20.1% year-over-year. The company’s adjusted EBITDA rose 54.7% from its prior-year quarter to $162.39 thousand.
Analysts expect DTST’s revenue to increase 9.9% year-over-year to $5.40 million for the fiscal fourth quarter ended December 2022. It has surpassed EPS estimates in three of the four trailing quarters.
DTST has gained 6.1% over the past five days to close the last trading session at $1.57.
Given its positive outlook, DTST has an overall B rating, which equates to a Buy in our POWR Ratings system.
It has an A grade for Sentiment and a B grade for Value and Quality. It is ranked #6 in the Internet industry.
To see the additional POWR Ratings for Growth, Momentum, and Stability for DTST, click here.
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TRVG shares were trading at $1.46 per share on Monday morning, up $0.01 (+0.69%). Year-to-date, TRVG has gained 8.15%, versus a 2.04% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities. More...
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