Wholesale prices increased less than expected in October, raising hopes that price pressures are cooling down. The producer price index rose 0.2% for the month, lower than the Dow Jones estimate. Moreover, the CPI showed a 7.7% annual gain which was a deceleration from a 41-year peak of 9% in June. This is raising hopes of a slower pace of rate hikes ahead.

Moreover, Treasury Secretary Janet Yellen said, “I expect inflation to come down over time, and Americans are rightly concerned about that, but I believe they’ll be feeling better about it.” In addition, while many experts have warned of a recession, Goldman Sachs believes the Federal Reserve can still pull off a soft landing for the U.S. economy.

Given the backdrop, fundamentally sound stocks United Microelectronics Corporation (UMC), Birchcliff Energy Ltd. (BIREF), Spok Holdings, Inc. (SPOK), and Good Times Restaurants Inc. (GTIM) might be ideal buys under $10.

United Microelectronics Corporation (UMC)

Headquartered in Hsinchu City, Taiwan, UMC is a semiconductor wafer foundry operating in Taiwan, Singapore, China, Hong Kong, and globally. The company offers services for circuit design, mask tooling, wafer fabrication, and assembly and testing.

In terms of forward Price/Sales, UMC is currently trading at 2.01x, 21.5% lower than the industry average of 2.56x. Its forward EV/EBIT multiple of 2.98 is 76.4% lower than the industry average of 12.63.

UMC’s trailing-12-month EBIT margin of 36.21% is 452.90% higher than the 6.55% industry average. Its trailing-12-month EBITDA margin of 52.20% is 333.40% higher than the 12.05% industry average.

UMC’s operating revenues came in at $2.38 billion for the third quarter that ended September 30, 2022, up 34.9% year-over-year. Moreover, its net income came in at $861 million, up 57.6% year-over-year. Also, its EPS came in at $2.19, up 53.1% year-over-year.

Analysts expect UMC’s revenue to increase 18.4% year-over-year to $9.12 billion in 2022. Its EPS is expected to increase 43.4% year-over-year to $1.19 in 2022. Over the past month, the stock has gained 24.1% to close the last trading session at $7.22.

UMC’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall A rating indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

UMC has an A grade for Quality and a B for Value. In the Semiconductor & Wireless Chip industry, it is ranked #3 out of 91 stocks. Click here for the additional POWR Ratings for Stability, Growth, Momentum, and Sentiment for UMC.

Birchcliff Energy Ltd. (BIREF)

Headquartered in Calgary, Canada, BIREF operates as an intermediate oil and natural gas company. It acquires, explores, develops, and produces natural gas, light oil, condensate, and natural gas liquids in Western Canada.

In terms of forward Price/Sales, BIREF is currently trading at 2.10x, 38.6% lower than the industry average of 1.51x. Its forward EV/EBIT multiple of 3.91 is 50.91% lower than the industry average of 7.87.

BIREF’s trailing-12-month EBIT margin of 67.04% is 249.18% higher than the 19.20% industry average. Its trailing-12-month EBITDA margin of 82.31% is 199.06% higher than the 27.52% industry average.

BIREF’s net revenue came in at C$454.21 million ($337.33 million) for the third quarter that ended September 30, 2022, up 41.4% year-over-year. Its net income increased 76.2% year-over-year to C$245.64 million ($182.43 million). Also, its EPS came in at C$0.89, up 78% year-over-year.

Street expects BIREF’s revenue to increase 40.9% year-over-year to $1.04 billion for the year ending December 2022 and 36.5% year-over-year to $312.25 million for the quarter ending December 2022. Over the past nine months, the stock has gained 63% to close the last trading session at $8.15. 

BIREF’s overall B rating indicates a Buy in our proprietary rating system.

The stock has an A grade for Momentum and a B for Quality. In the B-rated Energy – Oil & Gas industry, BIREF is ranked #16 out of 94 stocks. Click here for the additional POWR Ratings for Value, Growth, Sentiment, and Stability for BIREF.

Spok Holdings, Inc. (SPOK)

SPOK operates as a healthcare communication solution provider, serving businesses, professionals, management personnel, medical personnel, field sales personnel and service forces, manufacturing organizations, and government agencies.

In terms of forward EV/Sales, SPOK is currently trading at 1.14x, 39.45% lower than the industry average of 1.88x. Its trailing-12-month Price/Sales of 1.25x is lower than the industry average of 1.26x.

SPOK’s trailing-12-month gross profit margin of 66.14% is 33.89% higher than the 49.40% industry average.

SPOK’s operating income came in at $3.54 million compared to a loss of $3.56 million in the year-ago period. Its net profit came in at $2.92 million compared to a net loss of $2.49 million for the same period. Also, its EPS came in at $0.15 compared to a loss per share of $0.13 for the previous year.

SPOK’s revenue is expected to come in at $32.50 million for the quarter ending December 2022, while its EPS is expected to come in at $0.07 for the same period. Over the past six months, the stock has gained 20.9% to close the last trading session at $8.63.

SPOK’s overall A rating equates to a Buy in our POWR Ratings system. It has an A grade for Growth and a B for Quality and Sentiment. The stock is ranked first among 20 stocks in the Telecom – Domestic industry.

We’ve also rated SPOK for Stability, Momentum, and Value. Get all SPOK ratings here.

Good Times Restaurants Inc. (GTIM)

GTIM engages in the restaurant business in the United States. The company operates and franchises Good Times Burgers & Frozen Custard and Bad Daddy’s Burger Bar.

Its trailing-12-month EV/Sales of 0.54x is 53% lower than the industry average of 1.15x, while its trailing-12-month Price/Sales of 0.21x is 75% lower than the industry average of 0.86x.

GTIM’s trailing-12-month levered FCF margin of 4.23% is 210.12% higher than the 1.37% industry average.

GTIM’s total net revenues came in at $36.50 billion for the third quarter that ended June 28, 2022, up 7.5% year-over-year. Its restaurant sales increased 7.6% year-over-year to $36.27 billion. Also, its Bad Daddy’s Burger Bar restaurant sales increased 11.3% year-over-year to $27.17 million.

Street expects GTIM’s EPS to grow 30% per annum for the next five years. Over the past month, the stock has gained 6.9% to close the last trading session at $2.43.

GTIM has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system.

It has an A grade for Value and a B for Growth, Momentum, Sentiment, and Quality. GTIM is ranked #first among 47 stocks in the A-rated Restaurants industry. Click here for the additional POWR Ratings for GTIM (Stability).

UMC shares were trading at $7.50 per share on Tuesday afternoon, up $0.28 (+3.88%). Year-to-date, UMC has declined -35.90%, versus a -15.26% rise in the benchmark S&P 500 index during the same period.

About the Author: Rashmi Kumari

Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...

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