Despite signs of recovery in the domestic economy, the U.S. stock markets ended their last trading session of February in the red. Rising bond yields pushed investors into caution mode and stoked anxiety over a widespread sell-off. The technology sector saw a huge fall in momentum and suffered a major loss at week’s end. The tech-heavy NASDAQ lost 4.9% last week, its worst retreat since October last year.

A rise in government spending and the Federal Reserve’s loose monetary policy have played critical roles in steering the U.S. economy to a  path to recovery. However, these measures have now sparked inflationary concerns, leading to a bond sell-off. Low bond yields in the past have prompted investors to move into equities, which has boosted stock  valuations. However, with bond yields rising and markets in a cautious mode, these high-valued stocks now look less appealing.

Also, concerns over rising inflation have sparked speculation regarding the potential now for a Federal Reserve interest rate hike. Investors fear that this could raise corporate borrowing costs and impact the pace of economic growth.

Shane Oliver, Head investment strategist at AMP Capital, cautioned, “The longer this continues, the greater the risk of a more severe correction in share markets if earnings upgrades struggle to keep up with the rise in bond yields.”

Amid such market uncertainty,  investors must rely on companies with strong fundamentals, sustainable growth, and resilient business models. We believe United Microelectronics Corporation (UMC), Preformed Line Products Company (PLPC), and Nature’s Sunshine Products, Inc. (NATR) are three such operationally efficient companies. All three command a strong position in their respective industries and so could be good additions to one’s portfolio now.

United Microelectronics Corporation (UMC)

UMC is a semiconductor wafer foundry that operates in Taiwan, China, Singapore, Hong Kong, Japan, the United States, Europe, and other countries. Through its Wafer Fabrication and New Business segments, the company provides mask tooling, circuit design, wafer fabrication, and assembly and testing services. UMC is also involved in the research, development, and manufacturing of products in the solar energy and LED industries.

During the fourth quarter, ended December 31, 2020, UMC’s revenue rose 1% to NT$ 5.30 billion. Its revenue from its  28nm wafer business climbed 18% during the quarter. Its EPS for the quarter climbed to NT$0.92 from NT$0.75. And UMC’s sales revenue for the month of January grew 10.2% year-over-year to NT$15.53 billion.

Analysts expect UMC’s revenue for the quarter ending March 31, 2021 to be $1.68 billion, representing  a 19.7% increase year-over-year. Its EPS is likely to increase at the rate of 20% per annum over the next five years.

UMC ended Friday’s trading session at $9.80, rallying 282.2% over the past year. During the past six months, UMC surged 160.6%.

UMC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

It has a B grade for Growth, Value and Sentiment. It is ranked #4 of 99 stocks in the B-rated Semiconductor & Wireless Chip industry.

In total, we rate UMC on eight different levels. Beyond what we stated above, we also have given UMC grades for Stability, Momentum, and Quality. Get all the UMC ratings here.

Click here to checkout our Semiconductor Industry Report for 2021

Preformed Line Products Company (PLPC)

PLPC is an Australian manufacturing company that has been involved in supplying products to the electricity, telecommunications, cable television and data network industries in the Australian market for the past six decades. The company supplies high quality cable anchoring and control hardware systems for supporting, terminating and  splicing transmission and distribution lines.

During the third quarter, ended September 30, 2020, PLPC’s revenue climbed 7% year-over-year to $127.5 million. Its EPS for the quarter increased to $2.59 from $1.55 posted in the same period last year.

Over the past year, PLPC has gained 39.4% to end Friday’s trading session at $73.36. During the past six months, the stock climbed 26.2%.

The POWR Ratings are also high on PLPC. It has an Overall Rating of A, which translates to a Strong Buy. PLPC also has an A  grade for Value and Momentum, and a B grade for Growth and Stability. It is ranked #1 of 90 stocks in the B-rated Industrial – Equipment industry.

Click here to see the additional POWR Ratings for PLPC (Quality and Sentiment).

Nature’s Sunshine Products, Inc. (NATR)

NATR is a natural health and wellness company that  manufactures and sells nutritional and personal care products in Asia, North America, Europe, Latin America and  internationally.

Last  September, NATR revamped its business model. It has launched a new branded website and introduced a series of new programs designed to dramatically improve the Nature’s Sunshine Experience. The re-launch refocuses Nature’s Sunshine on its core strength as an herbal expert.

Additional aspects of the model include a revamped consumer-facing website where consultants can create their own dedicated URL, which will allow them to run their own digital businesses.

NATR’s net sales for the third quarter, ended September 30, 2020, climbed 13% year-over-year to $100.3 million. Its EPS for the quarter rose to $0.34 from $0.07 posted in the prior year period. NATR’s CEO said, “Strong consumer demand and new product launches accelerated our momentum in the U.S. and China, while COVID-19-related restrictions eased in Korea and Latin American markets, allowing us to more fully deploy our revamped field fundamentals.”

NATR has surged 73.5% during the past year to close Friday’s session at $16.48. Over the past six months, the stock has soared 51.3%.

NATR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system. NATR has a grade of A for Growth, Value, and Quality. In the B-rated Medical – Consumer Goods industry, it is ranked #1.

In addition to the POWR Ratings grades I’ve just highlighted, you can see NATR ratings for Momentum, Sentiment, and Stability here.

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

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UMC shares were trading at $10.10 per share on Monday morning, up $0.30 (+3.06%). Year-to-date, UMC has gained 19.81%, versus a 4.15% rise in the benchmark S&P 500 index during the same period.

About the Author: Namrata Sen Chanda

Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More...

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