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Stay Ahead of The Market With These 3 Strong Buy Stocks
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We’ve recently witnessed the strongest weeks in the market year-to-date, and investors are hopeful that the trend will continue to close the chapter on a rough start to 2022. However, today, the market pulled back.
Inflation fears are still widespread, but last week’s strong employment report bodes well for the state of the economy. Additionally, earnings season is just around the corner, a time when stocks will typically see the most movement.
I’ve selected three stocks to share today that all carry a Zacks Rank #1 (Strong Buy) with an overall VGM Score of an A. Two of them have quarterly reports coming this month, so let’s take a look at these three companies and analyze key metrics to see why I believe they deserve a spot within your portfolio.
Alcoa
Alcoa (AA - Free Report) is a worldwide leader in producing bauxite and aluminum products. The company has built a legacy of breakthrough innovations and best practices that have led to efficiency, safety, and sustainability. Shares have displayed stellar relative strength over the last year, advancing nearly 180% in value and easily outpacing the S&P 500’s 15% return.
The company kicks off earnings season with its next quarterly report on April 20th. Be ready for this earnings report, as the Zacks Consensus Estimate of $2.90 per share reflects a year-over-year increase of a notable 270%.
The subsequent quarter is looking even more robust, with EPS estimates increasing nearly 80% to $3.39 per share over the last 60 days. Furthermore, the current and next year’s EPS estimates have also soared 86% up to $13.09 per share and 80% up to $10.57 per share.
The company slashed its total liabilities by 11% from 2020 to 2021 and increased its total assets by 1.1%. Notably, long-term debt shrunk nearly 30%, and Alcoa ended FY21 with $1.8 billion in cash and equivalents, a 13% increase from FY20.
Flashing signs of being undervalued, the company’s current forward-earnings multiple of 6.9X is much lower than the Zacks Metal Products – Distribution Industry’s average of 10.6X. The current ratio is lower than its September 2021 high of 10.2X but slightly higher than its low of 6.3X in July 2021.
AA grew its top line by 31% from 2020 to 2021, attributed to a higher realized price of aluminum and alumina. Sales estimates for the current fiscal year reflect a considerable 21% increase year-over-year, and the company is going into its next quarterly report with an ESP Score of 6.5%. With a strong earnings outlook and a strengthened balance sheet, Alcoa has positioned itself nicely rolling into its next quarterly report and looks to remain strong in the future.
AutoNation
AutoNation (AN - Free Report) is the largest automotive retailer in the United States that offers vehicle maintenance and repair services, vehicle parts, extended service contracts, and other aftermarket services. Shares of AN climbed as high as $131 in 2021 but have since declined roughly 25% and lagged behind the general market over the last year.
AutoNation, Inc. Price, Consensus and EPS Surprise
AutoNation is slated to release its next quarterly earnings on April 19th, and it’s worth noting that the Zacks Consensus Estimate is forecasting EPS of $5.32 per share, a year-over-year growth of a considerable 90%. Next quarter's EPS estimate has been on the rise as well over the last 60 days, increasing by 9% up to $5.22 per share.
Furthermore, analysts have also raised their earnings outlook for the current and next year, with the Consensus Estimate Trend seeing increases of 12% to $20.06 per share and 20% to $18.28 per share.
AutoNation could be considered undervalued with its 5X forward-earnings multiple, much lower than its industry’s 6.2X average. Additionally, the current value is much lower than its 2021 high of 13.1X but marginally higher than its 2022 low of 4.9X.
The auto-retailer had revenue growth of nearly 27% from 2020 to 2021, and the current year’s sales estimate forecasts a year-over-year top-line expansion of 1.5%. Over its last four quarterly reports, AN has an average EPS surprise of nearly 40%, and in its latest quarter, it beat estimates by 15%. Going into its next quarterly earnings, AutoNation currently has an ESP Score of 1.2%.
AutoNation Sales
Image Source: Zacks Investment Research
Photronics, Inc
Photronics, Inc (PLAB - Free Report) is a global leader in the manufacturing of photomasks. Photomasks are high-precision quartz plates containing microscopic images of electronic circuits and are a vital element in the production of semiconductors. Shares have performed well over the last year, scratching in an 18% return and slightly outpacing the S&P 500.
Photronics, Inc. Price, Consensus and EPS Surprise
Unlike AA and AN, Photronics is slated to release its next quarterly report a little bit later, on May 25th. Look out though, analysts have been revising their earnings estimates upward over the last 60 days, boosting next quarter’s EPS estimate by 9% to $0.35 per share and the subsequent quarter’s EPS estimate by 15% to $0.38 per share. The current and next year’s EPS estimates have also witnessed positive revisions, increasing 15% to $1.49 per share and 9% to $1.63 per share, respectively.
Currently, the photomask manufacturer sports an 11.1X forward-earnings multiple, much lower than its 2021 high of 19.8X but slightly higher than its 2022 low of 10.8X. Additionally, the current value is also considerably lower than its industry’s 12.6X average.
From 2020 to 2021, PLAB’s top line grew by 6%, and sales estimates for the current year represent a substantial 17% year-over-year increase. The company has a very respectable 14% average EPS surprise over its last four quarters, and in its latest report, PLAB exceeded earnings expectations by nearly 23%.
Image Source: Zacks Investment Research
Final Thoughts
Pairing a Zacks Rank #1 (Strong Buy) with a high VGM Score is a great way to succeed in the market and rake in considerable gains. All three of these companies meet these initial standards, which bolsters my confidence surrounding future performance.
Additionally, all three companies have seen positive estimate revisions over the last 60 days, have strong revenue forecasts, and enticingly low forward-earnings multiples. These are all reasons why I believe these three stocks would be good portfolio additions.
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Stay Ahead of The Market With These 3 Strong Buy Stocks
We’ve recently witnessed the strongest weeks in the market year-to-date, and investors are hopeful that the trend will continue to close the chapter on a rough start to 2022. However, today, the market pulled back.
Inflation fears are still widespread, but last week’s strong employment report bodes well for the state of the economy. Additionally, earnings season is just around the corner, a time when stocks will typically see the most movement.
I’ve selected three stocks to share today that all carry a Zacks Rank #1 (Strong Buy) with an overall VGM Score of an A. Two of them have quarterly reports coming this month, so let’s take a look at these three companies and analyze key metrics to see why I believe they deserve a spot within your portfolio.
Alcoa
Alcoa (AA - Free Report) is a worldwide leader in producing bauxite and aluminum products. The company has built a legacy of breakthrough innovations and best practices that have led to efficiency, safety, and sustainability. Shares have displayed stellar relative strength over the last year, advancing nearly 180% in value and easily outpacing the S&P 500’s 15% return.
Alcoa Price, Consensus and EPS Surprise
Alcoa price-consensus-eps-surprise-chart | Alcoa Quote
The company kicks off earnings season with its next quarterly report on April 20th. Be ready for this earnings report, as the Zacks Consensus Estimate of $2.90 per share reflects a year-over-year increase of a notable 270%.
The subsequent quarter is looking even more robust, with EPS estimates increasing nearly 80% to $3.39 per share over the last 60 days. Furthermore, the current and next year’s EPS estimates have also soared 86% up to $13.09 per share and 80% up to $10.57 per share.
The company slashed its total liabilities by 11% from 2020 to 2021 and increased its total assets by 1.1%. Notably, long-term debt shrunk nearly 30%, and Alcoa ended FY21 with $1.8 billion in cash and equivalents, a 13% increase from FY20.
Flashing signs of being undervalued, the company’s current forward-earnings multiple of 6.9X is much lower than the Zacks Metal Products – Distribution Industry’s average of 10.6X. The current ratio is lower than its September 2021 high of 10.2X but slightly higher than its low of 6.3X in July 2021.
AA grew its top line by 31% from 2020 to 2021, attributed to a higher realized price of aluminum and alumina. Sales estimates for the current fiscal year reflect a considerable 21% increase year-over-year, and the company is going into its next quarterly report with an ESP Score of 6.5%. With a strong earnings outlook and a strengthened balance sheet, Alcoa has positioned itself nicely rolling into its next quarterly report and looks to remain strong in the future.
AutoNation
AutoNation (AN - Free Report) is the largest automotive retailer in the United States that offers vehicle maintenance and repair services, vehicle parts, extended service contracts, and other aftermarket services. Shares of AN climbed as high as $131 in 2021 but have since declined roughly 25% and lagged behind the general market over the last year.
AutoNation, Inc. Price, Consensus and EPS Surprise
AutoNation, Inc. price-consensus-eps-surprise-chart | AutoNation, Inc. Quote
AutoNation is slated to release its next quarterly earnings on April 19th, and it’s worth noting that the Zacks Consensus Estimate is forecasting EPS of $5.32 per share, a year-over-year growth of a considerable 90%. Next quarter's EPS estimate has been on the rise as well over the last 60 days, increasing by 9% up to $5.22 per share.
Furthermore, analysts have also raised their earnings outlook for the current and next year, with the Consensus Estimate Trend seeing increases of 12% to $20.06 per share and 20% to $18.28 per share.
AutoNation could be considered undervalued with its 5X forward-earnings multiple, much lower than its industry’s 6.2X average. Additionally, the current value is much lower than its 2021 high of 13.1X but marginally higher than its 2022 low of 4.9X.
The auto-retailer had revenue growth of nearly 27% from 2020 to 2021, and the current year’s sales estimate forecasts a year-over-year top-line expansion of 1.5%. Over its last four quarterly reports, AN has an average EPS surprise of nearly 40%, and in its latest quarter, it beat estimates by 15%. Going into its next quarterly earnings, AutoNation currently has an ESP Score of 1.2%.
AutoNation Sales
Image Source: Zacks Investment Research
Photronics, Inc
Photronics, Inc (PLAB - Free Report) is a global leader in the manufacturing of photomasks. Photomasks are high-precision quartz plates containing microscopic images of electronic circuits and are a vital element in the production of semiconductors. Shares have performed well over the last year, scratching in an 18% return and slightly outpacing the S&P 500.
Photronics, Inc. Price, Consensus and EPS Surprise
Photronics, Inc. price-consensus-eps-surprise-chart | Photronics, Inc. Quote
Unlike AA and AN, Photronics is slated to release its next quarterly report a little bit later, on May 25th. Look out though, analysts have been revising their earnings estimates upward over the last 60 days, boosting next quarter’s EPS estimate by 9% to $0.35 per share and the subsequent quarter’s EPS estimate by 15% to $0.38 per share. The current and next year’s EPS estimates have also witnessed positive revisions, increasing 15% to $1.49 per share and 9% to $1.63 per share, respectively.
Currently, the photomask manufacturer sports an 11.1X forward-earnings multiple, much lower than its 2021 high of 19.8X but slightly higher than its 2022 low of 10.8X. Additionally, the current value is also considerably lower than its industry’s 12.6X average.
From 2020 to 2021, PLAB’s top line grew by 6%, and sales estimates for the current year represent a substantial 17% year-over-year increase. The company has a very respectable 14% average EPS surprise over its last four quarters, and in its latest report, PLAB exceeded earnings expectations by nearly 23%.
Image Source: Zacks Investment Research
Final Thoughts
Pairing a Zacks Rank #1 (Strong Buy) with a high VGM Score is a great way to succeed in the market and rake in considerable gains. All three of these companies meet these initial standards, which bolsters my confidence surrounding future performance.
Additionally, all three companies have seen positive estimate revisions over the last 60 days, have strong revenue forecasts, and enticingly low forward-earnings multiples. These are all reasons why I believe these three stocks would be good portfolio additions.