There’s nothing good about the coronavirus. Period. However, the epic market plunge left in its wake does provide opportunity for savvy, patient investors. Remember when we were all talking about overbought conditions amid one of the longest bull runs in history? You should… it was only a little over a month ago.
That’s not the situation anymore. Stocks have made up about half of the March crash, but remains double-digits away from highs made earlier this year. That leaves plenty of value in quality names.
Our Undervalued Zacks #1 Rank stocks screen can find those Strong Buys at bargain prices. Below are three stocks that recently passed the test.
Sprouts Farmers Market (SFM - Free Report)
As tempting as it is, we really shouldn’t use this stay-at-home economy as an excuse to ‘let ourselves go’. Sooner or later, we’ll all be back at our offices or places of business… and we want those work clothes to fit! We also want our colleagues to think that we handled this seclusion well, rather than devolving into a drooling maniac that fed for weeks on doughnuts and Big Macs.
Sprouts Farmers Market (SFM - Free Report) can be a big help in that regard. This healthy grocery store is focused on natural and organic food. The company has been diversifying its offerings into products that are plant-based, gluten-free, keto-friendly and grass-fed.
That may not make your mouth water, but the Food—Natural Food Products company being in the top 4% of the Zacks Industry Rank should be very appetizing for any investor. Plus, this company knows how to beat earnings expectations, and its preparing to report again on May 5.
In the fourth quarter, SFM reported earnings per share of 27 cents that improved from last year’s 19 cents and beat the Zacks Consensus Estimate by nearly 93%! It has only missed once in the past few years. Net sales of $1.37 billion improved 7.5% year over year and topped our expectations. Same-store sales were up 1.5%.
Analysts expect more from SFM moving forward. Earnings estimates for this year has climbed 8.8% in the past two months to $1.36, while next year’s have improved 6.9% to $1.40.
And shares are up more than 25% since the market’s low on March 23 as grocery stores are seeing heavy demand in these extraordinary times.
It should also be noted that SFM recently announced that it would be expanding its grocery pickup service through Instacart to all of its more than 340 stores by early May. That announcement was made on April 15.
Silgan Holdings Inc. (SLGN - Free Report)
Here’s something that we’re not seeing a whole lot these days. Silgan Holdings Inc. (SLGN - Free Report) actually RAISED its full year earnings outlook! A lot of companies are withdrawing their guidances altogether due to this unpredictable environment. So what gives? Why does this company have better visibility moving forward?
SLGN is a play on the food and consumer health products industries, but it’s not a food or consumer health company. It is a leading supplier of rigid packaging for consumer goods products. More specifically, the company is the largest metal-container supplier for food products in North America.
In other words, as long as people need food and healthcare products, they’ll also need SLGN.
That’s why its been deemed an ‘essential’ company and managed to keep all of its global production facilities open during this unprecedented time. Record volume in those facilities led to a strong quarterly report and that elusive raised guidance.
First-quarter earnings per share of 57 cents jumped 29% year over year and beat the Zacks Consensus Estimate by more than 16%. The company has either eclipsed or met earnings expectations in 9 of the last 10 quarters. Total revenue of $1.03 billion also bettered our estimates and improved upon last year due to higher demand.
And here it is. SLGN now expects 2020 earnings per share between $2.30 and $2.50, which was raised from the earlier outlook of $2.28 to $2.38.
In just the past 30 days, earnings estimates for this year have improved 3.9% to $2.41, while next year’s is up 2.8% to $2.56. At the moment, analysts expect earnings growth of 6.2% for 2021 over 2020.
Shares of SLGN have soared 36.4% since the selloff low on March 23.
The Ensign Group (ENSG - Free Report)
It should come as no surprise that Medical – Nursing Homes is the #1 space in the Zacks Industry Rank at this difficult time. Such places have become hotspots during this coronavirus pandemic, which makes their services – and the brave folks administering them – absolutely crucial as we look to put an end to this outbreak.
The Ensign Group (ENSG - Free Report) is one company at the frontlines of this fight. The company provides skilled nursing services, senior living services, rehabilitative care services and other healthcare needs. The company has built itself up over the past several years with a number of acquisitions. It currently has more than 200 facilities in the U.S.
For its fourth quarter, SLGN reported earnings per share of 60 cents, which improved more than 11% from last year and beat the Zacks Consensus Estimate by 9.1%. It marked the eighth quarter in the past nine where it either met or beat our expectations.
Total revenue of $560 million rose 21.1% from last year and surpassed the Zacks Estimate by 2.9%.
Over the past two months, earnings estimates for this year have advanced 3.2% to $2.55, while next year’s is up 1.8% to $2.80. At the moment, analysts are expecting earnings growth of nearly 10% for next year over this year.
In its most recent report from February, ENSG raised its earnings per share guidance for the year to between $2.50 and $2.58, compared to the earlier range of $2.22 to $2.30. Revenue was also bumped up to between $2.42 billion and $2.45 billion.
Of course, guidances are endangered species in this uncertain environment, so we’ll have to see if ENSG makes any changes when it reports again on May 4. At the moment, we’re expecting 62 cents per share, which would improve upon the previous year’s 55 cents.
Shares of ENSG have advanced approximately 17.7% since the coronavirus low on March 23.
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