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4 Beaten-Down Stocks That Continue to Grow Earnings
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While the latest rally has prompted conversation about whether we have hit the bottom, that seems extremely unlikely given that the Fed is expected to raise rates another 75 basis points this month. Some experts are saying that we could end the year at 4%, which would mean that in addition to the 75 bps this month, there will be another at year-end.
The last thing the Fed wants is for consumers to go out and spend their money, which is what will happen in the holiday season. So, we don’t know what the Fed will do. But since the labor market is still tight (although easing) and personal income is still rising (although decelerating, up to the last report for July), personal consumption expenditures continue to increase (even other than on food and energy) while personal saving remains more or less steady at 5.0%.
The Fed has talked about a certain amount of pain, and these numbers obviously don’t reflect that. We’ll know more next week when the CPI data is out, but it does look like the Fed will do more. And that means there will be continued volatility in the market.
That is not necessarily a bad thing because it creates opportunities to buy stocks on the cheap. Speaking of cheap, I’ve picked a few today that investors appear to have abandoned for some unfathomable reason. Because they continue to post beat-and-raise quarters and have other positive factors supporting their businesses.
Take for example Marriott Vacations Worldwide Corp. (VAC - Free Report) , which is down 15.8% year to date. You’d think the company was doing very badly. But no. Marriott has managed double-digit earnings surprises in three of the last four quarters (25.8% in the last quarter) and the four-quarter average stands at 13.9%. Five of the analysts covering the stock have a Buy or Strong Buy rating on it, as does Zacks.
The vacation ownership business that Marriott is engaged in is in a particularly good place right now. People are spending more on vacations, not only because they’ve been cooped up for too long, but also because the stronger dollar goes farther on international trips.
No wonder, then, that analysts expect the company to grow revenue and earnings by a respective 19.7% and 131.4%, this year followed by another 6.6% and 21.2% in the next.
Marriot also pays a dividend that currently yields 1.74%.
As far as valuation goes, the shares are trading nearly 25% off their 5-year median level, as well as at a 42% discount to the industry and 29% discount to the S&P 500. That’s about as cheap as it gets.
Perion Network Ltd. (PERI - Free Report) is another stock of the same kind. This provider of digital advertising solutions to brands, agencies and publishers, mainly in North America and Europe, is down 11.7% year to date. The company beat the Zacks Consensus Estimate by 24.4% in the last quarter. It has posted double-digit surprises in each of the last four quarters averaging 39.4%. Its 2022 and 2023 estimates are up a respective 5.6% and 7.8% in the last 90 days. What’s more, four of the analysts covering the stock rate it a Buy or above.
Analysts are looking for 31.5% revenue growth this year, followed by 16.4% growth in the next. Earnings are expected to be equally strong, growing 83.3% this year and 10.9% in the next.
Perion shares trade at a 17.7% discount to their median level over the last five years. These levels are also a 58.9% discount to the industry average and a 32.3% discount to the S&P 500.
The shares carry a Zacks Rank #1 (Strong Buy).
Dime Community Bancshares, Inc. (DCOM - Free Report) is the holding company of Dime Community Bank that provides various commercial banking and financial services. DCOM shares are down 12.1% year to date, despite beating the Zacks Consensus Estimate by 18.8% in the last quarter (four-quarter average surprise 9.1%). Its 2022 and 2023 estimates are up a respective 7.3% and 7.4%.
Analysts are highly optimistic about its prospects. Three of them have a Buy rating on the shares and expect its revenue and earnings to grow both in 2022 and 2023.
Dime Community’s dividend yields 3.11%.
Dime Community shares trade at a 15.9% discount to their median level over the last five years. They’re also at a 13.2% discount to the industry and a 51.9% discount to the S&P 500.
Tecnoglass Inc. (TGLS - Free Report) , which designs, produces and installs glass products and architectural systems for the commercial and residential construction industries, has lost 14.7% of its value year to date. But the company has topped estimates at double-digit rates in each of the last four quarters, averaging 24.4%. Four of the analysts covering the stock rate it a Buy or above. They’ve raised its 2022 estimate 14.7% and its 2023 estimate 13.3%.
Tecnoglass’s revenues are currently expected to grow 28.2% in 2022 and another 10.3% in 2023. Earnings are expected to grow 47.7% and 12.5%, respectively.
It also pays a dividend that currently yields 1.16%.
The shares trade at a 24.9% discount to their median level over the last five years. They also trade at a 48.9% discount to the industry and 53.7% discount to the S&P 500.
One-Month Price Performance
Image Source: Zacks Investment Research
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4 Beaten-Down Stocks That Continue to Grow Earnings
While the latest rally has prompted conversation about whether we have hit the bottom, that seems extremely unlikely given that the Fed is expected to raise rates another 75 basis points this month. Some experts are saying that we could end the year at 4%, which would mean that in addition to the 75 bps this month, there will be another at year-end.
The last thing the Fed wants is for consumers to go out and spend their money, which is what will happen in the holiday season. So, we don’t know what the Fed will do. But since the labor market is still tight (although easing) and personal income is still rising (although decelerating, up to the last report for July), personal consumption expenditures continue to increase (even other than on food and energy) while personal saving remains more or less steady at 5.0%.
The Fed has talked about a certain amount of pain, and these numbers obviously don’t reflect that. We’ll know more next week when the CPI data is out, but it does look like the Fed will do more. And that means there will be continued volatility in the market.
That is not necessarily a bad thing because it creates opportunities to buy stocks on the cheap. Speaking of cheap, I’ve picked a few today that investors appear to have abandoned for some unfathomable reason. Because they continue to post beat-and-raise quarters and have other positive factors supporting their businesses.
Take for example Marriott Vacations Worldwide Corp. (VAC - Free Report) , which is down 15.8% year to date. You’d think the company was doing very badly. But no. Marriott has managed double-digit earnings surprises in three of the last four quarters (25.8% in the last quarter) and the four-quarter average stands at 13.9%. Five of the analysts covering the stock have a Buy or Strong Buy rating on it, as does Zacks.
The vacation ownership business that Marriott is engaged in is in a particularly good place right now. People are spending more on vacations, not only because they’ve been cooped up for too long, but also because the stronger dollar goes farther on international trips.
No wonder, then, that analysts expect the company to grow revenue and earnings by a respective 19.7% and 131.4%, this year followed by another 6.6% and 21.2% in the next.
Marriot also pays a dividend that currently yields 1.74%.
As far as valuation goes, the shares are trading nearly 25% off their 5-year median level, as well as at a 42% discount to the industry and 29% discount to the S&P 500. That’s about as cheap as it gets.
Perion Network Ltd. (PERI - Free Report) is another stock of the same kind. This provider of digital advertising solutions to brands, agencies and publishers, mainly in North America and Europe, is down 11.7% year to date. The company beat the Zacks Consensus Estimate by 24.4% in the last quarter. It has posted double-digit surprises in each of the last four quarters averaging 39.4%. Its 2022 and 2023 estimates are up a respective 5.6% and 7.8% in the last 90 days. What’s more, four of the analysts covering the stock rate it a Buy or above.
Analysts are looking for 31.5% revenue growth this year, followed by 16.4% growth in the next. Earnings are expected to be equally strong, growing 83.3% this year and 10.9% in the next.
Perion shares trade at a 17.7% discount to their median level over the last five years. These levels are also a 58.9% discount to the industry average and a 32.3% discount to the S&P 500.
The shares carry a Zacks Rank #1 (Strong Buy).
Dime Community Bancshares, Inc. (DCOM - Free Report) is the holding company of Dime Community Bank that provides various commercial banking and financial services. DCOM shares are down 12.1% year to date, despite beating the Zacks Consensus Estimate by 18.8% in the last quarter (four-quarter average surprise 9.1%). Its 2022 and 2023 estimates are up a respective 7.3% and 7.4%.
Analysts are highly optimistic about its prospects. Three of them have a Buy rating on the shares and expect its revenue and earnings to grow both in 2022 and 2023.
Dime Community’s dividend yields 3.11%.
Dime Community shares trade at a 15.9% discount to their median level over the last five years. They’re also at a 13.2% discount to the industry and a 51.9% discount to the S&P 500.
Tecnoglass Inc. (TGLS - Free Report) , which designs, produces and installs glass products and architectural systems for the commercial and residential construction industries, has lost 14.7% of its value year to date. But the company has topped estimates at double-digit rates in each of the last four quarters, averaging 24.4%. Four of the analysts covering the stock rate it a Buy or above. They’ve raised its 2022 estimate 14.7% and its 2023 estimate 13.3%.
Tecnoglass’s revenues are currently expected to grow 28.2% in 2022 and another 10.3% in 2023. Earnings are expected to grow 47.7% and 12.5%, respectively.
It also pays a dividend that currently yields 1.16%.
The shares trade at a 24.9% discount to their median level over the last five years. They also trade at a 48.9% discount to the industry and 53.7% discount to the S&P 500.
One-Month Price Performance
Image Source: Zacks Investment Research