The Fed’s aggressive interest rate hikes to control the surging inflation have kept the stock market under pressure. While better-than-expected corporate earnings and positive economic data helped the market recover last month, the possibility of the Fed considering a higher rate hike in its next meeting because of the surprisingly strong jobs report may not bode well for the market.
However, shares of companies with impressive growth prospects could be solid investments at their current low-price levels.
Shares of Arcos Dorados Holdings Inc. (ARCO) and Assertio Holdings, Inc. (ASRT) are currently trading under $10. The solid growth attributes of these companies could help their stocks deliver high returns from their current price levels.
Arcos Dorados Holdings Inc. (ARCO)
Headquartered in Montevideo, Uruguay, ARCO functions as a franchisee of McDonald's restaurants. The company has the exclusive right to own, operate, and grant franchises of McDonald's restaurants in 20 countries and territories.
In May, ARCO announced that it intends to redeem $123,000,000 of its outstanding 6.625% senior notes due 2023. The anticipated redemption date was June 10, 2022. This exhibits the company's stable cash flow generating capability and strengthens the balance sheet.
For the second quarter ending June 30, 2022, ARCO’s total revenues increased 40.9% year-over-year to $790.68 million. Its operating income came in at $48.34 million, compared to an operating loss of $6.81 million in the previous period.
Its net income amounted to $24.50 million, compared to a net loss of $29.71 million in the prior-year quarter. The company’s EPS came in at $0.12 compared to a loss per share of $0.14 in the previous period.
ARCO’s EBITDA has grown at a CAGR of 5.32% over the past three years. Furthermore, the company's diluted EPS has grown at a CAGR of 26.5% over the past three years.
The consensus EPS estimate of $0.14 for the second quarter ending June 2022 represents a 600.7% year-over-year growth. Analysts expect the company’s revenue to increase 38.4% year-over-year to $820.36 million for the quarter.
Closing the last trading session at $7.94, the stock has gained 36.2% year-to-date and 62% over the past nine months.
ARCO's POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock also has an A grade for Sentiment and Growth and a B for Value. ARCO is ranked #1 of 44 stocks within the B-rated Restaurants industry. To see additional POWR Ratings for Momentum, Quality, and Sentiment for ARCO, click here.
Assertio Holdings, Inc. (ASRT)
ASRT, a specialty pharmaceutical company, offers medicines in the areas of neurology, hospital, and pain and inflammation. Its pharmaceutical products include INDOCIN, an oral solution and a suppository form to cure moderate to severe rheumatoid arthritis, including acute flares of chronic disease; ankylosing spondylitis and osteoarthritis; and acute painful shoulder and gouty arthritis.
For the second quarter ending June 30, 2022, ASRT’s total revenue increased 38.5% year-over-year to $35.13 million. Its income from operations amounted to $10.79 million compared to a loss of $12.00 million in the year-ago period.
Its adjusted earnings came in at $13.42 million compared to a loss of $7.00 million in the prior-year period. The company’s adjusted EPS stood at $0.28 compared to a loss per share of $0.16 in the prior-year period.
ASRT’s EBIT has grown at a CAGR of 70.8% over the past three years.
Analysts expect ASRT's revenue to increase 23.9% year-over-year to $31.55 million for the third quarter ending September 2022. Moreover, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters.
The company's shares have soared 190% over the past year to close its last trading session at $3.65.
ASTR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Growth and Value and a B grade for Sentiment.
Within the Medical - Pharmaceuticals industry, it is ranked #11 of 174 stocks. In total, we rate ASTR on eight different levels. Beyond what we've stated above, we have also given ASTR grades for Quality, Stability, and Momentum. Get all the ASTR ratings here.
ARCO shares were trading at $7.90 per share on Tuesday afternoon, down $0.04 (-0.50%). Year-to-date, ARCO has gained 37.00%, versus a -12.94% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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