Sky-rocketing inflation, consecutive interest rate hikes, and the possibility of an economic slowdown have kept the stock market under tremendous pressure. However, the S&P 500 hit its highest level since June earlier in the week. Investors shook off recession worries as robust earnings reports and positive economic data boosted sentiments.
St. Louis Federal Reserve President James Bullard believes the U.S. is currently not in a recession. “With all the job growth in the first half of the year, it’s hard to say that there was a recession,” he added.
Furthermore, the July job report came in better-than-expected, with nonfarm payrolls rising 528,000 and the unemployment rate was 3.5%, versus the Dow Jones estimates of 258,000 and 3.6%, respectively. Also, wage growth was higher than estimated.
Given the scenario, we think investors should consider investing in bargain stocks ARC Document Solutions, Inc. (ARC), Alliance Global Group, Inc. (ALGGY), and Birchcliff Energy Ltd. (BIREF), which are currently trading under $10 but could soar in the near term, given their robust fundamentals.
ARC Document Solutions, Inc. (ARC)
ARC, a digital printing company, provides digital printing and document-related services in the United States.
For the fiscal quarter ended June 30, 2022, ARC’s net sales increased 8.4% year-over-year to $74.60 million. Net income attributable to ARC grew 26.9% from the year-ago value to $3.30 million. Adjusted EBITDA for the quarter stood at $11.30 million, reflecting a 1.8% increase year-over-year. Moreover, its EPS was $0.08, up 33.3% from the prior-year quarter.
The company surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 23.6% over the past year and 9.5% over the past month to close the last trading session at $2.88.
In terms of its trailing-twelve-month EV/Sales, ARC is trading at 0.66x, 63% lower than the industry average of 1.78x. Its trailing-twelve-month Price/Sales multiple of 0.42 is 68.2% lower than the industry average of 1.34.
ARC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating 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.
The company also has an A grade in Value, Quality, and Sentiment and a B in Growth. The stock is ranked #2 of 42 stocks in the B-rated Outsourcing - Business Services industry. To get ARC’s ratings for Momentum and Stability, click here.
Alliance Global Group, Inc. (ALGGY)
ALGGY engages in real estate development, tourism, entertainment and gaming, food and beverage, quick-service restaurants, and infrastructure development businesses. It operates through Megaworld; Emperador; Travellers; and GADC segments. It is based in Quezon City, the Philippines.
ALGGY’s consolidated revenues increased 18% year-over-year to P37.50 billion ($0.67 billion) in the fiscal first quarter of 2022. Net income increased by 52% from the prior-year quarter to P3.90 billion ($0.07 billion). Net profit increased 67% from the same period the prior year to P5.40 billion ($0.10 billion).
Analysts expect ALGGY’s revenue to come in at $2.80 billion, indicating an increase of 2.7% year-over-year for the fiscal year ending December 2022.
In terms of its forward EV/EBITDA, ALGGY is trading at 7.62x, 29.9% lower than the industry average of 10.87x. Its forward EV/EBIT multiple of 9.70 is 36% lower than the industry average of 15.16.
The stock has gained 10.2% over the past month to close its last trading session at $8.87.
The company has an overall rating of B, translating to Buy in our proprietary rating system. ALGGY is rated B in Quality, Stability, and Value. Within the REITs - Diversified industry, it is ranked #1 of 49 stocks.
Click here for additional ALGGY’s POWR Ratings for Momentum, Sentiment, and Growth.
Birchcliff Energy Ltd. (BIREF)
Headquartered in Calgary, Canada, BIREF, an intermediate oil and natural gas company, acquires, explores for, develops, and produces natural gas, light oil, condensate, and natural gas liquids in Western Canada.
For the fiscal quarter ended March 31, BIREF’s cash flow from operating activities increased 86.6% year-over-year to $154.15 million. Its net income grew 467.5% from the year-ago value to $125.79 million, while its net earnings per share stood at $0.47, reflecting a 487.5% increase year-over-year.
The consensus revenue estimate of $298.45 million for the fiscal quarter ended June 2022 represents a 92.7% improvement year-over-year. Also, its consensus revenue estimate of $1.07 billion for the fiscal year ending December 2022 represents a 45.9% increase from the previous year.
In terms of its forward EV/EBIT, BIREF is trading at 3.39x, 60.4% lower than the industry average of 8.54x. Its forward EV/EBITDA multiple of 2.64 is 53.5% lower than the industry average of 5.68.
Over the past year, the stock has gained 98.7% to close the last trading session at $7.37. It gained 30.1% over the past six months.
It is no surprise that the stock has an overall rating of B, translating to Buy in our POWR Ratings system. BIREF has an A grade in Momentum and a B grade in Growth and Quality. It is ranked #12 of 97 stocks in the B-rated Energy - Oil & Gas industry.
Beyond what is stated above, we’ve also rated BIREF for Sentiment, Stability, and Value. Get all the BIREF ratings here.
ARC shares were trading at $2.86 per share on Friday afternoon, down $0.02 (-0.69%). Year-to-date, ARC has declined -14.31%, versus a -12.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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