The latest data released by the Bureau of Labor Statistics revealed that the consumer price index increased 8.3% in April, exceeding an 8.1% estimate. The surging inflation has made the Federal Reserve hawkish, and there could be further aggressive interest rate hikes this year. This, combined with the negative GDP growth in the first quarter and the supply chain disruptions expected to stem from the continued war between Ukraine and Russia, has triggered a broad-based stock market sell-off.
Growth stocks have been hammered during this market sell-off, as growth stocks look less attractive to investors in a rising interest rate environment. The sell-off in growth stocks has led to many trading at discounted valuations.
That’s why today we’re highlighting 3 stocks from our Top 10 Growth screen, which is just 1 of the 10 screens in our POWR Screens 10 service (more on that below). We think it could be wise to add RCM Technologies, Inc. (RCMT), Coca-Cola Consolidated, Inc. (COKE), and Civeo Corporation (CVEO) to your portfolio at their current price levels.
RCM Technologies, Inc. (RCMT)
RCMT is a provider of business and technology solutions through the deployment of engineering, specialty healthcare, and information technology services. The company operates through Engineering; Specialty HealthCare; and Information Technology Services.
RCMT’s revenue for the fiscal first quarter ended April 2, 2022, increased 83.9% year-over-year to $91.96 million. The company’s adjusted EBITDA increased 416.6% year-over-year to $9.30 million. Also, its net income increased 547.4% year-over-year to $6.52 million. In addition, its EPS came in at $0.62, representing an increase of 675% year-over-year.
RCMT’s revenue has grown at a CAGR of 6.3% over the past three years. The company’s EBITDA grew at a CAGR of 30.1% over the past three years.
In terms of forward non-GAAP P/E and EV/S, RCMT’s 11.42x and 0.77x are lower than the industry averages of 15.83x and 1.57x, respectively. Moreover, its forward EV/EBIT of 8.49x is 40.4% lower than the industry average of 14.26x.
Analysts expect RCMT’s EPS for the quarter ending June 30, 2022, to increase 400% year-over-year. Its revenue for fiscal 2022 is expected to increase 56.6% year-over-year to $319.26 million. Over the past year, the stock has gained 505.5% to close the last trading session at $23.01.
RCMT’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to a 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.
It has an A grade for Growth and Sentiment and a B grade for Value and Quality. It is ranked #4 out of 18 stocks in the A-rated Outsourcing – Staffing Services industry. Click here to see the other ratings of RCMT for Momentum and Stability.
Coca-Cola Consolidated, Inc. (COKE)
COKE distributes, markets, and manufactures nonalcoholic beverages in the United States. Its segments include Nonalcoholic Beverages and All Other. It offers a range of nonalcoholic beverage products and flavors, including sparkling and still beverages. Coca-Cola falls under sparkling beverages, while energy products fall under still beverages. Noncarbonated beverages include bottled water, ready-to-drink tea, coffee, enhanced water, juices, and sports drinks.
For the fiscal first quarter ended April 1, 2022, COKE’s net sales increased 10.5% year-over-year to $1.40 billion. The company’s non-GAAP net income increased 28.9% year-over-year to $78.98 million. Also, its adjusted EPS came in at $8.42, representing an increase of 28.7% year-over-year.
COKE’s revenue has grown at a CAGR of 6.9% over the past three years. The company’s EBITDA grew at a CAGR of 34.3% over the past three years.
In terms of forward non-GAAP P/E and EV/S, COKE’s 14.62x and 0.97x are lower than the industry averages of 17.26x and 1.75x, respectively. Moreover, its forward EV/EBIT of 11.68x is 27% lower than the industry average of 16.02x.
For the quarter ending June 30, 2022, COKE’s EPS is expected to increase 8.1% year-over-year to $9.51. Its revenue for fiscal 2022 is expected to increase 2.7% year-over-year to $5.72 billion. It surpassed consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 44% to close the last trading session at $508.41.
COKE’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Growth and a B grade for Value, Stability, Sentiment, and Quality. Within the B-rated Beverages industry, it is ranked first out of 35 stocks. To see the rating of COKE for Momentum, click here.
Civeo Corporation (CVEO)
CVEO provides hospitality services to the natural resource industry in Canada, Australia, and the United States. The company develops lodges and villages; and mobile accommodations. It offers food, housekeeping, maintenance services, laundry, facility management and maintenance, water and wastewater treatment, power generation, communication systems, security, logistics, and camp management services.
On April 7, 2022, CVEO announced that the private investment firm Conversant Capital LLC had purchased its approximately 958,000 common shares from entities affiliated with Lance Torgerson under a stock purchase agreement. President and CEO of CVEO Bradley Dodson said, “Civeo is pleased to welcome Conversant as a new shareholder and hopes to benefit from its expertise in the hospitality and lodging sectors.”
CVEO’s revenue has grown at a CAGR of 10.2% over the past three years. The company’s EBITDA grew at a CAGR of 11.4% over the past three years.
In terms of forward EV/EBITDA and EV/S, CVEO’s 6.19x and 0.94x are lower than the industry averages of 10.16x and 1.57x, respectively. Moreover, its forward P/S of 0.56x is 54.5% lower than the industry average of 1.22x.
CVEO’s revenue increased 32% year-over-year to $165.67 million for the first quarter ended March 31, 2022. The company’s adjusted EBITDA increased 57.5% year-over-year to $25.56 million. Also, its net income came in at $1.90 million, compared to a net loss of $9.42 million in the year-ago period.
Analysts expect CVEO’s EPS for the quarter ending June 30, 2022, to increase 1,800% year-over-year to $0.51. Its revenue for fiscal 2022 is expected to increase 12.1% year-over-year to $666.45 million. Over the past year, the stock has gained 61.4% to close the last trading session at $26.14.
CVEO’s POWR Ratings reflect solid prospects. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Growth and Sentiment and a B grade for Value, Stability, and Quality. It is ranked first out of 43 stocks in the B-rated Outsourcing – Business Services industry. Click here to see the rating of CVEO for Momentum.
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RCMT shares were trading at $21.79 per share on Monday morning, down $1.22 (-5.30%). Year-to-date, RCMT has gained 206.04%, versus a -16.85% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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