The recession concerns are rising as the Fed indicated the rate hikes would continue to bring the multi-decade high inflation under control. According to Nobel Prize-winning economist and Columbia University Professor Joseph Stiglitz, hiking interest rates “too high, too fast, too far” would stoke inflation in goods and housing.
However, despite the increasing pressure, the labor market remained resilient, with 3,15,000 jobs added in August, higher than the estimated 2,98,000. “This report supports the Fed’s ability to engineer a soft landing. Markets like it,” said Michael Arone, chief investment strategist at State Street Global Advisors.
Given this backdrop, we think fundamentally solid stocks The Kroger Co. (KR), Hillenbrand, Inc. (HI) and Genie Energy Ltd. (GNE), which are currently trading under $50, could be ideal investments now.
The Kroger Co. (KR)
KR, a retailer in the United States, operates combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses.
On August 23, KR announced the official opening of two new spoke facilities in Greater Nashville and the Chicago Metro Area. As last-mile cross-dock locations, the new spokes will make delivery available to more customers in Tennessee and Illinois. This should expand the company’s customer base.
KR’s operating profit increased 87% year-over-year to $1.51 billion in the fiscal first quarter ending April 2022. Net earnings attributable to the company grew 374.3% from the year-ago value to $664 million, while its net EPS improved 400% year-over-year to $0.90.
Analysts expect KR’s revenue for the fiscal year ending January 2023 to come in at $147.66 billion, indicating an increase of 7.1% year-over-year. The company’s EPS is expected to grow 6.8% year-over-year to $3.93 in the same period.
KR has gained 8.5% over the past nine months to close the last trading session at $48.43.
KR’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
KR has a B grade in Quality, Growth, and Value. It is ranked #4 of 38 stocks in the A-rated Grocery/Big Box Retailers industry.
Beyond what is stated above, we’ve also rated KR for Momentum, Stability, and Sentiment. Get all KR ratings here.
Hillenbrand, Inc. (HI)
HI operates as a diversified industrial company in the United States and internationally through its Advanced Process Solutions; Molding Technology Solutions; and Batesville segments.
On August 31, HI announced the completion of the acquisition of Herbold Meckesheim GmbH, a Germany-based leader in recycling systems, for a valuation of approximately €79 million ($ million). This should help the company move closer to its long-term growth strategy in the recycling market.
“By leveraging Herbold’s key technologies, we have an opportunity to strengthen our leadership position in the recycling industry and expand our offerings across the entire recycling value chain,” said Kim Ryan, President and CEO of HI.
For the fiscal quarter ended June 30, 2022, HI’s net revenue increased 39.5% year-over-year to $720.60 million. Its gross profit grew 2.4% from the year-ago value to $231.30 million, while its net income stood at $48.80 million, reflecting a 20.8% increase year-over-year. Moreover, the company’s EPS for the same quarter was $0.68.
The consensus EPS estimate of $3.90 for the ongoing fiscal year ending September 2022 represents a 2.8% improvement year-over-year. The consensus revenue estimate of $2.92 billion for the same period represents a 1.9% year-over-year increase. HI also beat the consensus EPS estimates in each of the trailing four quarters.
The stock has slumped 6.3% over the past three months to close the last trading session at $40.59.
It is no surprise that the stock has an overall rating of A, translating to Strong Buy in our POWR Ratings system.
HI has a B grade in Growth, Value, Stability, Sentiment, and Quality. Of the 36 stocks in the A-rated Industrial - Manufacturing industry, HI is ranked #2.
Click here to get additional POWR Ratings for Momentum for HI.
Genie Energy Ltd. (GNE)
GNE supplies electricity and natural gas to residential and small business customers in the United States and internationally. The company operates in three segments Genie Retail Energy (GRE); GRE International; and Genie Renewables.
GNE’s income from operations increased 968.7% year-over-year to $48.50 million in the fiscal second quarter of 2022. Its net income grew 577.5% from the year-ago value to $33.90 million, while its EPS increased 584.2% year-over-year to $1.30. Also, its adjusted EBITDA came in at $49.10 million, up 798.2% from the prior-year quarter.
The stock has gained 89.7% over the past nine months to close the last trading session at $9.73. It gained 74.7% year-to-date.
GNE’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, translating to Strong Buy in our proprietary rating system.
GNE is also rated A in Value and a B in Momentum, Sentiment, and Quality. In the Utilities - Domestic industry, it is ranked #1 out of the 66 stocks.
To see additional POWR Ratings for Growth and Stability for GNE, click here.
KR shares were trading at $48.75 per share on Tuesday afternoon, up $0.32 (+0.66%). Year-to-date, KR has gained 9.22%, versus a -16.95% 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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