The stock market has witnessed significant volatility due to several macroeconomic and geopolitical headwinds this year. With inflation remaining elevated and the possibility of the Fed raising interest rates aggressively, the market is expected to remain volatile.
Amid this uncertain environment, a good strategy could be buying stocks that have gained momentum recently and are well-positioned to maintain the same based on their strong fundamentals and growth prospects, irrespective of the market movements. Investors’ interest in momentum stocks is evident from the Invesco DWA Momentum ETF’s (PDP) 8.2% returns over the past month.
PBF Energy Inc. (PBF), Global Partners LP (GLP), and GeoPark Limited (GPRK) have shown no signs of slowing down and are currently trading at discounts to their peers. Strong fundamentals should help these stocks maintain their momentum in the upcoming months. So, it could be wise to invest in these stocks.
PBF Energy Inc. (PBF)
PBF is a petroleum refiner and supplier of gasoline, diesel fuel, jet fuel, unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants, and other petroleum products. The company operates through two segments: Refining; and Logistics.
On July 28, 2022, PBF announced the acquisition of the remaining public stake in PBF Logistics LP. As of July 22, 2022, it owned approximately 47.7% of the outstanding common units of PBF Logistics.
Tom Nimbley, PBF Energy's and PBF Logistics' Chairman and CEO, said, "This transaction will ultimately allow us to simplify our corporate structure and eliminate administrative, compliance, and cost burdens of running a separate public company. Following consummation of the merger, we believe that the combined company will have a significantly enhanced financial profile."
For the second quarter, which ended June 30, 2022, PBF’s revenues increased 104.1% year-over-year to $14.08 billion. Its income from operations rose 1,057% from its year-ago value to $1.71 billion.
The company’s adjusted net income increased 2,416% year-over-year to $1.21 billion, while its EPS grew 2,374.3% from the prior-year quarter to $9.65. Also, its adjusted EBITDA grew substantially from the year-ago value to $1.91 billion.
In terms of forward non-GAAP P/E, PBF is currently trading at 1.95x, 74.9% lower than the industry average of 7.76x. Its forward EV/S multiple of 0.16x is 91.9% lower than the industry average of 1.95x. In addition, the stock’s forward EV/EBITDA and EV/EBIT ratios came in at 1.85x and 2.21x, compared to the industry averages of 5.67x and 8.64x, respectively.
Analysts expect PBF’s revenues to increase 44.1% year-over-year to $10.36 billion in its fiscal third quarter (ending September 30, 2022). Its EPS is expected to increase significantly to $5.71 in the current quarter.
Shares of PBF have gained 194.9% year-to-date to close the last trading session at $38.25. PBF is currently trading above its 50-day and 200-day moving averages of $31.66 and $24.08, respectively, indicating an uptrend.
PBF’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to a Buy in our proprietary rating system.
It has an A grade for Growth, Value, and Momentum and a B for Quality. Within the B-rated Energy – Oil & Gas industry, it is ranked #7 of 97 stocks. To see additional POWR Ratings for PBF of Stability and Sentiment, click here.
Global Partners LP (GLP)
GLP purchases, sell, gathers, blends, stores, and manages the logistics of transporting gasoline and gasoline blend stocks, distillates, residual oil, renewable fuels, crude oil, and propane to wholesalers, retailers, and commercial customers in the New England states, Mid-Atlantic region and New York.
On February 2, 2022, the company expanded its retail footprint in the Mid-Atlantic region by acquiring Miller’s Neighborhood market. Global Partners LP President and CEO Eric Slifka said, “Acquiring these high-quality locations enables us to further capitalize on our scale, supply relationships, and integrated model to enhance product margin along each step of the value chain.”
GLP’s sales increased 62.3% year-over-year to $5.32 billion for the second quarter ended June 30, 2022. Its gross profit grew 58.1% from the year-ago value to $281.48 million, while its operating income rose 466.2% year-over-year to $186.81 million. The company’s adjusted EBITDA increased 129.9% year-over-year to $134.91 million. Also, its net income and EPS increased 1,241.2% and 1,904.3% year-over-year to $162.81 million and $4.61.
In terms of forward P/S, GLP is currently trading at 0.05x, 96.5% lower than the industry average of 1.45x. Its forward EV/S multiple of 0.13x is 93.2% lower than the industry average of 1.95x. In addition, the stock’s forward EV/EBIT ratio of 6.89x compares to the industry average of 8.64x.
Analysts expect GLP’s EPS and revenue for the quarter ending September 30, 2022, to increase 54.6% and 23.8% year-over-year to $1.33 and $4.11 billion, respectively. It surpassed the consensus EPS estimates in three of the trailing four quarters. The stock has gained 18.5% year-to-date to close the last trading session at $27.84.
GLP is currently trading above its 50-day and 200-day moving averages of $25.50 and $25.76, respectively, indicating an uptrend.
GLP’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.
It has an A grade for Value and Momentum and a B for Sentiment. Within the A-rated MLPs - Oil & Gas industry, it is ranked #2 out of 34 stocks. Click here to see the other ratings of GLP for Growth, Stability, and Quality.
GeoPark Limited (GPRK)
Headquartered in Bogotá, Colombia, GPRK explores, develops, and produces oil and gas reserves in five geographical segments: Chile, Colombia, Brazil, Argentina, and Ecuador. As of December 31, 2021, the company had working or economic interests in 42 hydrocarbon blocks.
On August 10, 2022, the company’s Board of Directors increased its quarterly cash dividend for the third time in a year to $0.127 per share from $0.082 per share. This reflects the company’s strong cash flows.
In the second quarter ending June 30, 2022, GPRK’s revenue increased 88% year-over-year to $311.20 million. Its operating profit grew 646.9% from its year-ago value to $143.40 million, while its net profit came in at $67.90 million compared to a loss of $2.50 million in the year-ago period.
In terms of forward non-GAAP P/E, GPRK is currently trading at 2.89x, 62.7% lower than the industry average of 7.76x. Its forward EV/S multiple of 1.16x is 40.3% lower than the industry average of 1.95x. In addition, the stock’s forward EV/EBITDA and EV/EBIT ratios of 2.31x and 3.01x compare to the industry averages of 5.67x and 8.64x, respectively.
The consensus EPS estimate of $4.54 for fiscal 2022 represents a 330.2% year-over-year growth. Analysts expect its revenue to increase 48.3% year-over-year to $258 million for the third quarter ending September 30, 2022. It surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.
The shares of GPRK have gained 14.8% year-to-date to close the last trading session at $13.15. GPRK is trading above its 50-day moving average of $12.46.
GPRK’s POWR Ratings reflect solid prospects. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
It has an A grade for Value and Momentum and a B for Quality. It is ranked #9 out of 43 stocks in the A-rated Foreign Oil & Gas industry. To see the other ratings of GPRK for Growth, Stability, and Sentiment, click here.
PBF shares were trading at $36.97 per share on Friday afternoon, down $1.28 (-3.35%). Year-to-date, PBF has gained 185.04%, versus a -12.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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