The stock market’s summer rally ended as investor sentiments were weighed down by Fed Chair Jerome Powell’s hawkish comments at the annual symposium in Jackson Hole, Wyoming. Since the speech last week, the benchmark indices have declined.
Amid a volatile backdrop, UBS Global Wealth Management’s chief investment officer Mark Haefele believes that value stocks show promise as this sector has outperformed growth during inflationary periods. He stated, “(Value) is one area where we would be more focused.”
On the other hand, the Fed’s aggressive stance has lifted bond yields and pushed market participants to reassess equity valuations, making stocks look expensive to some.
Given this backdrop, fundamentally strong stocks Rimini Street, Inc. (RMNI), Overseas Shipholding Group, Inc. (OSG), and DHI Group, Inc. (DHX), which seems to be trading at a discount to their peers, might be solid buys now. These stocks are rated Strong Buy or Buy in our proprietary POWR Ratings system.
Rimini Street, Inc. (RMNI)
RMNI offers enterprise software products, services, and support for various industries. The company sells its solutions mainly through direct sales organizations. It provides software support services for Oracle and SAP enterprise software products.
On August 24, RMNI announced that the University of Technology Sydney switched to RMNI for improved support and security. This might bolster the company’s position in the education market.
On July 28, RMNI announced the launch of Rimini Protect, a new suite of security solutions that could provide a more comprehensive layer of security that surrounds and protects enterprise IT infrastructure and applications. The Rimini Protect Suite might substantially add to the company’s revenue.
In terms of its forward EV/Sales, RMNI is trading at 0.95x, 65.5% lower than the industry average of 2.74x. Its forward Price/Sales multiple of 1.11 is 59% lower than the industry average of 2.71.
RMNI’s revenue came in at $101.20 million for the second quarter that ended June 30, representing a 10.5% year-over-year growth. Its non-GAAP operating income grew 21.3% from the prior-year quarter to $11.95 million, while adjusted EBITDA rose 10.8% year-over-year to $11.02 million.
Analysts expect RMNI’s revenue for the third quarter ending September 2022 to be $102.42 million, indicating a 7.1% year-over-year growth. The company’s EPS for the same quarter is expected to be $0.12.
RMNI has gained 12.6% over the past six months to close its last trading session at $5.10.
RMNI’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.
RMNI has an A grade for Quality and a B for Growth and Value. It is ranked #4 out of the 155 stocks in the Software – Application industry.
Beyond what we’ve stated above, we have also given RMNI grades for Momentum, Stability, and Sentiment. Get all RMNI ratings here.
Overseas Shipholding Group, Inc. (OSG)
OSG owns and operates a fleet of oceangoing vessels engaged in the transportation of crude oil and petroleum products in the United States flag trade. The company serves independent oil traders, refinery operators, and government entities.
On June 13, OSG announced that its Board of Directors had authorized a program to purchase up to five million shares of the company’s common stock. The Company intends to fund the share repurchase program with excess cash.
OSG’s trailing-12-month Price/Book multiple of 0.78 is 62.3% lower than the industry average of 2.06. In terms of its trailing-12-month Price/Sales, the stock is trading at 0.67x, 58.8% lower than the industry average of 1.63x.
For the second quarter of 2022, ended June 30, OSG’s shipping revenues increased 33.5% year-over-year to $117.99 million. Its adjusted EBITDA rose 209.9% from its previous-year quarter to $31.48 million. Net earnings and net earnings per class A share came in at $3.74 million and $0.04, up 135% and 133.3% from the prior-year period.
OSG has gained 60.1% year-to-date and 49% over the past six months to close its last trading session at $3.01.
This promising prospect is reflected in OSG’s POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
OSG has an A grade for Momentum and a B grade for Sentiment and Quality. It is ranked #2 out of the 44 stocks in the A-rated Shipping industry.
Click here to see the additional POWR Ratings for OSG(Growth, Value, and Stability).
DHI Group, Inc. (DHX)
DHX provides data, insights, and employment connections through specialized services for technology professionals globally. The company operates Dice, ClearanceJobs, and eFinancialCareers.
On June 13, DHX announced that it had signed an amended and restated credit agreement increasing the size from a $90 million revolving credit facility to a $100 million revolving credit facility, with a feature for an additional $50 million. The facility has a maturity date of June 2027. The amended and restated credit facility is expected to provide financial flexibility to drive the company’s growth strategy forward.
DHX’s forward Price/Cash Flow multiple of 6.43 is 26.2% lower than the industry average of 8.71. In terms of its forward EV/Sales, the stock is trading at 1.87x, 4.3% lower than the industry average of 1.95x.
DHX’s revenue came in at $ 37.06 million for the second quarter of 2022 ended June 30, representing a 29% year-over-year growth. Its adjusted EBITDA grew 9.7% from the prior-year quarter to $7.80 million, while its income from continuing operations rose 784% from the same period last year to $1.45 million. The company’s EPS increased 104.7% from the prior-year period to $0.03.
Street expects DHX’s revenue for the fiscal year ending December 2022 to be $146.43 million, indicating a 22.1% year-over-year growth. The company’s EPS for the same year is expected to increase 100% from the prior year to $0.04.
DHX has gained 23.3% over the past year to close its last trading session at $5.14. The stock has increased 5.1% in the past month.
It is no surprise that DHX has an overall B rating, which translates to Buy in our POWR Ratings system. The stock has a B grade for Growth, Value, Sentiment, and Quality. It is ranked #4 of 19 stocks in the A-rated Outsourcing - Staffing Services industry.
Beyond what we’ve stated above, we have also given DHX grades for Momentum and Stability. Get all DHX ratings here.
RMNI shares were trading at $5.00 per share on Wednesday afternoon, down $0.10 (-1.96%). Year-to-date, RMNI has declined -16.25%, versus a -15.98% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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