The Consumer Price Index (CPI) for November increased 7.1% year-over-year versus the 7.3% expected by economists. The decline from the previous month’s 7.7% has sent the market higher as investors expect the magnitude of the interest rate hikes and the possibility of a recession to decline.
While the Fed had indicated the likelihood of smaller rate hikes beginning as soon as this month, the CPI data released today almost assures the same. So, the market might continue to rally for some time.
Given this backdrop, it could be wise to invest in quality stocks Garrett Motion Inc. (GTX), ARC Document Solutions, Inc. (ARC), and Good Times Restaurants Inc. (GTIM), which are currently trading under $10.
Garrett Motion Inc. (GTX)
GTX provides turbocharger and electric boosting technologies for the automotive industry. The company offers light-vehicle gasoline, light-vehicle diesel, and commercial vehicle turbochargers; and provides automotive software solutions.
GTX’s forward Price/Sales multiple of 0.13x is 84.6% lower than the industry average of 0.86x. Its forward EV/EBITDA multiple of 2.52x is 72.4% lower than the industry average of 9.16x.
Its trailing-12-month net income margin of 11.38% is 125.51% higher than the industry average of 5.05%. Its trailing-12-month levered FCF margin of 11.02% is 773.44% higher than the 1.26% industry average.
During the fiscal third quarter that ended September 30, 2022, GTX’s net sales rose 12.6% year-over-year to $945 million. Its gross profit grew 9.2% from its prior-year quarter to $178 million. The company’s comprehensive income increased 138% year-over-year to $169 million, while its adjusted EBITDA increased 9% year-over-year to $146 million.
Analysts expect GTX’s EPS to increase 74.7% year-over-year to $0.26 in the fiscal first quarter ending March 2023. Its revenue is expected to increase 4.9% year-over-year to $945 million in the same quarter.
Over the past year, the stock has declined marginally to close the last trading session at $7.39.
GTX’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
GTX also has an A grade for Value and a B for Quality. The stock is ranked #6 of 61 stocks in the A-rated Auto Parts industry.
Click here to see the other ratings of GTX for Growth, Momentum Stability, and Sentiment.
ARC Document Solutions, Inc. (ARC)
ARC is a digital printing company that provides digital printing and document-related services in the United States. It provides managed print services, cloud-based document management software, and other digital hosting services. The company also offers professional and software services to re-produce and distribute documents of different formats and specialized graphic color printing.
On December 8, ARC declared a quarterly cash dividend of $0.05 per share, payable on February 28, 2023. It has a four-year dividend yield of 1.96%. Its current annual dividend of $0.20 translates to a 6.92% yield.
In terms of its trailing 12-month Price/Sales, ARC is currently trading at 0.43x, which is 67.7% lower than the industry average of 1.32x. Its EV/EBITDA of 4.56x is 62.4% lower than the 12.14x industry average.
Its trailing-12-month gross profit margin of 33.20% is 14.10% higher than the industry average of 29.09%. Its trailing-12-month levered FCF margin of 9.77% is 186.6% higher than the 3.41% industry average.
In the fiscal third quarter that ended September 30, 2022, ARC’s net sales came in at $73.10 million, increasing marginally year-over-year. Adjusted net income attributable to ARC increased 15.6% year-over-year to $3.70 million, while its adjusted EPS rose 12.5% from the prior-year quarter to $0.09.
Over the past month, the stock has gained 6.6% to close the last trading session at $2.89.
ARC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Value, Sentiment, and Quality. In the B-rated Outsourcing – Business Services industry, ARC is ranked at the top of 42 stocks.
To see the other ratings of ARC for Growth, Stability, and Momentum, click here.
Good Times Restaurants Inc. (GTIM)
GTIM engages in the restaurant business in the United States. The company operates and franchises Good Times Burgers & Frozen Custard and Bad Daddy’s Burger Bar.
In terms of trailing-12-month EV/Sales, GTIM is trading at 0.55x, which is 50.7% lower than the industry average of 1.12x. Its trailing-12-month Price/Sales multiple of 0.23 is 72.6% lower than the industry average of 0.86.
Its asset turnover ratio of 1.47% is 45.25% higher than the industry average of 1.01%. Its trailing-12-month levered FCF margin of 4.23% is 235.37% higher than the 1.26% industry average.
GTIM’s total net revenues came in at $36.50 billion for the third quarter that ended June 28, 2022, up 7.5% year-over-year. Its restaurant sales increased 7.6% year-over-year to $36.27 billion. Also, its Bad Daddy’s Burger Bar restaurant sales increased 11.3% year-over-year to $27.17 million.
The stock has gained 7.6% over the past month to close the last trading session at $2.55.
It is no surprise that GTIM has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system.
It has an A grade for Value and a B for Growth, Momentum, Sentiment, and Quality. GTIM is ranked first among the 47 stocks in the A-rated Restaurants industry.
Click here for the additional POWR Ratings for Stability for GTIM.
GTX shares were unchanged in premarket trading Tuesday. Year-to-date, GTX has declined -7.97%, versus a -12.60% 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.
3 Stocks Under $10 That Worth Looking Into This Month StockNews.com
