Although market turbulence continued last week on speculation surrounding interest rate hikes and rising inflation, the U.S. stock market is expected to perform strongly in the coming months. While only a few companies have released their fourth-quarter earnings reports so far, a FactSet report estimates the earnings growth rate for S&P 500 members to be 21.7% for the quarter.
Furthermore, the labor market is expected to hit full employment this year. The unemployment rate decreased to 3.9% at year’s end from 6.3% in January 2021.
Therefore, we think fundamentally strong stocks SunCoke Energy, Inc. (SXC), Lincoln Educational Services Corporation (LINC), and Destination XL Group, Inc. (DXLG), which are currently trading at less than $10, could deliver solid upside in the coming months.
SunCoke Energy, Inc. (SXC)
SXC in Lisle, Ill., is a raw material processing and handling company. It serves steel and power customers, with its principal business cokemaking and logistics. The company operates through three segments: Domestic Coke; Brazil Coke; and Logistics. Additionally, SXC owns and operates five cokemaking facilities in the United States and one in Brazil.
SXC's revenues increased 21.3% year-over-year to $366.5 million in the third quarter, ended Sept. 30, 2021. The company's operating income rose 245% from the prior-year quarter to $41.4 million. Its net income came in at $23 million, compared to a $2.7 million net loss in the prior-year quarter. Also, the company's EPS amounted to $0.27, compared to a $0.03 loss per share in the third quarter of 2020.
SXC has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. SXC's EPS is estimated to grow at an 8% CAGR per annum over the next five years. The stock has gained 13.1% in price over the past month and 30.1% over the past year to close its last trading session at $7.52.
SXC's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Growth and Momentum. We have also graded SXC for Quality, Value, Sentiment, and Stability. Click here to access all SXC's ratings. SXC is ranked #1 of 11 stocks in the B-rated Coal industry.
Lincoln Educational Services Corporation (LINC)
LINC in West Orange, N.J. provides diversified career-oriented post-secondary education to high school graduates and working adults. Transportation and Skilled Trades; Healthcare and Other Professions; and Transitional are the company’s operational segments. LINC operates 22 schools in 14 states under Lincoln Technical Institute, Lincoln College of Technology, Lincoln Culinary Institute, Euphoria Institute of Beauty Arts and Sciences, and associated brand names.
Last month, LINC's South Plainfield, N.J. campus welding program was granted accreditation by the National Center for Construction Education & Research (NCCER). The company believes that this recognition proves that LINC's curriculum and training methodologies help students prepare to step into the workforce immediately.
During the third quarter, ended Sept. 30, 2021, LINC's revenue increased 13% year-over-year to $89.06 million. The company's operating income grew 49.6% from its year-ago value to $5.75 million. Its net income rose 9.3% from the prior-year quarter to $3.84 million. Also, the company's EPS increased 37.5% year-over-year to $0.11.
LINC's revenue is expected to increase 4.6% year-over-year to $349.55 million in its fiscal year 2022. In addition, the company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Furthermore, its EPS is expected to increase 113.9% in fiscal 2021. Closing yesterday's trading session at $6.86, the stock has soared 6.4% in price over the past nine months and 11.5% over the past year.
LINC's POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. Also, the stock has an A grade for Value and Sentiment.
In addition to the POWR Rating grades I've just highlighted, one can see LINC's ratings for Growth, Stability, Quality, and Momentum here. The stock is ranked #1 of 23 stocks in the Outsourcing – Education Services industry.
Note that LINC is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.
Destination XL Group, Inc. (DXLG)
Incorporated in 1976, DXLG is a specialty retailer of big and tall men's clothing and shoes with retail, wholesale and direct operations in the United States and Toronto, Canada. The Canton, Mass.-based company offers sportswear, accessories, casual clothing, tailored-related separates, blazers, dress slacks, and woven under various private labels. Polo Ralph Lauren, Lacoste, Levi's, Nautica, Reebok, and vineyard vines are brands carried by DXLG.
This month, DXLG partnered with Nautica, the global designer of sportswear and lifestyle brand vineyard vines brands, to launch the Big + Tall apparel space, starting with the Spring 2022 season. This partnership should offer a wide range of designer Big + Tall clothes to DXLG's customers.
DXLG's sales increased 42.6% year-over-year to $121.49 million for its fiscal third quarter, ended Oct. 30, 2021. The company's gross profit grew 96.2% from its year-ago value to $60.96 million. Its operating income came in at $15.94 million, versus a $5.92 million operating loss in the prior-year quarter. Also, the company's net income amounted to $13.66 million, compared to a $7.02 million net loss in its fiscal third quarter of 2020.
For its fiscal 2022, DXLG's revenue is expected to be $503.35 million, representing a 57.8% year-over-year increase. Its EPS is expected to increase 15% per annum in the next five years. Closing its last trading session at $5.04, the stock has surged 235.3% in price over the past nine months and 1,160% over the past year.
It is no surprise that DXLG has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has an A grade for Growth, Sentiment, and Quality.
Click here to see the additional POWR Ratings for DXLG (Value, Stability, and Momentum). DXLG is ranked #1 of 46 stocks in the B-rated Specialty Retailers industry.
Note that DXLG is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.
SXC shares were unchanged in premarket trading Thursday. Year-to-date, SXC has gained 14.11%, versus a -4.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
3 Stocks Under $10 With Major Potential in 2022 StockNews.com
