The S&P 500 has declined 17.7% year-to-date, while the Russell 2000 small-cap index has lost 19.6%. It has been a rough ride for equities this year, with the benchmark indexes tumbling on concerns over soaring inflation and the Fed’s attempts to tame it.
Investors increasingly fear the central bank’s aggressive policy tightening to tame the multi-decade high inflation will push the economy into a recession. The worse-than-anticipated inflation data might compel the Fed to keep hiking rates, putting further pressure on the stock market in the upcoming months.
The current market backdrop highlights the importance of investing in fundamentally sound stocks with solid upside potential. While small-cap stocks usually do not perform well amid economic contraction, Wall Street analysts expect ARC Document Solutions, Inc. (ARC), Assertio Holdings, Inc. (ASRT), and Centerra Gold Inc. (CGAU) to surge in the upcoming months. So, it could be worth adding these stocks to your watchlist.
ARC Document Solutions, Inc. (ARC)
With a market capitalization of $113.81 million, ARC provides digital printing and document-related services to customers across industries. It also resells printing, imaging, and related equipment primarily to architectural, engineering, and construction firms and provides ancillary services.
The company serves local restaurant owners, construction subcontractors, international retailers, regional energy companies, school districts, retail, technology, energy, education, hospitality, and public utilities.
For the first quarter ended March 31, 2022, ARC’s net sales increased 12.5% year-over-year to $69.49 million. Its income from operations grew 78.1% from the year-ago period to $3.06 million. ARC’s net income attributable came in at $1.97 million, representing a 149.9% year-over-year improvement, while its adjusted EPS increased 150% year-over-year to $0.05.
The consensus EPS estimate of $0.26 for its fiscal 2022 ending December 31, 2022, represents an 18.2% year-over-year improvement. Analysts expect the company’s revenue to reach $286.90 million for the same fiscal year, indicating a 5.4% rise from the prior-year period.
The stock has gained 28.3% over the past year to close the last trading session at $2.63. Analysts expect the stock to hit $3.50 in the upcoming months, representing a 19.4% upside potential.
ARC’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.
It also has an A grade for Value and Quality and a B for Growth and Sentiment. It is ranked #2 of 43 stocks in the B-rated Outsourcing – Business Services industry. Click here to see the additional ratings of ARC for Momentum and Stability.
Assertio Holdings, Inc. (ASRT)
ASRT is a specialty pharmaceutical company that offers medicines in different treatment areas, including neurology, pain, and inflammation. The company provides INDOCIN, an oral solution to treat moderate to severe rheumatoid arthritis, and CAMBIA, a non-steroidal anti-inflammatory drug (NSAID). It has a market cap of $159.02 million.
On March 31, 2022, ASRT partnered with BlinkRx to support healthcare professionals and patients undergoing treatment with Otrexup with a unique access solution. Dan Peisert, President and CEO of ASRT, said, “This builds upon our existing pharmacy hub capabilities with a new direct-to-patient model for those who prefer a convenient digital option.”
For the fiscal first quarter ended March 31, 2022, ASRT’s net revenue increased 36.1% year-over-year to $36.54 million. Its adjusted EBITDA grew 51.8% from the year-ago value to $23.86 million, while its adjusted earnings improved 70.3% year-over-year to $17.53 million. The company’s adjusted EPS increased 40.7% from its year-ago value to $0.38.
For the quarter ended June 30, 2022, ASRT’s revenue is expected to increase 25.2% year-over-year to $31.78 million. Street expects its EPS to be $0.08 for the same period. ASRT has gained 243.1% over the past nine months to close the last trading session at $3.50. Analysts expect the stock to hit $6, representing a 71.4% potential upside.
ASRT’s POWR Ratings reflect these solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
It also has an A grade for Growth, Value, Sentiment, and Quality. Within the Medical - Pharmaceuticals industry, it is ranked #8 out of 169 stocks. To see the other ratings of ASRT for Momentum and Stability, click here.
Centerra Gold Inc. (CGAU)
Headquartered in Toronto, Canada, CGAU is a gold mining company focused on operating, developing, exploring, and acquiring gold properties in North America, Turkey, and other markets worldwide. The company explores gold, copper, and molybdenum deposits. It operates two mines: the Mount Milligan Mine in British Columbia, Canada, and the Oksut Mine in Turkey. It has a market cap of $1.79 billion.
On February 28, 2022, CGAU announced the completion of its previously announced acquisition of Gemfield Resources LLC, owner of the Goldfield District Project, from Waterton, Nevada Splitter, LLC. This acquisition is expected to add high-quality development projects and expand CGAU’s footprint in North America.
CGAU’s revenue increased 30.5% year-over-year to $295.22 million. The company’s adjusted net earnings from continuing operations increased 100% year-over-year to $56.40 million. Also, its adjusted EPS from continuing operations came in at $0.19, representing an increase of 90% year-over-year. In addition, its earnings from mine operations increased 61% year-over-year to $113.50 million.
Analysts expect CGAU’s EPS for fiscal 2022 to increase 12.8% year-over-year to $0.71. Its revenue for the current year is expected to increase 11.9% year-over-year to $1.01 billion. Over the past three months, the stock has lost 33.2% to close the last trading session at $6. However, analysts expect the stock to hit $10.37, representing a 72.8% potential upside.
CGAU has an overall B rating, which equates to a Buy in our POWR Ratings system. It has an A grade for Quality and a B for Growth and Value. It is ranked first out of 33 stocks in the Miners – Gold industry. Click here to see the other ratings of CGAU for Momentum, Stability, and Sentiment.
ARC shares were trading at $2.68 per share on Wednesday morning, up $0.05 (+1.90%). Year-to-date, ARC has declined -21.19%, versus a -16.11% 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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