The stock markets have been experiencing immense volatility lately due to concerns over high inflation, the Federal Reserve’s aggressive interest rate increases, supply chain disruptions, and a potential recession. However, slower inflation in April caused many economists to speculate that inflation may not increase further. Also, strong consumer spending is expected to keep the overall economy moving forward.
However, because current investor concerns are expected to linger, we think it could be wise to invest in mid-cap stocks because they usually deliver better returns than large-cap stocks and are more stable than small-cap stocks. Investors’ interest in mid-cap stocks is evident in the SPDR Portfolio S&P 400 Mid Cap ETF’s (SPMD) 3.7% returns over the past month versus the SPDR S&P 500 Trust ETF’s (SPY) 1.1% returns.
So, it could be wise to invest now in quality mid-cap stocks from US Foods Holding Corp. (USFD), Clean Harbors, Inc. (CLH), Huntsman Corporation (HUN), and Integra LifeSciences Holdings Corporation (IART).
US Foods Holding Corp. (USFD)
With a $7.29 billion market capitalization, USFD markets and distributes fresh, frozen, and dry food and non-food products in the United States. The Rosemont, Ill., company serves independently owned single- and multi-unit restaurants, regional concepts, national restaurant chains, hospitals, nursing homes, hotels and motels, country clubs, government and military organizations, colleges and universities, and retail locations. It has a network of more than 69 distribution facilities and a fleet of approximately 6,500 trucks.
On May 18, 2022, USFD announced a strategic agreement with Kalera AS, a leading hydroponic indoor vertical farming company, to bring Kalera’s broad assortment of high-quality, sustainably grown, year-round offerings to USFD’s foodservice operators. This move should help USFD gain wide reach across the markets and nurture its relationship with Kalera in the future.
For its fiscal year 2022 first quarter, ended April 2, 2022, USFD’s net sales increased 23.9% year-over-year to $7.80 billion. The company’s non-GAAP gross profit came in at $1.27 billion, indicating a 23.7% year-over-year improvement. Its adjusted EBITDA was $241 million, up 40.1% from the prior-year period. While its adjusted net income increased 196.3% year-over-year to $80 million, its adjusted EPS grew 200% to $0.36. The company had $190 million in cash and cash equivalents as of April 2, 2022.
Analysts expect the company’s EPS to improve 23.7% year-over-year to $2.26 for its fiscal year 2022, ending Dec. 31, 2022. The $33.63 billion consensus revenue estimate for the same fiscal year represents a 14.1% rise from the prior-year period. The company’s EPS is expected to grow at a 29.8% rate per annum over the next five years.
The stock’s 9.86x forward EV/EBITDA is 15.4% lower than the 11.66x industry average. In terms of forward Price/Sales, USFD is currently trading at 0.22x, which is 81.4% lower than the 1.17x industry average. And over the past month, the stock has declined 10.9% in price to close yesterday’s trading session at $32.58.
USFD’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Growth and Sentiment and a B grade for Value. Click here to see the additional ratings for USFD’s Stability, Quality, and Momentum.
USFD is ranked #13 of 86 stocks in the B-rated Food Makers industry.
Clean Harbors, Inc. (CLH)
CLH provides environmental, energy, and industrial services in North America. The Norwell, Mass.,company operates through two reporting segments–Environmental Services and Safety-Kleen Sustainability Solutions (SKSS). It is also a re-refiner and recycler of used oil and a provider of parts cleaning and related environmental services to commercial, industrial, and automotive customers. It has a $5.44 billion market capitalization.
On June 3, 2022, CLH’s Safety-Kleen business segment unveiled KLEEN+, a new family of base oil grades aimed at redefining the market and lowering the environmental impact of automotive and industrial lubricants by reducing their carbon footprint. A life cycle assessment of the carbon footprint of KLEEN+ conducted by engineering consulting firm Ramboll concluded that Safety-Kleen’s base oil achieved as much as a 78% reduction in greenhouse gas emissions compared to base oil made via a traditional refining process on a per-gallon basis. This should help KLEEN+ gain wider recognition across the industry.
For its fiscal year 2022 first quarter, ended March 31, 2022, CLH’s revenue increased 44.7% year-over-year to $1.17 billion. The company’s income from operations came in at $87.09 million, up 71.3% from the prior-year period. Its net income was $45.31 million for the quarter, indicating a 108.5% year-over-year improvement. CLH’s EPS came in at $0.83, representing a 112.8% rise from the year-ago period. It had $339.58 million in cash and cash equivalents as of March 31, 2022.
The $4.59 consensus EPS estimate for its fiscal 2022, ending Dec. 31, 2022, represents a 26.1% rise from the year-ago period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts estimate the company’s revenue will improve 24.9% year-over-year to $4.75 billion for the same fiscal year. CLH’s EPS is expected to grow at a 30% rate per annum over the next five years.
The stock’s 9.27x forward EV/EBITDA is 11% lower than the 10.42x industry average. In terms of forward Price/Sales, CLH is currently trading at 1.10x, which is 18.4% lower than the 1.35x industry average. Over the past month, the stock has gained 3.6% in price to close yesterday’s trading session at $99.93.
CLH’s POWR Ratings reflect its solid prospects. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has a B grade for Value and Growth. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for CLH’s Momentum, Stability, Sentiment, and Quality here.
CLH is ranked #5 of 15 stocks in the B-rated Waste Disposal industry.
Huntsman Corporation (HUN)
Salt Lake City, Utah-based HUN manufactures and sells differentiated organic chemical products worldwide. The company operates through four segments: Polyurethanes; Performance Products; Advanced Materials; and Textile Effects. It has a $7.59 billion market capitalization.
HUN’s revenues for its fiscal 2022 first quarter, ended March 31, 2022, increased 30.1% year-over-year to $2.39 billion. The company’s gross profit came in at $565 million, representing a 44.1% year-over-year improvement. Its adjusted pre-tax income came in at $347 million for the quarter, up 62.9% from the year-ago period. And HUN’s adjusted net income was t $256 million, indicating a 74.2% rise from the prior-year period. Its adjusted EPS increased 80.3% year-over-year to $1.19. And the company had $807 million in cash and cash equivalents as of March 31, 2022.
Analysts expect HUN’s EPS to improve 25.1% year-over-year to $4.43 in its fiscal 2022, ending Dec. 31, 2022. The company surpassed the Street’s EPS estimates in each of the trailing four quarters. The $9.34 billion consensus revenue estimate for the same fiscal year indicates a 10.6% year-over-year improvement. The company’s EPS is expected to grow at an 11.6% rate per annum over the next five years.
HUN’s 5.79x forward EV/EBITDA is 15% lower than the 6.81x industry average. In terms of forward Price/Sales, the stock is currently trading at 0.81x, which is 36.8% lower than the 1.27x industry average. Over the past month, it has gained 5.9% in price to close yesterday’s session at $36.18.
HUN’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to Strong Buy in our proprietary rating system.
The stock has an A grade for Value and a B grade for Growth. Click here to see the additional ratings for HUN (Momentum, Stability, Sentiment, and Quality).
The stock is ranked #12 of 91 stocks in the A-rated Chemicals industry.
Integra LifeSciences Holdings Corporation (IART)
IART in Plainsboro, N.J., manufactures and markets surgical implants and medical instruments for use in neurosurgery, extremity reconstruction, and general surgery. The company operates through Codman Specialty Surgical and Tissue Technologies segments. It offers neurosurgery and neurocritical care products, surgical headlamps and instrumentation, asset management software and support, and after-market services to hospitals and surgery centers and dental, podiatry, and veterinary offices. It has a $5.11 billion market capitalization.
On March 22, 2022, IART launched the NeuraGen 3D Nerve Guide Matrix, a resorbable implant to repair peripheral nerve discontinuities. The unique inner matrix of NeuraGen 3D has porous channels, which have been demonstrated preclinically to help guide Schwann cell migration and direct axonal growth, an essential objective for surgeons in the treatment of nerve repair and restoring function. By advancing its peripheral nerve repair solutions portfolio, this launch should help IART achieve greater market reach in the coming months.
IART’s fiscal 2022 first-quarter total revenues increased 4.6% year-over-year to $376.64 million. The company’s operating income came in at $46.16 million, indicating a 50.3% year-over-year improvement. While its adjusted net income increased 5% year-over-year to $61.98 million, its adjusted EPS grew 7.3% to $0.74. As of March 31, 2022, the company had $407.09 million in cash and cash equivalents.
Analysts expect the company’s EPS to increase 4.1% year-over-year to $3.31 for its fiscal 2022, ending Dec. 31, 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $1.59 billion consensus revenue estimate for the same fiscal year represents a 3.3% year-over-year improvement. IART’s EPS is expected to grow at an 8.2% rate per annum over the next five years.
The stock’s 1.75x non-GAAP forward PEG is 6.1% lower than the 1.86x industry average. In terms of forward Price/Sales, IART is currently trading at 3.21x, which is 27.9% lower than the 4.45x industry average. Over the past month, the stock has gained 4% in price to close Friday’s trading session at $61.46.
IART’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has a B grade for Value and Growth. Click here to see the additional ratings for IART (Momentum, Sentiment, Quality, and Stability).
IART is ranked #12 of 149 stocks in the Medical - Devices & Equipment industry.
Click here to checkout our Healthcare Sector Report for 2022
USFD shares were trading at $32.23 per share on Wednesday morning, down $0.35 (-1.07%). Year-to-date, USFD has declined -7.46%, versus a -12.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
4 Buy-Rated Mid-Cap Stocks to Buy in June StockNews.com
