Most industries continue to witness declines in their share prices amid highly volatile market conditions on concerns about high inflation and a hawkish Fed. However, impressive fourth-quarter earnings reports have been boosting investor sentiment. Furthermore, investors seeking to balance out their portfolios are now betting on mid-cap stocks, which can be viewed as a buffer zone between small-cap and large-cap stocks.
Many experts expect the market correction to be short-lived, and that quality mid-cap stocks with a promising outlook can withstand the turbulence. Michael Arone, the chief investment strategist at State Street Global Advisors, said, "On the other side of this, the economy should continue to expand, as earnings are pretty good."
So, we think it could be wise to bet on high-quality mid-cap stocks Masonite International Corporation (DOOR), Silicon Motion Technology Corporation (SIMO), Piper Sandler Companies (PIPR), and Belden Inc. (BDC). They look undervalued at their current price levels. Also, these stocks are rated ‘Strong Buy’ in our proprietary rating system and possess solid growth and value grades.
Masonite International Corporation (DOOR)
DOOR in Tampa, Fla., designs, manufactures, markets, and distributes interior and exterior doors for the new construction and repair, renovation, and remodeling sectors of the residential and non-residential building construction markets worldwide. It has a $2.95 billion market capitalization.
On Jan. 4, 2022, DOOR launched Masonite M-Pwr Smart Doors, which are the first to integrate power, lights, a video doorbell, and a smart lock. Howard Heckes, President and CEO, said, "The revolutionary technology of these doors provides families with the peace of mind that they are always connected and always protected."
DOOR's net sales increased 11% year-over-year to $652.21 million for its fiscal third quarter, ended Oct. 3, 2021. The company's net income came in at $37.69 million, compared to a $21.77 million loss in the year-ago period. Also, its EPS came in at $1.54, compared to an $0.89 loss per share in the previous period.
In terms of forward EV/S, DOOR's 1.13x is 39.2% lower than the industry average of 1.86x. In addition, the stock's forward P/S of 0.87x is 41.9% lower than the1.50x industry average.
For its fiscal 2022, analysts expect DOOR's revenue to be $2.82 billion, representing a 7.6% year-over-year rise. The company's EPS is expected to increase 21% year-over-year to $9.74 for fiscal 2022. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock closed yesterday's trading session at $99.24.
DOOR's POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has a B grade for Growth, Value, and Momentum. Within the B-Rated Home Improvement & Goods industry, it is ranked #2 of 61 stocks. Click here to see the additional POWR Ratings for Stability, Quality, and Sentiment for DOOR.
Silicon Motion Technology Corporation (SIMO)
Based in Kowloon, Hong Kong, SIMO, together with its subsidiaries, designs, develops, and markets NAND flash controllers for solid-state storage devices. It has a $2.76 billion market capitalization.
On Jan. 27, 2022, Wallace Kou, President, and CEO of SIMO, said, "We were supply constrained for most of 2021, including the fourth quarter. Nevertheless, we were able to create significant incremental value throughout the year by optimizing our limited foundry wafer supply, which led to solid consecutive sequential quarterly revenue and earnings growth and very strong full year operating results."
For its fiscal fourth quarter, ended Dec. 31, 2021, SIMO's net sales increased 83.7% year-over-year to $264.36 million. Its non-GAAP net income was $67.54 million, up 125.8% year-over-year. Furthermore, its non-GAAP EPS was $1.90, up 120.9% year-over-year.
In terms of forward EV/S, SIMO's 2.09x is 44% lower than the 3.72x industry average. In addition, the stock's 2.40x forward P/S is 33.6% lower than the 3.61x industry average.
SIMO's revenue is expected to be $1.14 billion in fiscal 2022, representing a 23.6% year-over-year rise. In addition, the company's EPS is expected to increase 28.3% year-over-year to $7.97 for its fiscal 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 59.9% in price to close yesterday's trading session at $79.00.
It is no surprise that SIMO has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Value and a B grade for Growth and Quality.
SIMO is ranked #8 of 100 stocks in the A-Rated Semiconductor & Wireless Chip industry. Click here to see SIMO's ratings for Momentum, Sentiment, and Stability as well.
Note that SIMO is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
Click here to checkout our Semiconductor Industry Report for 2022
Piper Sandler Companies (PIPR)
PIPR in Minneapolis, Minn., operates as an investment bank and institutional securities firm that serves corporations, private equity groups, public entities, non-profit entities, and institutional investors in the United States and internationally. It has a $2.76 billion market capitalization.
On Oct. 29, 2021, Chad R. Abraham, chairman, and CEO, said, "We generated our fourth consecutive quarter with net revenues at or above $400 million, driven by strong contributions across our businesses. We remain committed to returning excess capital to our shareholders and with our strong earnings and positive outlook, we declared a special cash dividend of $3.00 per share."
PIPR's net revenues increased 46.7% year-over-year to $445.56 million for the third quarter, ended Sept. 30, 2021. Its adjusted net income came in at $82.81 million, up 94% year-over-year. And the company's adjusted EPS was $4.55, up 91.2% year-over-year.
In terms of forward P/S, PIPR's 1.48x is 55.5% lower than the 3.32x industry average. Its 7.88x forward P/E non-GAAP is also 33.8% lower than the 11.90x industry average.
Analysts expect PIPR's revenue to reach $1.7 billion for its fiscal year 2022. In addition, the company's EPS is expected to hit $15.55 for fiscal 2022. Also, it surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 74.4% in price to close yesterday's trading session at $154.22.
PIPR'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.
In addition, it has a B grade for Growth, Value, Sentiment, and Quality. It is ranked #1 among 22 stocks in the B-Rated Investment Brokerage industry. Click here to see the additional POWR Ratings for PIPR (Momentum and Stability).
Belden Inc. (BDC)
BDC is a St. Louis, Mo.-based signal transmission solutions company in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. It operates in two segments, Enterprise Solutions, and Industrial Solutions. It has a $2.51 billion market capitalization.
On Nov. 3, 2021, Roel Vestjens, President and CEO, BDC, said, "We are executing several strategic growth initiatives, such as enhancing our solution selling capabilities and introducing innovative new products, and our strong results reflect the significant momentum we are gaining with customers. I am optimistic about our future and confident that the company is well positioned to drive profitable growth and shareholder value."
BDC's revenues came in at $630.84 million for the third quarter, ended Oct. 3, 2021, up 32.6% year-over-year. Its net income increased 142.8% year-over-year to $41.26 million, while its EPS came in at $0.91, up 139.5% year-over-year.
BDC's 1.48x forward EV/S is 60.1% lower than the 3.72x industry average. Its 1.02x forward P/S is 71.7% lower than the 3.61x industry average.
BDC's revenue is expected to increase 3.5% year-over-year to $2.48 billion for its fiscal 2022. Its EPS is also estimated to increase 7.2% to $5.07 for fiscal 2022. It also surpassed the EPS estimates for each of the trailing four quarters. And over the past year, BDC gained 18.4% in price to close yesterday's trading session at $55.95.
BDC has an overall A grade in our POWR Ratings system, which equates to a Strong Buy. It also has an A grade for Growth and a B grade for Value and Sentiment.
BDC is ranked #5 of 94 stocks in the Industrial - Equipment industry. Click here to check additional ratings for BDC (Momentum, Stability, and Quality).
DOOR shares were trading at $99.75 per share on Tuesday morning, up $0.51 (+0.51%). Year-to-date, DOOR has declined -15.43%, versus a -5.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
4 No-Brainer Mid-Cap Stocks for February: Silicon Motion, Masonite International, Belden, and Piper Sandler StockNews.com
