The December consumer price index (CPI) increased 6.5% year-over-year and decreased 0.1% over the prior month. This raised consumer confidence, signaling that the Fed’s rate hikes are having the intended effect.
However, the central bank has given indications of continuing hikes at a slower pace until inflation falls below 2%. Recently, Fed Governor Michelle Bowman commented, “In recent months, we’ve seen a decline in some measures of inflation but we have a lot more work to do, so I expect the FOMC will continue raising interest rates to tighten monetary policy, as we stated after our December meeting.”
Furthermore, the World Bank expects U.S. GDP to fall to 0.5% in 2023, 1.9 percentage points lower than the previous projection of 2.4%. The institution also warned of recession amid slowing growth.
Given the economic uncertainty, investors could opt for inexpensive penny stocks that have the potential to grow over time. Hence, fundamentally sound penny stocks trivago N.V. (TRVG) and Overseas Shipholding Group, Inc. (OSG) could now be added to your watchlist.
trivago N.V. (TRVG)
Headquartered in Düsseldorf, Germany, TRVG operates a hotel and accommodation search platform globally. The company offers an online meta-search for hotels and accommodations through online travel agencies, hotel chains, and independent hotels.
On October 18, 2022, TRVG and AXS, a digital ticketing platform for live sports and entertainment, announced a global partnership to allow eventgoers to access affordable stay booking options with event ticket purchases made via AXS. The collaboration also makes TRVG the exclusive accommodation partner of AXS, which should be strategically beneficial.
TRVG’s forward non-GAAP P/E of 6.62x is 59.7% lower than the industry average of 16.42x. Its forward EV/Sales of 0.6x is 68% lower than the industry average of 1.87x.
For the fiscal third quarter that ended September 30, TRVG’s total revenue increased 32.5% year-over-year to €183.70 million ($198.28 million). Cash, cash equivalents, and restricted cash at the end of the period improved 19% from the prior-year period to €231.81 million ($250.20 million). Adjusted EBITDA rose 115.5% year-over-year to €33.47 million ($36.13 million).
Street expects TRVG’s EPS to increase 4.3% year-over-year to $0.25 for the fiscal year ending December 2023. Furthermore, revenue for the same period is expected to rise 19% from the prior-year period to $687.59 million. The company surpassed EPS estimates in each of the four trailing quarters.
The stock has gained 25.4% over the past month to close its last trading session at $1.68. Moreover, it has gained 5% intraday.
This promising prospect is reflected in TRVG’s POWR Ratings. 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.
TRVG has an A grade for Quality and a B for Growth and Value. In the Internet industry, it is ranked #2 out of 60 stocks.
Click here for the additional POWR Ratings for Momentum, Stability, and Sentiment for TRVG.
Overseas Shipholding Group, Inc. (OSG)
OSG is the owner and operator of a fleet of oceangoing vessels engaged in transporting crude oil and petroleum products in the U.S. flag trade. The company serves independent oil traders, refinery operators, and government entities.
On December 8, 2022, OSG announced that it had exercised options to extend its six bareboat charter agreements with American Shipping Company ASA for an additional three-year term commencing in December 2023.
“We believe the market continues to support attractive commercial opportunities for these vessel leases to supplement the strong and stable cash flow generation from our niche businesses,” said Sam Norton, OSG’s President, and CEO.
On November 15, OSG announced that it had agreed to purchase five million shares of its common stock from Cyrus Capital for $2.86 per share. This share repurchase might bolster its shareholder returns.
OSG’s shipping revenues increased 30.9% year-over-year for the third quarter that ended September 30, 2022, to $123.06 million. Its net income came in at $13.25 million, compared to a net loss of $16.01 million in the year-ago period. Moreover, its EPS came in at $0.15, compared to a loss per share of $0.18 in the prior-year period.
The stock has gained 67.5% over the past six months and 22% over the past month to close the last trading session at $3.50.
OSG’s POWR Ratings reflect its promising outlook. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
The stock has an A grade for Momentum and Quality and a B for Growth and Value. Within the A-rated 46-stock Shipping industry, it is ranked first.
Click here to see OSG’s ratings for Stability and Sentiment.
TRVG shares were unchanged in premarket trading Friday. Year-to-date, TRVG has gained 24.44%, versus a 3.80% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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