Since the beginning of the year, the major stock market indexes have been highly volatile on concerns over the Fed’s decision to raise the interest rates multiple times this year and a worsening situation between Ukraine and Russia.
The consumer price index for January increased 7.5% year-on-year, beating the Dow Jones estimate of 7.2%. This was the index’s highest increase since February 1982 and may compel the Fed to raise the interest rates aggressively in March, which could lead to further stock market volatility. However, as history suggests, the markets do not remain in the oversold territory for long periods and tend to rebound after a significant correction.
Given this backdrop, we think it could be wise to bet on quality undervalued stocks Arko Corp. (ARKO), Yalla Group Limited (YALA), O2Micro International Limited (OIIM), Culp, Inc. (CULP), and Core Molding Technologies, Inc. (CMT). These stocks are currently trading near their 52-week lows.
Arko Corp. (ARKO)
ARKO operates convenience stores in the United States. The Richmond, Va.-based concern operates through the Retail; Wholesale; and GPM Petroleum segments. The Retail segment sells fuel and merchandise to retail consumers. The Wholesale segment supplies fuel to third-party dealers and consignment agents. And the GPM Petroleum segment supplies fuel to sub-wholesalers and bulk purchasers.
On Dec. 6, 2021, ARKO announced that its subsidiary, GPM Investments, LLC, formed a partnership with Sbarro to launch new restaurants inside four village pantry store locations in Indiana. The partnership should enhance GPM’s in-store experience and provide sought-after food offerings to customers.
ARKO’s total revenues increased 112% year-over-year to $2.03 billion for the third quarter, ending Sept. 30, 2021. The company’s operating income increased 70.4% year-over-year to $54.72 million. Also, its adjusted EBITDA increased 39.9% year-over-year to $80.18 million.
In terms of forward EV/S and P/S, ARKO’s respective 0.38x and 0.14x are lower than the industry averages of 1.31x and 1.07x. Furthermore, its 6.64x forward P/CF is 40.1% lower than the11.09x industry average.
Analysts expect ARKO’s EPS and revenue for fiscal 2021 to increase 192.9% and 90.3%, respectively, year-over-year to $0.41 and $7.44 billion. The stock closed the last trading session at $8.52. It is currently trading 11.6% above its 52-week low of $7.32, which it hit on August 5, 2021.
ARKO’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to a 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 a B grade for Growth, Value, and Sentiment. It is ranked #9 out of 46 stocks in the Specialty Retailers industry. Click here to see the other ratings of Momentum, Stability, and Quality.
Yalla Group Limited (YALA)
Headquartered in Dubai, United Arab Emirates, YALA is a voice-centric social networking and entertainment platform under the Yalla name. It operates primarily in the Middle East and North Africa region. The company’s platform sells virtual items and provides upgrade services. It also offers group chatting and games services.
On Jan.19, 2022, YALA announced that the lead plaintiffs in a securities class-action lawsuit against the company and its CEO had voluntarily dismissed the suit on Jan. 12, 2022. It marked the successful and conclusion of the lawsuit for the company.
For the fiscal third quarter, ended Sept. 30, 2021, YALA’s revenue increased 110.8% year-over-year to $71.30 million. The company’s non-GAAP net income increased 114.5% year-over-year to $33.20 million. Also, its non-GAAP operating income came in at $33.61 million, representing a 116.1% increase year-over-year.
In terms of forward EV/S and EV/EBIT, YALA’s respective 2.22x and 6.69x are lower than the 2.41x and 15.57x industry averages. Furthermore, its 5.67x forward EV/EBITDA is 38.4% lower than the 9.21x industry average.
For its fiscal year 2021, analysts expect YALA’s EPS and revenue to increase 19.3% and 100.5%, respectively, year-over-year to $0.68 and $270.57 million. The stock closed the last trading session at $6.96. It is currently trading 25.5% above its 52-week low of $5.17, which it hit on Jan. 28, 2022.
YALA’s POWR Ratings reflect solid prospects. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Value. Within the Software – Application industry, it is ranked #25 out of 167 stocks. To see the other ratings of YALA for Growth, Momentum, Stability, and Sentiment, click here.
Click here to check out our Software Industry Report for 2022
O2Micro International Limited (OIIM)
Cayman Islands-based OIIM designs, develops, and markets integrated circuits and solutions for power management components and systems. The company offers analog and mixed-signal integrated circuits that manage and provide power for LCD and LED lighting. Its products are used in consumer electronics, computers, communication, and automotive markets.
On Feb. 11, 2022, OIIM announced that a patent was granted to it for systems and methods for managing a battery pack. The company was issued 17 claims under China Patent No. ZL201910054748.2 on March 16, 2021, to invent a system and methods for managing a battery pack. OIIM’s VP of Advanced Technology, Dr. Guoxing, said, “This invention provides an effective solution for the battery pack management with more than one load while at the same time delivering advanced safety protections.”
OIIM’s revenue increased 4.9% year-over-year to $24.38 million for the fourth quarter, ended Dec. 31, 2021. The company’s gross profit increased 11% year-over-year to $13.23 million. Also, its net income for its fiscal year ended Dec. 31, 2021, increased 97.6% year-over-year to $12.11 million.
In terms of forward EV/S and P/S, OIIM’s respective 0.65x and 1.09x are lower than the 3.60x and 3.62x industry averages. Furthermore, its 9.12x forward non-GAAP P/E is 56.1% lower than the 20.79x industry average.
Analysts expect OIIM’s EPS and revenue for fiscal 2023 to increase 36.1% and 11.6%, respectively, year-over-year to $0.49 and $118 million It surpassed the Street’s EPS estimates in three of the trailing four quarters. The stock closed the last trading session at $4.25. It is currently trading 9.4% above its 52-week low of $3.71, which it hit on Jan. 26, 2022.
OIIM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
It has an A grade for Value and a B grade for Sentiment. It is ranked #45 out of 97 stocks in the A-rated Semiconductor & Wireless Chip industry. Click here to see the additional ratings of OIIM for Growth, Momentum, Stability, and Quality.
Click here to checkout our Semiconductor Industry Report for 2022
Culp, Inc. (CULP)
High Point, N.C.-based CULP manufactures, sources, markets, and sells mattress fabrics, sewn covers, and cut and sewn kits for use in mattresses, foundations, and other bedding products. The company operates in the Mattress Fabrics and Upholstery Fabrics segments.
For six months ended Oct.31, 2021, CULP’s net sales increased 11.5% year-over-year to $157.60 million. The company’s net income came in at $3.10 million, versus a $0.34 million net loss in the year-ago period. Also, its EPS came in at $0.25, compared to a $0.03 loss per share in the year-ago period.
In terms of forward EV/S and P/S, CULP’s respective 0.26x and 0.32x are lower than the 1.31x and 1.07x industry averages. Furthermore, its 0.79x forward P/B is 74% lower than the 3.05x industry average.
For the quarter ending April 30, 2022, CULP’s EPS is expected to increase 81.8% year-over-year to $0.20. The company’s revenue for fiscal 2023 is expected to increase 5.8% year-over-year to $333.19 million. It surpassed consensus EPS estimates in three of the trailing four quarters. The stock closed the last trading session at $8.50. It is currently trading 0.4% above its 52-week low of $8.21, which it hit on Feb.14, 2022.
CULP’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
It has a B grade for Growth, Value, Momentum, and Sentiment. Within the A-rated Industrial – Textiles industry, it is ranked #3 of 5 stocks. To see the other ratings of CULP for Stability and Quality, click here.
Core Molding Technologies, Inc. (CMT)
CMT in High Point, N.C., manufactures sheet molding compounds and molders of fiberglass reinforced plastics. The company produces and sells molded products for varied markets, including medium- and heavy-duty trucks, automobiles, marine, construction, and other commercial markets.
On November 5, CMT’s President and CEO, David Duvall, said, “We had success with our long-term strategy to diversify our business by winning new programs in multiple industries. In the third quarter, we signed over $40 million of new business which will be launched over the next twelve months.”
CMT’s net sales for its fiscal third quarter, ended Sept. 30, 2021, increased 35.2% year-over-year to $81.03 million. The company’s product sales increased 24.7% year-over-year to $67.64 million. Also, its total assets came in at $179.45 million for the period ended Sept. 30, 2021, compared to $165.51 million for the period ended Dec. 31, 2021.
In terms of EV/S and P/S, CMT’s respective 0.34x and 0.23x are lower than the 1.85x and 1.55x industry averages. Furthermore, its 0.68x P/B is 68.9% lower than the 2.19x industry average.
The stock closed the last trading session at $8.50. It is currently trading 4.9% above its 52-week low of $7.96, which it hit on Jan.25, 2022.
CMT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Growth and Value and a B grade for Sentiment and Quality. It is ranked #1 in the Industrial – Manufacturing industry. Click here to see the other ratings of CMT for Momentum and Stability.
What To Do Next?
If you’d like to see more top stocks under $10, then you should check out our free special report: 3 Stocks to DOUBLE This Year
What gives these stocks the right stuff to become big winners?
First, because they are all low-priced companies with explosive growth potential, that excel in key areas of growth, sentiment and momentum.
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Click below now to see these 3 exciting stocks which could double (or more!) in the year ahead:
ARKO shares were unchanged in premarket trading Wednesday. Year-to-date, ARKO has declined -2.85%, versus a -6.49% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
Scoop Up These 5 Undervalued Stocks Under $10 Trading Near 52-Week Lows StockNews.com
