A solid third-quarter earnings season so far has kept the stock market upbeat. The decline in jobless claims for two straight weeks to reach its lowest level since the outbreak of the pandemic added to investor optimism.
Another factor driving market sentiment is that President Biden’s trillion-dollar infrastructure spending plan may finally be passed in the near term. Many high-profile House progressives are willing to vote on the infrastructure bill in exchange for President Biden’s assurance on the passage of a multi-trillion-dollar reconciliation package next.
Since the market’s uptrend has driven several stocks to high price levels lately, fundamentally sound stocks Grupo Bimbo, S.A.B. de C.V. (GRBMF), Yiren Digital Ltd. (Y.R.D.), Jiayin Group Inc. (JFIN), and A.R.C. Document Solutions, Inc. (A.R.C.), which are currently trading at less than $5, could be ideal bets now. Each of these stocks is rated Strong Buy in our proprietary POWR Ratings system.
Grupo Bimbo, S.A.B. de C.V. (GRBMF)
Based in Mexico, GRBMF and its subsidiaries produce, distribute, and sell various bakery products worldwide. The company produces bread, cookies, pies, pastries, sweet rolls, tortillas, tostadas, snacks, appetizers, sweets, chocolates, jams, and other confectionery products.
On January 26, 2021, GRBMF’s Bimbo Bakeries USA (BBU) business earned the U.S. Environmental Protection Agency (EPA) ENERGY STAR certification for 15 of its bakeries. This achievement recognizes the bakeries’ efforts in lowering greenhouse gas emissions by reducing their energy intensity.
For its fiscal second quarter, ended June 30, 2021, GRBMF’s operating income came in at Mex$7.06 billion ($349.98 million), representing a 2.5% year-over-year improvement. The company’s net income was Mex$3.07 billion ($151.98 million), up 18.6% from the prior-year period. GRBMF had Mex$11.91 billion (590.71 million) in cash and equivalents as of June 30, 2021.
GRBMF has surpassed Street revenue estimates in each of the trailing four quarters. Analysts expect its revenue to be $16.69 billion for the current year, representing a 2.7% rise year-over-year. The stock has gained 25.5% in price year-to-date and closed Friday’s trading session at $2.73.
In terms of forward EV/Sales, GRBMF is currently trading at 1.08x, which is 45.6% lower than the 1.98x industry average. In terms of forward Price/Sales, GRBMF is currently trading at 0.75x, which is 47.3% lower than the 1.43x industry average of 1.43x.
GRBMF’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has an A grade for Stability, and a B grade for Value and Quality. Click here to see the additional ratings for GRBMF’s Growth, Momentum, and Sentiment. Of the 83 stocks in the Food Makers industry, GRBMF is ranked #2.
Yiren Digital Ltd. (YRD)
YRD is a China-based fintech company that operates a digital financial management platform to connect investors and individual borrowers for loan transactions. The company provides loan facilitation services, short-term cash management, mutual fund investment, insurance, securities, and stock products. It offers its products through www.yxpuhui.com, a wealth management website, and a mobile application.
For its fiscal second quarter, ended June 30, 2021, YRD’s total net revenue increased 49.1% year-over-year to $174.25 million. The company’s pre-tax income came in at $39.55 million for the quarter, versus a $39.60 million loss in the prior-year period. Its net income came in at $30.99 million, versus a $32.87 million net loss in the year-ago period. Its earnings per ADS were $0.37, compared to a $0.35 loss per ADS in the prior-year period. As of June 30, 2021, the company had $339.58 million in cash and cash equivalents.
Analysts expect YRD’s revenue to be $696.13 million for the current year, representing a 13.7% rise from the prior-year period. The stock has gained 6% year-to-date and closed Friday’s trading session at $3.54.
YRD’s 0.17x forward EV/Sales is 94.8% lower than the 3.27x industry average. In terms of forward Price/Sales, YRD is currently trading at 0.43x, 87.7% lower than the industry average of 3.47x.
It’s no surprise that YRD has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock has a B grade for Growth, Value, Momentum, and Quality. Click here to see the additional ratings for YRD (Stability and Sentiment).
YRD is ranked #1 of 13 stocks in the B-rated Foreign Consumer Finance industry.
Jiayin Group Inc. (JFIN)
JFIN is a China-based company that provides a fintech platform to facilitate connections between underserved individual borrowers and financial institutions' funding partners. The company offers loan facilitation services, post-origination services, and other businesses.
On April 5, 2021, JFIN’s Shanghai Jiayin Finance Technology Co., Ltd. subsidiary announced its decision to acquire a 95% equity interest in Shanghai Bweenet Network Technology Co., Ltd., a limited liability company that designs chips and hardware specialized in cryptocurrency mining, for RMB95 million. Shanghai Bweenet’s product portfolios will support JFIN to expand its business operations.
For its fiscal second quarter, ended June 30, 2021, JFIN’s net revenues increased 100.9% year-over-year to $76.23 million. The company’s income from operations came in at $23.17 million, up 211.5% from the prior-year period. While its net income increased 208.5% year-over-year to $19.65 million, its EPS increased 210.5% to $0.09. The company had $21.90 million in cash and cash equivalents and restricted cash as of June 30, 2021.
Analysts expect the stock’s EPS to improve 34.2% year-over-year in the current year to $0.98. It surpassed the consensus EPS estimates in each of the trailing four quarters. A $335.03 million consensus revenue estimate for the current year indicates a 64.2% year-over-year improvement. JFIN has gained 38.7% year-to-date and ended Friday’s trading session at $4.23.
In terms of forward EV/Sales, JFIN’s 0.64x is 80.3% lower than the 3.27x industry average. In terms of forward Price/Sales, JFIN is currently trading at 0.69x, which is 80.1% lower than the 3.47x industry average.
JFIN’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The stock has an A grade for Sentiment, and a B grade for Value, Momentum, and Quality. Click here to see the additional ratings for JFIN’s Growth and Stability.
JFIN is ranked #6 of 103 stocks in the Financial Services (Enterprise) industry.
ARC Document Solutions, Inc. (ARC)
ARC is a Walnut Creek, Calif.-based reprographics company that designs, builds, and operates printing and technology solutions for various industries. The company also resells printing, imaging, and related equipment primarily to architectural, engineering, and construction firms and provides ancillary services. It serves senior management teams, IT and procurement departments, project architects, engineers, general contractors, facilities managers, as well as retail, technology, educational, hospitality, and public utilities.
ARC’s net sales came in at $68.80 million for its fiscal second quarter, ended June 30, 2021, representing a 7% improvement year-over-year. The company’s gross profit was $22.79 million, up 11.5% from the prior-year period. Its income from operations came in at $4.19 million, indicating a 56.1% rise from the prior-year period. While its adjusted net income increased 116.4% year-over-year to $2.64 million, its adjusted EPS increased 50% to $0.06. As of June 30, 2021, ARC had $52.37 million in cash and cash equivalents.
The stock has rallied 82.4% in price year-to-date and ended Friday’s trading session at $2.70. ARC’s 0.73x trailing-12-month EV/Sales is 64.2% lower than the 2.04x industry average. In terms of trailing-12-month Price/Sales, ARC is currently trading at 0.43x, which is 74.7% lower than the 1.69x industry average.
ARC’s POWR Ratings reflect its solid prospects. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. ARC has an A grade for Value and Quality, and a B grade for Momentum. In addition to the POWR Ratings grades we’ve just highlighted, one can see ARC’s ratings for Sentiment, Stability, and Growth here.
Of the 47 stocks in the B-rated Outsourcing - Business Services industry, ARC is rated #2.
GRBMF shares were unchanged in after-hours trading Monday. Year-to-date, GRBMF has gained 23.39%, versus a 23.04% 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 Top Stocks Under $5 Rated 'Strong Buy' in the POWR Ratings appeared first on StockNews.com