The stock market witnessed rampant fluctuations in the first half of 2022, as is evident from the CBOE Volatility Index’s 67.7% year-to-date gains. Federal Reserve Bank of Cleveland President Loretta Mester is backing another 75 bps hike in July, which could further decelerate overall economic growth.
Given this backdrop, value investing is gaining traction among investors. According to Cliff Asness, managing and founding principal at AQR Capital Management, and Rob Arnott, founder, and chairman of Research Affiliates, “value stocks finally have room to run after years of lagging behind.”
Mr. Asness added, “I’ve never been more excited about value.” Moreover, the Russell 1000 Value index has outperformed the Russell 1000 Growth index year-to-date, and the momentum is estimated to persist.
Therefore, we think it might be the right time to scoop up fundamentally sound under $10 stocks Computer Task Group, Incorporated (CTG), Transportadora de Gas del Sur S.A. (TGS), and Ultralife Corporation (ULBI), which seems to be trading at a discount. They have a Strong Buy rating in our proprietary POWR Ratings system with an A grade for Value.
Computer Task Group, Incorporated (CTG)
CTG and its subsidiaries offer information and technology services in North America, South America, Western Europe, and India. It operates through three segments- North America IT Solutions and Services; Europe IT Solutions and Services; and Non-Strategic Technology Services.
On May 10, 2022, Filip Gydé, CTG’s President and CEO, said, “We are building on our strong momentum, as evidenced by the recent awarding of our largest digital solutions development contract in the Company’s history in North America. Despite the macroeconomic headwinds, we are successfully executing our strategy, and our team is energized and excited to develop the next generation of solutions for our customers.”
For the first quarter ended April 1, 2022, CTG’s North America IT solutions and services revenue came in at $20.43 million, up 10.7% year-over-year. Its non-GAAP net income came in at $2.44 million, up 21.6% year-over-year, while its non-GAAP EPS came in at $0.16, up 23.1% year-over-year. Also, its adjusted EBITDA came in at $4.33 million, up 16.3% year-over-year.
In terms of forward EV/S, CTG’s 0.31x is 88.5% lower than the industry average of 2.70x. Its forward P/S of 0.36x is also lower than the industry average of 2.71x.
CTG’s revenue is expected to increase 8.5% year-over-year to $391.26 million in 2023, while its EPS is estimated to increase 24.6% year-over-year to $0.86. It surpassed EPS estimates in each of the four trailing quarters. Over the past month, the stock has gained marginally to close the last trading session at $8.56.
It’s no surprise that CTG has an overall A rating, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. In addition, it has an A grade for Value and a B grade for Stability, Sentiment, and Quality.
CTG is ranked #4 out of 81 stocks in the Technology - Services industry. Click here to see the additional POWR Ratings for CTG (Growth and Momentum).
Transportadora de Gas del Sur S.A. (TGS)
Headquartered in Buenos Aires, Argentina, TGS engages in the transportation of natural gas, production, and commercialization of natural gas liquids in Argentina. The company has four segments: Natural Gas Transportation Services; Liquids Production and Commercialization; Other Services; and Telecommunications.
TGS’ revenues increased 10.6% year-over-year to Ps28.60 billion ($228.37 million) for the first quarter ended March 31, 2022. Its total comprehensive income came in at Ps8.20 billion ($65.47 million), up 35.2% year-over-year, while its EPS came in at Ps10.89, up 35.3% year-over-year.
The stock’s forward EV/EBITDA of 4.41x is 25% lower than the industry average of 5.89x. Its forward EV/EBIT of 6.74x is 27.9% lower than the industry average of 9.35x.
TGS surpassed EPS estimates in three of the four trailing quarters. The stock has gained 15.8% year-to-date to close the last trading session at $5.14.
TGS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system.
TGS has an A grade for Value, Momentum, and Quality and a B for Sentiment. Within the A-rated Foreign Oil & Gas industry, it is ranked #6 out of 42 stocks. Click here for the additional POWR Ratings for Growth and Stability for TGS.
Ultralife Corporation (ULBI)
ULBI and its subsidiaries design, manufacture, install and maintain power and communication and electronics systems worldwide. The company operates in two segments, Battery & Energy Products and Communications Systems.
On April 28, 2022, Michael D. Popielec, President and CEO, said, “Looking forward, as we balance the impact of current supply chain disruptions, we continue to advance new product development initiatives, receive early acceptance of our new product rollouts, and transition new products to production, thereby retaining the view that our long-term profitable growth drivers, strategy, and expectations remain sound and achievable.”
For the first quarter ended March 31, 2022, ULBI’s total revenues came in at $30.37 million, up 16.9% year-over-year. Its battery and energy products revenues came in at $29.15 million, up 31.8% year-over-year. In addition, its total assets came in at $161.39 million, compared to $159.54 million for the period ended December 31, 2021.
The stock’s forward EV/S of 0.73x is 51.4% lower than the industry average of 1.50x. Its forward P/S of 0.58x is 50.7% lower than the industry average of 1.18x.
ULBI’s revenue is expected to come in at $131.90 million in 2022, representing a 34.2% year-over-year rise. In addition, the company’s EPS is expected to increase 2,500% year-over-year to $0.24 in 2022. ULBI closed the last trading session at $4.55.
ULBI has an overall A rating, equating to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Value and a B grade for Momentum, Sentiment, and Quality.
ULBI is ranked #11 out of 93 stocks in the B-rated Industrial - Equipment industry. Click here to see the additional POWR Ratings for ULBI (Growth and Stability).
CTG shares were trading at $8.57 per share on Friday morning, up $0.01 (+0.12%). Year-to-date, CTG has declined -14.04%, versus a -20.10% 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.
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