The stock market has been under pressure lately due to investors’ concerns over the looming economic slowdown due to the Federal Reserve’s aggressive monetary policy tightening to combat the multi-decade high inflation. In addition, U.S. consumer spending rose less than expected in May, stoking fears of a recession.
Moreover, the 2-year yield has recently risen above the 10-year yield, indicating that the economy might have entered a recession. However, this broader market sell-off provides a golden buying opportunity for investors because many quality stocks are now trading at attractive valuations.
So, it could be wise to invest in shares of industry leaders Builders FirstSource, Inc. (BLDR) and HCA Healthcare, Inc. (HCA), which have declined significantly year-to-date. These stocks possess solid rebound potential.
Builders FirstSource, Inc. (BLDR)
BLDR manufactures and supplies building materials, manufactured components, and construction services to professional homebuilders, sub-contractors, remodelers, and consumers in the United States. In addition, it provides other building products and services, such as cabinets and hardware, turn-key framing, shell construction, design assistance, and professional installation services.
On May 10, 2022, Dave Flitman, President and CEO of BLDR, said, “For 2022, we have increased our expectations for growth and significant free cash flow generation. We remain committed to deploying capital to high return internal investments, accretive bolt-on M&A and share repurchases.”
BLDR’s net sales surged 36.1% year-over-year to $5.70 billion in the fiscal first quarter ended March 31, 2022. The company’s adjusted EBITDA grew 119.8% year-over-year to $1 billion, while its adjusted net income came in at $700.80 million, representing a 136.5% year-over-year rise. Also, its adjusted EPS came in at $3.90, up 174.6% year-over-year.
For fiscal 2022, analysts expect BLDR’s EPS and revenue to increase 17.9% and 22.2% year-over-year to $3.37 and $5.87 billion, respectively. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. The stock has lost 31.5% year-to-date to close the last trading session at $58.69.
BLDR’s POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting
The stock has a B grade for Momentum, Quality, Value, and Growth. Within the Home Improvement & Goods industry, BLDR is ranked #5 out of 63 stocks. Click here to see the additional POWR Ratings for BLDR (Stability and Sentiment).
HCA Healthcare, Inc. (HCA)
HCA provides health care services company in the United States. The company operates general and acute care hospitals offering medical and surgical, and outpatient services. It operates 182 hospitals, 125 freestanding surgery centers, and 21 freestanding endoscopy centers in 20 states and England.
On June 23, 2022, HCA announced an agreement to form a joint venture combining McKesson’s US Oncology Research and HCA Healthcare’s Sarah Cannon Research Institute. Sam Hazen, CEO of HCA, said, "We believe this joint venture with McKesson, which unifies our oncology research experts, will promote the development of individualized therapies and provide more opportunities for cancer patients to receive new treatments."
HCA’s revenues surged 6.9% year-over-year to $14.95 billion in the fiscal first quarter ended March 31, 2022. Its total assets came in at $52.21 billion for the period ended March 31, 2022, compared to $50.74 billion for the period ended December 31, 2021. Also, its EPS came in flat at $4.14.
Analysts expect HCA’s EPS and revenue to increase 11.3% and 5.3% year-over-year to $19.16 and $63.92 billion, respectively, in fiscal 2023. The stock has lost 32.8% year-to-date to close the last trading session at $172.58.
It’s no surprise that HCA has an overall B rating, equating to Buy in our POWR Ratings system. The stock has a B grade for Value and Quality.
Click here to see HCA’s ratings for Growth, Sentiment, Momentum, and Stability. HCA is ranked #2 out of 13 in the Medical - Hospitals industry.
BLDR shares were trading at $59.24 per share on Wednesday afternoon, up $0.55 (+0.94%). Year-to-date, BLDR has declined -30.88%, versus a -18.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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