Down More Than 20% Year to Date, Buy These 4 Stocks for an End of the Year Rebound
The market, which appeared impervious to negative news earlier this year, witnessed the largest monthly decline in September since March 2020. However, given the expectation of a strong third-quarter earnings...
The market, which appeared impervious to negative news earlier this year, witnessed the largest monthly decline in September since March 2020. However, given the expectation of a strong third-quarter earnings season and a potent catalyst with the infrastructure bill and reconciliation package, the market could see a solid rebound later this year. Therefore, we think fundamentally sound stocks Lufax Holdings (LU), Addus HomeCare (ADUS), Tupperware Brands (TUP), and Outbrain Inc. (OB), which have slumped more than 20% year-to-date, could witness a solid upside.
The S&P 500 has spent much of 2021 in an upswing, continuing its strong performance after recovering from the pandemic-led slump in the first quarter of 2020. However, September marked the index’s worst month since March 2020.
Since the upcoming third-quarter earnings season is expected to be strong and the proposed infrastructure spending is expected to boost the performance of several sectors, the market could bounce back from the September slump.
Given this backdrop, we believe fundamentally sound stocks Lufax Holdings Ltd. (LU), Addus HomeCare Corporation (ADUS), Tupperware Brands Corporation (TUP), and Outbrain Inc. (OB), which are down by more than 24% this year, could witness a steady rebound in the coming months. So, these stocks could be great bets now.
Lufax Holdings Ltd. (LU)
LU runs a technology-enabled personal financial services platform. It provides a variety of loan options, including unsecured and secured loans and consumer financing loans. In addition, the company offers wealth management platforms, such as Lufax (Lu.com), Lu International (Singapore), and Lu International (Hong Kong), to the middle class and affluent investors to invest in products and portfolios; retail credit facilitation services platform that offers small business owners with lending solutions; and technology empowerment solutions for financial institutions.
In June, LU’s subsidiary, Lu International, announced a strategic collaboration with Schroders Singapore, a wholly-owned subsidiary of Schroders, an asset management firm, to co-innovate digital wealth solutions in Southeast Asia, intending to meet the region's fast-growing demands of retail investors.
LU’s net income increased 53.2% year-over-year to RMB4.73 billion ($732 million) in the second quarter ended June 30, 2021. Its EPS came in at RMB1.86 ($0.29) over this period. In addition, the company’s cash and cash equivalents surged 63.1% from the prior year quarter to RMB24.72 billion ($3.83 billion).
The company’s EPS is expected to grow 11.6% year-over-year to $1.06 in fiscal 2021. Analysts expect LU’s revenue to increase 18.4% year-over-year to $9.45 billion in the current year. The stock has declined 51.6% year-to-date and 51.9% over the past nine months.
LU's POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its weighting.
LU has also rated an A grade for Sentiment, and a B for Momentum and Quality. Within the Foreign Consumer Finance industry, it is ranked #1 of 13 stocks.
To see additional POWR Ratings for Growth, Stability, and Value for LU, click here.
Addus HomeCare Corporation (ADUS)
ADUS offers personal care services to elderly, chronically ill, disabled persons, and individuals at risk of hospitalization or institutionalization in the United States. Personal Care; Hospice; and Home Health are the three operational segments of the company.
This month, ADUS completed the acquisition of Summit Home Health, LLC. With this acquisition, the company aims to expand clinical services in areas where it already has a strong personal care presence and offers up new value-based care opportunities.
During the second quarter ended June 30, 2021, ADUS’s net service revenue increased 18.1% year-over-year to $217.89 million. Its operating income grew 77.5% from the year-ago value to $17.05 million, while its net income surged 67.9% year-over-year to $11.60 million over this period. The company’s EPS increased 67.4% from the year-ago value to $0.72.
The consensus EPS estimate of $3.48 for the current year represents a 13% improvement year-over-year. Analysts expect ADUS's revenue to increase 15% year-over-year to $879.46 million in fiscal 2021. The stock has declined 19% over the past year and 34% year-to-date.
ADUS’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has a B grade for Growth and Sentiment. In the Medical Services industry, it is ranked #22 of 84 stocks.
In total, we rate ADUS on eight different levels. Beyond what we've stated above, we have also given ADUS grades for Value, Stability, Momentum, and Quality. Get all the ADUS ratings here.
Tupperware Brands Corporation (TUP)
TUP operates as a consumer products company internationally. The company manufactures, promotes, and sells design-centric preparation, storage, and serving solutions for the kitchen and home. The company distributes its products to approximately 80 countries through independent sales force members, including independent distributors, directors, managers, and dealers.
In June, TUP prepaid its Term Loan Debt of $58 million to Angelo Gordon and JP Morgan, and that its Board of Directors has approved share repurchases of up to $250 million of the company's outstanding shares of common stock. This exhibits the robust financial health of the company.
For the second quarter ended June 26, 2021, TUP’s net sales increased 16.9% year-over-year to $464.7 million. Its operating income grew 63.2% year-over-year to $75.9 million. The company’s net income came in at $35.6 million, while its EPS amounted to $0.67 over this period.
Analysts expect TUP’s EPS to grow 43.3% year-over-year to $3.21 next year. TUP’s revenue is expected to increase 7% in fiscal 2021. The stock has declined 33.9% so far this year and 19.2% over the past six months.
TUP's POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. TUP has also rated an A grade for Quality, and a B for Value. Within the B-rated Home Improvements & Goods industry, it is ranked #14 of 64 stocks.
Click here to see additional POWR Ratings for Growth, Stability, Sentiment, and Momentum for TUP.
Outbrain Inc. (OB)
OB provides an online content recommendation platform to people worldwide. It offers tailored feeds and data-driven suggestions to media partners, as well as a solution that increases user engagement and a web-based dashboard to manage and control different parts of its platform.
This month, OB renewed its collaboration with Immediate Media, the award-winning special interest content and platform company that reaches over 16 million engaged UK consumers per month. With this, Immediate Media will begin using OB's Smartfeed, a configurable content discovery feed that allows publishers to optimize the user experience to increase engagement and revenue.
Also, this month, OB entered a new partnership agreement with Pijper Media, a well-known media company in the Netherlands. This exemplifies the tremendous momentum OB is gaining in the Netherlands and across the region.
OB’s revenue increased 56.6% year-over-year to $247.15 million in the second quarter ended June 30, 2021. Its operating income grew significantly from the year-ago value to $17.16 million. The company reported a net income of $15.20 million, compared to a net loss of $2.62 million in the prior-year quarter. Its EPS amounted to $0.28, compared to a loss per share of $0.16 in the second quarter of 2020.
The consensus revenue estimate of $1.21 billion for the next year represents a 21.7% increase year-over-year. OB’s EPS is expected to increase 27.4% year-over-year to $0.73 in fiscal 2022. Also, the stock has declined 24.7% year-to-date.
It is no surprise that OB has an overall B rating, equating to Buy in our POWR Ratings system. The stock also has a B grade for Quality, Sentiment, and Momentum. In the Technology – Services industry, it is ranked #11 of 71 stocks.
In addition to the POWR Ratings grades I have just highlighted, you can see the OB ratings for Growth, Value, and Stability.
CX shares were trading at $6.91 per share on Tuesday morning, down $0.11 (-1.57%). Year-to-date, CX has gained 33.66%, versus a 17.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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