Many investors expect the stock market to experience a sell-off in the near term due to rising concerns surrounding the spread of the highly contagious COVID-19 Delta variant. Also, because the consumer price index rose 5.4% year-over-year in June, representing its biggest jump since 2008, investors are concerned about inflation’s potential impact on the stock market.
Although Fed Chairman Jerome Powell said the Fed is nowhere near considering a rate hike, investor jitters around the aforementioned factors could lead to several overpriced stocks suffering corrections in the near term.
In these uncertain times, fundamentally sound low-priced stocks could be safer bets. H & M Hennes & Mauritz AB (HNNMY), CEMEX S.A.B de C.V (CX), and Mazda Motor Corporation (MZDAY) are currently trading below $10 and exhibit strong fundamentals. So, we think it could be wise to bet on these under-the-radar stocks now.
H & M Hennes & Mauritz AB (HNNMY)
Based in Sweden, HNNMY designs, manufactures, and markets clothing items and related accessories. It offers a wide range of products that include sportswear, shoes, bags, beauty products, stationery, ready-to-wear, and interior products. The company provides its products under the H&M, H&M HOME, COS, & Other Stories, Monki, Weekday, ARKET, Afound, and Sellpy brands.
Last month, HNNMY was awarded the industry’s most prestigious prize–Design Grand Prix–at Cannes Lions. This recognition should help the company establish an enhanced brand image in the industry and drive business growth.
During the first quarter, ended March 31, 2021, HNNMY's net sales increased 62.3% year-over-year to Kr.46.51 billion ($5.39 billion). The company’s operating profit came in at Kr.3.85 billion ($446.57 million), versus a Kr.6.19 billion ($717.38 million) operating loss in the prior-year period. Its net income came in at Kr.2.77 billion ($320.78 million) for this quarter, compared to a Kr.4.99 billion ($578.61 million) net loss in the first quarter of 2020.
Analysts expect HNNMY's revenue to increase 9.3% year-over-year to $23.74 billion in the current year. The stock has gained 40.8% over the past year to close yesterday’s trading session at $4.28.
HNNMY's POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
HNNMY has also rated an A for Momentum and Quality, and a B for Growth. In addition, , within the A-rated Fashion & Luxury industry, it is ranked #9 of 66 stocks.
To see additional POWR Ratings for Sentiment, Stability, and Value for HNNMY, click here.
CEMEX, S.A.B de C.V (CX)
CEMEX is a Mexico-based company that manufactures, markets, and sells cement, ready-mix concrete, aggregates, clinker, and other building products worldwide. It also offers building solutions for housing, pavement, green building advisory services, cement trade maritime services, and information technology solutions.
In May, CX announced that it provided more than 65,000 cubic meters of ready-mix concrete to support the construction of the Circa Resort & Casino, the tallest skyscraper in Downtown Las Vegas. It is also the first new resort facility to open in the city in more than 40 years.
During the first quarter, ended March 31, 2021, CX’s net sales increased 10.9% year-over-year to $3.41 billion. The company’s operating income increased 349.5% year-over-year to $975.87 million. Its net income increased significantly year-over-year to $664.53 million. And its gross profit surged 15% year-over-year to $1.11 million over this period.
CX is expected to witness 10.9% revenue growth for the current year. In addition, its EPS is estimated to increase 186.7% year-over-year to $0.78 in 2021. Over the past year, CX's stock has gained 171.8% to close yesterday’s trading session at $8.40.
CX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has a B grade for Growth, Value, and Sentiment. In the A-rated Industrial- Building Materials industry, it is ranked #1 of 55 stocks.
In total, we rate CX on eight different levels. Beyond what we've stated above, we have also given CX grades for Stability, Momentum, and Quality. Get all the CX ratings here.
Click here to check out our Infrastructure Sector Report for 2021
Mazda Motor Corporation (MZDAY)
Headquartered in Hiroshima, Japan, MZDAY is a manufacturer and distributor of passenger cars and commercial vehicles internationally. In addition, the company distributes old autos and special purpose vehicles, the transportation of automobiles and components, the production and distribution of machine tools, and the inspection and bodywork of automobiles.
This month, MZDAY launched its first solar power generation system to promote green manufacturing lines and factory offices. The solar panels will generate sufficient electricity to run the facility and charge the batteries of all MX-30 EV vehicles produced there. The company aims to introduce and use green electricity in its efforts to reach carbon neutrality in 2050.
For its fiscal year ended March 31, 2021, MZDAY’s cash and cash equivalent increased ¥170.8 billion ($26.37 billion) from the end of the previous fiscal year to ¥738.8 billion ($114.08 billion). Its gross profit came in at ¥613.64 billion ($94.75 billion), while its operating income amounted to ¥8.82 billion ($1.36 billion). Furthermore, the company’s comprehensive income came in at ¥20.46 billion ($3.15 billion) versus a comprehensive loss of ¥5.07 billion ($782.92 million) in the prior year.
Analysts expect MZDAY's revenue to increase 59.6% year-over-year to $31.17 billion in the fiscal period ending March 2022. Also, the stock has surged 46.5% over the past year to close yesterday’s trading session at $4.66.
It is no surprise that MZDAY has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Value, and a B for Growth, Stability, and Quality. Within the Auto – Vehicle Manufacturers industry, it is ranked #3 of 57 stocks.
In addition to the POWR Ratings grades we have just highlighted, one can see the MZDAY ratings for Sentiment and Momentum.
Click here to check out our Automotive Industry Report for 2021
HNNMY shares were trading at $4.32 per share on Thursday afternoon, up $0.04 (+0.93%). Year-to-date, HNNMY has gained 5.62%, versus a 18.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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