The Federal Reserve’s aggressive monetary tightening to fight multi-decade-high inflation and continuing geopolitical tensions have fostered a massive stock market sell-off this year. The potential for the economy to slip into a recession in the near term has added to investors’ concerns. Consequently, many quality stocks have entered oversold territory.
The U.S. Consumer Price Index (CPI) data report scheduled to be released this Friday will determine the Fed’s future actions to bring prices down. After a slight decline in April, many analysts expect the May inflation data to remain flat. Economists are predicting core inflation of 5.9% for May.
Given the expectation of some improvement, we think investors should consider buying the dips in the prices of Agilent Technologies, Inc. (A), Hillenbrand, Inc. (HI), and TriNet Group, Inc. (TNET). These names hold the potential to rebound soon. Also, our proprietary POWR Ratings system has rated these stocks ‘Strong Buy.’
Agilent Technologies, Inc. (A)
Santa Clara, Calif.-based A provides core bio-analytical and electronic measurement solutions to the life diagnostics and applied chemical markets. The company offers electronic and bio-analytical measurement, semiconductor, and board testing. It markets its products through direct sales, distributors, resellers, manufacturer’s representatives, and electronic commerce.
On June 6, 2022, A announced the release of its MassHunter BioConfirm 12.0 software, which now supports data generated by A’s Agilent high-resolution LC/MS for oligonucleotide purity analysis and sequence confirmation. As the demand for oligonucleotide analysis capabilities increases, this integrated BioConfirm 12.0 workflow quickly generates accurate results and saves considerable time and resources compared to the traditional approach. The software should witness high demand across the industry to contribute to biotherapeutics and vaccine research and development.
A’s fiscal 2022 second-quarter net revenues increased 5.4% year-over-year to $1.61 billion. The company’s income from operations came in at $360 million, indicating a 25% year-over-year improvement. While its non-GAAP net income increased 13.7% year-over-year to $340 million, its non-GAAP EPS grew 16.5% to $1.13. As of April 30, 2022, the company had $1.19 billion in cash and cash equivalents.
Analysts expect A’s EPS to grow 19.6% year-over-year to $4.58 for its fiscal year 2022 ending, Oct. 31, 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $5.26 consensus revenue estimate for the same fiscal year represents a 12.3% rise from the prior-year period. The company’s EPS is expected to grow at a 14% rate per annum over the next five years.
Over the past three months, the stock has declined 4.7% to close yesterday’s trading session at $127.63, down 28.9% from its 52-week high of $179.57.
A’s POWR Ratings reflect its solid prospects. 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.
It has a B grade for Growth, Sentiment, and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for A’s Momentum, Stability, and Value here.
A is ranked #3 of 52 stocks in the Medical - Diagnostics/Research industry.
Click here to checkout our Healthcare Sector Report for 2022
Hillenbrand, Inc. (HI)
HI in Batesville, Ind., is a diversified industrial company that manufactures and sells premium business-to-business products and services worldwide. The company operates through Advanced Process Solutions; Molding Technology Solutions; and Batesville. It designs equipment and systems used in processing applications and offers compounding and extruding equipment, bulk materials handling systems, and related engineering services.
For its fiscal year 2022 second quarter, ended March 31, 2022, HI’s net revenue increased 2.7% year-over-year to $742 million. The company’s adjusted EPS came in at $1.01, representing a 3.1% rise from the prior-year period. The company had $444.80 million in cash and cash equivalents as of March 31, 2022.
The $3.89 consensus EPS estimate for its fiscal year 2022, ending Sept. 30, 2022, indicates a 2.7% rise from the prior-year period. It surpassed the consensus EPS estimates in each of the trailing four quarters. Analysts expect the company’s revenue to improve 2.2% year-over-year to $2.93 billion for the same fiscal year. HI’s EPS is expected to grow at a 12% rate per annum over the next five years.
Over the past three months, the stock has declined 6% in price to close yesterday’s trading session at $44.28, down 18.2% from its 52-week high of $54.15.
HI’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
It has a B grade for Value, Growth, and Quality. Click here to see the additional ratings for HI’s Stability, Momentum, and Sentiment.
HI is ranked #3 of 36 stocks in the B-rated Industrial - Manufacturing industry.
Click here to check out our Industrial Sector Report for 2022
TriNet Group, Inc. (TNET)
TNET provides human resources (HR) solutions, payroll services, employee benefits, and employment risk mitigation services for small and midsize businesses in the United States. Offering its solutions through its direct sales organization, the San Leandro, Calif.-based company serves clients in technology, professional services, financial services, not-for-profit, property management, retail, manufacturing, hospitality, and life sciences industries.
On May 3, 2022, TNET launched a major redesign to its customer-facing technology platform that will meet the demands of today’s evolving workforce and deliver a more visual, intuitive, and optimized experience across devices. Features including workforce analytics dashboards, document management, mobile onboarding, and a knowledge center should help customers make more informed decisions while streamlining workflows. The redesign should witness great demand from small- and medium-sized businesses (SMBs) in the coming months.
TNET’s operating revenue for its fiscal 2022 first quarter, ended March 31, 2022, increased 14.9% year-over-year to $1.22 billion. The company’s operating income came in at $204 million, representing a 47.8% year-over-year improvement. Its adjusted net income was $168 million for the quarter, indicating a 51.4% rise from the prior-year period. And TNET’s adjusted EPS increased 53.6% year-over-year to $2.55. The company had $235 million in cash and cash equivalents as of March 31, 2022.
TNET surpassed the Street EPS estimates in each of the trailing four quarters, which is impressive. The $1.24 billion consensus revenue estimate for its fiscal year 2022, ending Dec. 31, 2022, represents a 3% rise from the prior-year period. The company’s EPS is expected to grow at a 7.3% rate per annum over the next five years.
Over the past three months, the stock has declined 9.7% to close yesterday’s session at $79.27, down 27.5% from its 52-week high of $109.40.
TNET’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, which equates to Strong Buy in our proprietary rating system.
The stock has a B grade for Value and Quality. Click here to see the additional ratings for TNET (Momentum, Growth, Stability, and Sentiment).
The stock is ranked #4 of 44 stocks in the B-rated Outsourcing - Business Services industry.
A shares were trading at $127.35 per share on Tuesday afternoon, down $0.28 (-0.22%). Year-to-date, A has declined -20.00%, versus a -13.15% 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.
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