This year the stock market witnessed the worst first-half performance in more than 50 years. Amid rising recession fears, Jim Reid, head of global fundamental credit strategy at Deutsche Bank, believes that the second half doesn’t look optimistic either.
Rob Subbaraman, the chief economist at Nomura, states that most of the world’s leading economies will fall into a recession within the next 12 months. The slump in the U.S. economy is expected to be mild but could stretch for a prolonged period.
The recession fears have led to heightened volatility in the market, as is evident from the CBOE Volatility Index’s 62.8% year-to-date gains. Investors are considering more defensive strategies. Anthony Watson, founder and president of Thrive Retirement Specialists, recently said, “Value stocks tend to outperform growth stocks going into a recession.”
Given this backdrop, top-rated value stocks ARC Document Solutions, Inc. (ARC), Assertio Holdings, Inc. (ASRT), and Catalyst Pharmaceuticals, Inc. (CPRX) could be perfect picks amid the market fluctuations. These stocks are rated Strong Buy in our proprietary POWR Ratings system and have an A grade for Value and Quality.
ARC Document Solutions, Inc. (ARC)
Digital printing company, ARC, provides digital printing and document-related services in the United States. The company operates 146 service centers in the United States, Canada, China, the United Kingdom, India, United Arab Emirates.
On May 4, 2022, Suri Suriyakumar, ARC’s Chairman, President, and CEO, said, “For the past year, our strategy to diversify our addressable markets has been performing to plan, and we are confident that our growth will continue.”
ARC’s net sales increased 12.6% year-over-year to $69.49 million for the first quarter ended March 31, 2022. Its adjusted net income came in at $2 million, up 122.2% year-over-year, while its adjusted EPS came in at $0.05, up 150% year-over-year. Also, its EBITDA came in at $8.60 million, up 2.4% year-over-year.
ARC’s trailing-twelve-months EV/S of 0.64x is 62.4% lower than the industry average of 1.69x. Its trailing-twelve-months P/S of 0.40x is 68.8% lower than the industry average of 1.27x.
Analysts expect ARC’s revenue to grow 5.4% year-over-year to $286.90 million in 2022. Its EPS is expected to grow 18.2% year-over-year to $0.26 in 2022. Over the past year, the stock has gained 22.3% to close the last trading session at $2.63.
ARC’s 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. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
ARC has an A grade for Value and Quality and a B grade for Growth and Sentiment. Within the B-rated Outsourcing - Business Services industry, it is ranked #2 out of 44 stocks. Click here to see the additional POWR Ratings for Momentum and Stability for ARC.
Assertio Holdings, Inc. (ASRT)
A specialty pharmaceutical company, ASRT, provides medicines in neurology, hospital, and pain and inflammation. Its pharmaceutical products include INDOCIN, CAMBIA, SPRIX, and Otrexup.
On March 31, 2022, ASRT and BlinkRx, the leading patient access solution, announced a collaboration to support healthcare professionals. The partnership aims to simplify medical conveniences and extend its consumer base.
For the first quarter ended March 31, 2022, ASRT’s total revenues increased 36.1% year-over-year to $36.54 million. Its net and comprehensive income came in at $9.06 million, up 99.5% year-over-year, while its EPS came in at $0.20, up 66.7% year-over-year. Moreover, its adjusted EBITDA came in at $23.86 million, up 51.9% year-over-year.
In terms of forward EV/S, ASRT’s 1.19x is 67.5% lower than the industry average of 3.67x. Its forward P/S of 1.09x is 75.7% lower than the industry average of 4.47x.
ASRT’s revenue is expected to come in at $131.73 million in 2022, representing an 18.7% year-over-year rise. The company’s EPS is expected to increase by 1,433.3% year-over-year to $0.40 in 2022. Over the past year, the stock has gained 105.9% to close the last trading session at $3.15.
ASRT has an overall A grade equating to a Strong Buy in our POWR Ratings system. It has an A grade for Growth, Value, Sentiment, and Quality. It is ranked #8 out of 171 stocks in the Medical - Pharmaceuticals industry. Click here to get additional ASRT ratings (Momentum and Stability).
Catalyst Pharmaceuticals, Inc. (CPRX)
Commercial-stage biopharmaceutical company, CPRX, focuses on developing and commercializing therapies for people with rare debilitating, chronic neuromuscular, and neurological diseases in the United States.
On May 10, 2022, Patrick J. McEnany, CPRX’s Chairman and CEO, said, “We delivered record revenues, driven in part by new patients converting to FIRDAPSE® following the removal of Ruzurgi® from the U.S. market in February 2022. Our accomplishments exemplify our exceptional commercial and patient services capabilities and steadfast commitment to the LEMS patient community that we serve.”
CPRX’s total revenues for the first quarter ended March 31, 2022, came in at $43.09 million, up 42.7% year-over-year. Its non-GAAP net income came in at $19.40 million, up 67.9% year-over-year, while its non-GAAP EPS came in at $0.18, up 63.6% year-over-year.
CPRX’s forward EV/S of 2.65x is 28.2% lower than the industry average of 3.69x. Its forward P/S of 3.61x is 19.2% lower than the industry average of 4.47x.
Analysts expect CPRX’s revenue to increase 42.6% year-over-year to $200.85 million in 2022. Its EPS is expected to increase 81.1% year-over-year to $0.67 in 2022. Over the past year, the stock has gained 21.9% to close the last trading session at $7.06.
It’s no surprise that CPRX 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 Quality and a B for Growth.
CPRX is ranked #12 out of 171 stocks in the Medical - Pharmaceuticals industry. Click here for the additional POWR Ratings for CPRX (Momentum, Stability, and Sentiment).
ARC shares were trading at $2.58 per share on Tuesday afternoon, down $0.05 (-1.90%). Year-to-date, ARC has declined -24.13%, versus a -19.22% 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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