Various macroeconomic and geopolitical concerns have roiled the stock market so far this year. The Dow Jones Industrial Average has declined 11.9% year-to-date to close the last trading session at 31,990.04, while the S&P 500 and Nasdaq Composite have lost 16.7% and 24.7% year-to-date to close the last trading session at 3,966.84 and 11,782.67, respectively.
Investors and analysts have been worried about a recession as the Federal Reserve maintains its aggressive stance to tame the surging inflation. The Federal Reserve meets today to hike the benchmark interest rates for the fourth time this year, and Street expects the central bank to hike the interest rates again by 75 basis points.
With the increasing fears of a recession, investors should consider investing in stocks with strong fundamentals and solid growth prospects that are currently under the radar. To that end, we think quality stocks Accel Entertainment, Inc. (ACEL), Novo Nordisk A/S (NVO), and Titan Machinery Inc. (TITN) could be good fits for one’s portfolio now.
Accel Entertainment, Inc. (ACEL)
ACEL operates as a distributed gaming operator in the United States. It is involved in the installation, maintenance, and operation of gaming terminals; redemption devices that disburse winnings and contain automated teller machine (ATM) functionality; and other amusement devices in authorized non-casino locations, such as restaurants, bars, taverns, convenience stores, liquor stores, truck stops, and grocery stores.
On June 1, 2022, ACEL announced that it had completed the acquisition of Century Gaming, Inc. ACEL CEO Andy Rubenstein said, “Together, we look forward to continue seeking innovative opportunities to expand our hyper-local business model into new markets across the country.”
ACEL’s total revenues increased 33.8% year-over-year to $196.89 million for the first quarter ended March 31, 2022. The company’s adjusted EBITDA increased 36.5% year-over-year to $35.24 million. Also, its adjusted net income increased 59.2% year-over-year to $17.60 million.
Analysts expect ACEL’s EPS and revenue for the quarter ending September 30, 2022, to increase 50% and 34.4% year-over-year to $0.27 and $259.82 million, respectively. Over the past month, the stock has gained 2.5% to close the last trading session at $11.28.
ACEL’s POWR Ratings reflect solid prospects. According to our proprietary rating system, it has an overall rating of A, translating to a Strong Buy. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Growth, Value, Sentiment, and Quality. It is ranked first out of 29 stocks in the Entertainment – Casino/Gambling industry. Click here to see the other ratings of ACEL for Momentum and Stability.
Novo Nordisk A/S (NVO)
Denmark-based NVO is a global healthcare company engaged in diabetes care. It is the world’s biggest producer of diabetes drugs and operates in diabetes and obesity care and biopharmaceutical segments. Also, it is engaged in the discovery, development, manufacturing, and marketing of pharmaceutical products.
On May 10, 2022, NVO announced its collaboration with Flagship Pioneering to create a portfolio of novel research programs to develop transformational medicines. NVO’s Ph.D. professor, executive vice president, and chief scientific officer Marcus Schindler said, “We are excited about this new agreement which will give Novo Nordisk access to Flagships’ large and diverse portfolio of companies, representing a wide variety of novel, cutting-edge technologies, and therapeutic modalities.”
For the fiscal first quarter ended March 31, 2022, NVO’s sales increased 24.3% year-over-year to Kr.42.03 billion ($5.76 billion). The company’s net profit increased 12.5% year-over-year to Kr.14.21 billion ($1.95 billion). Also, its EPS came in at Kr.6.22, representing an increase of 14.1% year-over-year.
For the quarter ending December 31, 2022, NVO’s EPS is expected to increase 25.7% year-over-year to $0.91. Its revenue for the quarter ended June 30, 2022, is expected to increase 8.5% year-over-year to $5.71 billion. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 27.7% to close the last trading session at $115.93.
NVO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Quality and a B for Stability and Sentiment. It is ranked #2 out of 169 stocks in the Medical – Pharmaceuticals industry. Click here to see the other ratings of NVO for Growth, Value, and Momentum.
Titan Machinery Inc. (TITN)
TITN owns and operates a network of full-service agricultural and construction equipment stores in the United States and Europe. It operates through three segments: Agriculture, Construction, and International. The company sells new and used equipment, including agricultural and construction equipment manufactured under the CNH Industrial family of brands, as well as equipment from various other manufacturers.
On July 11, 2022, TITN announced that it had entered into a purchase agreement to acquire Heartland Ag Systems. TITN Chairman and CEO David Meyer said, “This transaction is significant for Titan Machinery both in size and strategic fit. Most importantly, this gives Titan Machinery access to the full product line of Case IH application equipment, including self-propelled sprayers and fertilizer applicators, along with incremental sales opportunities to package with tractors, tillage, and construction equipment to the commercial application customer.”
TITN’s revenue increased 23.7% year-over-year to $461 million for the first quarter ended April 30, 2022. The company’s adjusted net income increased 71.1% year-over-year to $17.83 million. Also, its adjusted EPS came in at $0.79, representing a 71.7% year-over-year increase.
Analysts expect TITN’s EPS for the quarter ending July 31, 2022, to increase 21.1% year-over-year to $0.69. Its revenue for fiscal 2023 is expected to increase 20.7% year-over-year to $2.07 billion. It surpassed consensus EPS estimates in each of the trailing four quarters. Over the past month, the stock has gained 9.4% to close the last trading session at $26.01.
TITN’s POWR Ratings reflect solid prospects. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Sentiment and a B for Growth, Value, and Momentum. It is ranked #6 out of 92 stocks in the B-rated Industrial Equipment industry. Click here to see TITN’s ratings for Stability and Quality.
ACEL shares were unchanged in premarket trading Tuesday. Year-to-date, ACEL has declined -13.36%, versus a -16.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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