Macroeconomic and geopolitical concerns have kept the stock market under pressure since the beginning of the year. Earlier this week, the Fed announced its fourth benchmark interest rate hike to control the sky-high inflation. Since more interest rate hikes are expected this year, a recession appears unavoidable.
The U.S. economy contracted for the second consecutive quarter, with the gross domestic product declining at an annualized rate of 0.9%. This makes many analysts believe that a recession has already arrived.
Although growth stocks have been hammered during the market sell-off, many are no-brainer buys at the current price levels. Investors’ interest in growth stocks is evident from the iShares Russell Growth ETF’s (IWF) 8.8% gains over the past month.
Regardless of the market conditions, investors could consider investing in Albertsons Companies, Inc. (ACI), Celestica Inc. (CLS), and Core Molding Technologies, Inc. (CMT) without hesitation due to their strong fundamentals and solid growth prospects.
Albertsons Companies, Inc. (ACI)
ACI is a food and drug retailer in the U.S. The company offers groceries, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services. It operates under twenty banners, including Tom Thumb, Carrs, Jewel-Osco, Haggen, Market Street, Kings Food Markets, Vons, Albertsons, Randalls, Acme, Safeway, and Balducci’s Food Lover's Market.
ACI’s net sales and other revenue increased 9.6% year-over-year to $23.31 billion for the first quarter ended June 18, 2022. The company’s adjusted net income increased 12.4% year-over-year to $582 million. Also, its adjusted EPS came in at $1, representing an increase of 12.3% year-over-year. In addition, its adjusted EBITDA increased 8.5% year-over-year to $1.42 billion.
ACI’s revenue has grown at a CAGR of 6.8% over the past three years. The company’s EBITDA grew at a CAGR of 17.4% over the past three years.
Analysts expect ACI’s EPS for fiscal 2024 to increase 1% year-over-year to $2.92. Its revenue for fiscal 2023 is expected to increase 5.7% year-over-year to $75.99 billion. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 29.5% to close the last trading session at $26.85.
ACI’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 an A grade for Value and a B for Growth and Quality. It is ranked #3 out of 38 stocks in the A-rated Grocery/Big Box Retailers industry. Click here to see the other ratings of ACI for Momentum, Stability, and Sentiment.
Celestica Inc. (CLS)
Headquartered in Toronto, Canada, CLS is a hardware platform and supply chain solutions provider in North America, Europe, and Asia. It operates through two segments Advanced Technology Solutions; and Connectivity & Cloud Solutions.
On January 18, 2022, CLS announced that its AbelConn Electronics facility had earned ISO 13485:2016 certification for medical device production. Celestica HealthTech VP Kevin Walsh said, “Earning ISO 13485 certification enables us to provide healthcare customers, especially in the United States and throughout North America, with quick-turn manufacturing and delivery capabilities, improving their resilience to supply chain disruptions with an in-region solution.”
For the fiscal second quarter ended June 30, 2022, CLS’ revenue increased 20.9% year-over-year to $1.71 billion. The company’s net earnings increased 35.3% year-over-year to $35.60 million. Also, its EPS came in at $0.29, representing an increase of 38% year-over-year.
CLS’ EBIT has grown at a CAGR of 17.7% over the past three years. The company’s EBITDA grew at a CAGR of 9.4% over the past three years.
For the quarter ending September 30, 2022, CLS’ EPS and revenue are expected to increase 27.4% and 17.9% year-over-year to $0.45 and $1.73 billion, respectively. Over the past year, the stock has gained 17.2% to close the last trading session at $10.50.
CLS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Value, and Sentiment. Within the Technology – Services industry, it is ranked #2 out of 81 stocks. Click here to see the other CLS ratings for Momentum, Stability, and Quality.
Core Molding Technologies, Inc. (CMT)
CMT is an engineered materials company specializing in molded structural products, principally in building products, utilities, transportation, and power-sports industries across North America and Mexico.
CMT’s net sales increased 24.4% year-over-year to $90.59 million for the first quarter ended March 31, 2022. The company’s operating income grew 12.4% year-over-year to $6.01 million. Its adjusted EBITDA stood at $9.51 million, up 10.7% year-over-year. Also, its net income increased 11.8% year-over-year to $3.86 million, while its EPS came in at $0.46, indicating an increase of 12.2% from the prior-year period.
CMT’s revenue has grown at a CAGR of 14.3% over the past five years. The company’s EBITDA grew at a CAGR of 79.9% over the past three years.
Analysts expect CMT’s revenue for fiscal 2023 is expected to increase 4.8% year-over-year to $352.30 million. Over the past six months, the stock has gained 26.6% to close the last trading session at $10.26.
CMT’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has an A grade for Growth and Value and a B for Sentiment and Quality. It is ranked first among 42 stocks in the A-rated Industrial – Manufacturing industry. Click here to see the other ratings of CMT for Momentum and Stability.
ACI shares were trading at $26.88 per share on Friday morning, up $0.03 (+0.11%). Year-to-date, ACI has declined -9.84%, versus a -13.00% 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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