Last week, markets worldwide closed on a pessimistic note on news reports of a new COVID-19 variant with multiple strains. According to reports, the variant, called B.1.1.529, was first detected in South Africa. The World Health Organization (WHO) has designated the variant, called omicron, as a variant of concern (VOC).
Following Black Friday’s big sell-off, the U.S. stock market indexes bounced back yesterday after President Joe Biden said that economic lockdowns in response to the COVID-19 omicron variant are currently off the table. However, stock futures today have plunged because Moderna, Inc. (MRNA) CEO said he expects existing vaccines to be less effective against the new variant.
Amid this market dip, we think it could be wise to take advantage of quality stocks that are trading at a discount to their peers. Takeda Pharmaceutical Company Limited (TAK), Dow Inc. (DOW), Albertsons Companies, Inc. (ACI), Lufax Holding Ltd (LU), and Univar Solutions Inc. (UNVR) are five stocks that are trading at a reasonable valuation and have immense growth potential. So, we think it could be wise to bet on these stocks now.
Takeda Pharmaceutical Company Limited (TAK)
Headquartered in Tokyo, Japan, TAK researches, develops, manufactures, and sells pharmaceutical products, general medical products, quasi-drugs, and healthcare products in Japan and overseas. The company’s research and development (R&D) functions are concentrated in four areas of oncology, digestive system diseases, rare diseases, and neurology.
On October 27, 2021, TAK announced that it had exercised its option to acquire GammaDelta Therapeutics Limited, which is involved in exploiting the unique properties of gamma delta T cells for immunotherapy. The acquisition expands TAK’s immune-oncology and innate immune cell therapy portfolio with novel platforms leveraging yδT cells to treat solid tumors and hematological malignancies.
For six months ended September 30, 2021, TAK's revenue increased 12.8% year-over-year to ¥1,794 billion ($15.79 billion). The company’s operating profit increased 60.5% year-over-year to ¥346 billion ($3.04 billion). And its EPS increased 111.1% year-over-year to ¥116.40.
In terms of forward EV/EBITDA, TAK’s 7.73x is 52.7% lower than the 16.35x industry average. Also, its forward EV/S and P/S of 2.49x and 1.42x, respectively, are lower than the 6.03x and 7.09x industry averages.
Analysts expect TAK’s EPS for fiscal 2023 to increase 51.8% year-over-year to $0.84. Its revenue for its fiscal year 2022 is expected to grow 439% year-over-year to $29.90 billion. The stock closed yesterday’s trading session at $13.49 after hitting its 52-week low of $13.38.
TAK’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to a 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 an A grade for Value and a B grade for Stability. It is ranked #25 out of the 476 stocks in the Biotech industry. Click here to check the additional ratings of TAK for Growth, Momentum, Sentiment, and Quality.
Click here to checkout our Healthcare Sector Report for 2021
Dow Inc. (DOW)
DOW is the holding company of The Dow Chemical Company and its subsidiaries. The Midland, Mich.-based company’s portfolio consists of plastics, coatings, and silicones. Its Industrial intermediates businesses deliver a range of science-based products and solutions for their customers in various market segments, including packaging, infrastructure, mobility, and consumer care.
On November 15, 2021, DOW introduced a solvent-free SYL- OFF SL 184 Coating, which is an energy-efficient alternative that minimizes misting at very high product label production line speeds. The new coating is solvent-free and very energy efficient. It should also enable release liner producers to move to more profitable high-speed product label operations without compromising performance, cost, or sustainability.
For the fiscal third quarter ended September 30, 2021, DOW’s net sales increased 53% year-over-year to $14.83 billion. The company’s operating EBITDA increased 143.1% year-over-year to $3.61 billion. And its EPS came in at $2.23 compared to a $0.04 loss per share in the year-ago period.
In terms of forward non-GAAP P/E, DOW's 6.31x is 57.7% lower than the 14.93x industry average. Likewise, the stock's forward EV/S and P/S of 1.03x and 0.77x, respectively, are lower than the 1.77x and 1.42x industry averages.
DOW’s EPS and revenue for its fiscal year 2021 are expected to increase 443.4% and 42.3%, respectively, year-over-year to $9.02 and $54.84 billion It has surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 2.6% in price over the past year to close yesterday’s trading session at $56.86.
DOW’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
It has an A grade for Value and a B grade for Quality. It is ranked #26 of 90 stocks in the A-rated Chemicals industry. To check the additional ratings of DOW (Growth, Momentum, Stability, and Sentiment), click here.
Albertsons Companies, Inc. (ACI)
Food and drug retailer ACI, which is headquartered in Boise, Idaho, offers groceries, general merchandise, health and beauty care products, pharmacy, fuel, and other items and services. It operates under 20 banners, including Tom Thumb, Carrs, Jewel-Osco, and Haggen.
On November 11, 2021, ACI announced the launch of Albertsons Media Collective, a retail media network that is designed to deliver digitally native, shopper-centric, and engaging branded content to the company’s network of shoppers. Kristi Argyilan, SVP Retail Media at ACI, said, “Albertsons Media Collective will further our goal of bringing brands and our customers together by delivering an unrivaled vendor and customer experience and truly reimagining marketing for what’s next.”
ACI’s net sales and other revenue for its fiscal second quarter, ended September 11, increased 4.7% year-over-year to $16.50 billion. The company’s gross profit increased 3.1% year-over-year to $4.71 billion. And its adjusted EBITDA increased 1.8% year-over-year to $965.40 million.
In terms of forward non-GAAP P/E, ACI's 13.67x is 28.8% lower than the 19.21x industry average. The stock's forward EV/S and P/S of 0.43x and 0.24x, respectively, are lower than the 1.96x and 1.43x industry averages.
Analysts expect ACI’s revenue for its fiscal year 2023 to increase 1.5% year-over-year to $70.87 billion. It has surpassed consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 123.4% in price to close yesterday’s trading session at $35.43.
ACI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. It has an A grade for Growth and a B grade for Value, Sentiment, and Quality.
Lufax Holding Ltd. (LU)
Headquartered in Shanghai, China, LU is a technology-empowered personal financial services platform. It offers loan products, including unsecured loans and secured loans, and consumer finance loans. The company also provides wealth management platforms, such as Lufax, Lu International, and Lu International.
On June 28, 2021, Lu International, a subsidiary of LU, announced that it had established a strategic partnership with Schroders Singapore to address the fast-growing needs of retail investors in the region. This collaboration aims to revolutionize the digital investment landscape in the area, drawing on the robust capabilities of both powerhouses.
For the third quarter, ended September 30, 2021, LU’s total income increased 21.8% year-over-year to RMB15.92 billion ($2.49 billion). Its net profit increased 90.8% year-over-year to RMB4.12 billion ($643.53 million). Also, its net interest income increased 57.2% year-over-year to RMB3.80 billion ($594.59 million).
In terms of forward non-GAAP PEG, LU’s 0.55x is 40.4% lower than the 0.93x industry average. In addition, the stock’s 1.18x and 1.62x respective forward EV/S and P/S are 61.6% and 51.6% lower than the .08x and 3.36x industry averages.
LU’s EPS for its fiscal year 2022 is expected to increase 14.2% year-over-year to $1.21. For the quarter ending March 31, 2022, the company’s revenues are expected to be $2.73 billion, representing a 22.1% year-over-year rise. It has surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock closed yesterday’s trading session at $6.34.
It is no surprise that LU has an overall B rating, which translates to a Buy in our proprietary rating system. It has a B grade for Value, Momentum, Sentiment, and Quality. Click here to see the additional ratings for LU (Growth and Stability). LU is ranked #2 of 13 stocks in the Foreign Consumer Finance industry.
Univar Solutions Inc. (UNVR)
UNVR is a global chemical and ingredient distributor that provides value-added services to customers across various industries. The Downers Grove, Ill.-based company’s segments include Univar Solutions USA; Univar Solutions Europe, the Middle East, and Africa; Univar Solutions Canada; and Univar Solutions Latin America.
On November 4, 2021, UNVR announced a distribution agreement with Calumet for its petroleum and white oils used in the beauty and personal care, industrial solutions, food processing, and pharmaceutical industries across Europe. The deal is expected to help UNVR introduce its product portfolio to new markets and gain new customers.
UNVR’s net income for the fiscal third quarter, ended September 30, 2021, increased 192% year-over-year to $84.40 million. The company’s adjusted net income increased 104% year-over-year to $106.30 million, while its adjusted EPS increased 106.6% year-over-year to $0.62. Also, its adjusted EBITDA increased 28.1% year-over-year to $210.90 million.
In terms of forward non-GAAP P/E, UNVR's 13.24x is 37.2% lower than the 21.09x industry average. Likewise, the stock's 0.72x and 0.49x respective forward EV/S and P/S are lower than the 2.01x and 1.63x industry averages.
Analysts expect UNVR’s EPS and revenue for the quarter ending December 31, 2021, to increase 70.4% and 16%, respectively, year-over-year to $0.46 and $2.36 billion. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 47.9% in price to close yesterday’s trading session at $27.05.
UNVR’s 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 an A grade for Growth and Sentiment and a B grade for Value and Momentum.
It is ranked #11 in the Chemicals industry. To check the other ratings of UNVR (Stability and Quality), click here.
TAK shares were trading at $13.28 per share on Tuesday afternoon, down $0.21 (-1.56%). Year-to-date, TAK has declined -27.03%, versus a 23.59% 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.Take Advantage of the Market’s Dip and Buy These 5 Cheap Value Stocks appeared first on StockNews.com