Amid recent banking collapses and the Fed’s hawkish stance to tame inflation, the market volatilities could remain embedded for a while. Against this backdrop, let us see some inexpensive stocks, Nokia Oyj (NOK), Rimini Street, Inc. (RMNI), Rave Restaurant Group, Inc. (RAVE), and Data Storage Corporation (DTST), which could be wise picks this week, for the reasons mentioned in the article.
Recently, the Federal Reserve has raised the interest rate by 25 basis points, which brought the benchmark funds rate to a range of 4.75% to 5%. The ninth consecutive rate hike and the banking crisis have further tightened the financial conditions.
The Fed projects only one more rate hike this year. However, Fed Chair Jerome Powell also followed with a hawkish statement, “If we need to raise rates higher, we will.” This raised some concerns among analysts.
Win Thin, global head of currency strategy at BBH, expects that once the economy gets past the banking sector stresses, the “tightening cycle likely remains intact.”
Moreover, given the current market dynamics, New York University professor and top economist Nouriel Roubini believes a “severe recession” is likely in the next year and warns about the “mother of all debt crises.”
The stock market is currently significantly volatile. However, this could be an opportune time for investors to scoop up inexpensive stocks that have the potential to grow over time. Although penny stocks are associated with volatility, fundamentally sound penny stocks NOK, RMNI, RAVE, and DTST might be solid buys this week.
Nokia Oyj (NOK)
Headquartered in Espoo, Finland, NOK provides mobile, fixed, and cloud network solutions worldwide. The company operates through four segments Mobile Networks; Network Infrastructure; Cloud and Network Services; and Nokia Technologies.
On March 7, NOK announced that its Converged Charging software solution had been selected by Hrvatski Telekom to help the Croatian operator modernize on-line charging and better harness network monetization opportunities that can unlock new revenue streams.
The deal expands NOK’s partnership with Hrvatski Telekom, which already uses a variety of other NOK products, including its Voice Core and other software applications.
On February 27, NOK announced a contract with MTN South Africa to offer 5G Radio Access Network (RAN) equipment. This is expected to enhance NOK’s market position in South Africa and assist MTN in providing greater 5G experiences to its users.
On January 26, the board resolved to distribute a dividend of €0.02 per share. The dividend was paid to the shareholders on 9 February 2023. This reflects its cash generation abilities.
NOK’s forward EV/Sales of 0.84x is 68.2% lower than the industry average of 2.64x. Its forward EV/EBITDA multiple of 5.34 is 59.9% lower than the industry average of 13.31. Likewise, its forward EV/EBIT of 6.73x is 58.5% lower than the industry average of 16.24x.
NOK’s trailing-12-month EBIT margin of 10.94% is 141.4% higher than the 4.53% industry average, while its trailing-12-month EBITDA margin of 14.62% is 48.2% higher than the industry average of 9.87%.
NOK’s net sales came in at €7.45 billion ($8.10 billion) for the fourth quarter that ended December 31, 2022, increasing 16.1% year-over-year. Moreover, its gross profit came in at €3.19 billion ($3.47 billion), up 25.8% year-over-year. Its profit rose 363.5% year-over-year to €3.15 billion ($3.43 billion), while its earnings per share came in at €0.56, representing an increase of 366.7% year-over-year.
NOK’s revenue is expected to increase 9.9% year-over-year to $6.59 billion in the fiscal second quarter ending June 2023. Its EPS is expected to come in at $0.10 for the same quarter. It surpassed revenue estimates in each of the four trailing quarters.
NOK’s shares have gained 8% over the past six months and marginally intraday to close the last trading session at $4.60.
NOK’s promising outlook is reflected in its POWR Ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
NOK has an A grade for Value and a B for Growth and Sentiment. In the B-rated 49-stock Technology – Communication/Networking industry, it is ranked #4.
Beyond what we have stated above, click here for the additional POWR Ratings for Momentum, Stability, and Quality for NOK.
Rimini Street, Inc. (RMNI)
RMNI provides enterprise software products, services, and support for various industries. The company offers application management services for Oracle and SAP enterprise software products.
On March 22, RMNI announced the formal launch of its outsourcing service program Rimini ONE, which is designed to offer a comprehensive set of unified, integrated services to run, manage, support, customize, configure, connect, protect, monitor, and optimize enterprise applications, databases, and technology software.
On March 1, RMNI announced the launch of Rimini Watch, a new suite of proactive observability solutions that includes monitoring, health check, and change management capabilities to reduce downtime, improve performance, and ensure business continuity for Oracle and SAP applications and databases.
Rimini Watch eliminates the time, resource, and cost challenges usually associated with continuous monitoring of critical Oracle and SAP operating processes and managing changes that can impact application and database performance and business continuity.
RMNI’s forward EV/Sales of 0.75x is 71.5% lower than the industry average of 2.64x. Its forward EV/EBITDA multiple of 5.79 is 56.5% lower than the industry average of 13.31. Likewise, its forward EV/EBIT of 6.12x is 62.3% lower than the industry average of 16.24x.
RMNI’s trailing-12-month ROTC of 152.21% is significantly higher than the 1.97% industry average. Its trailing-12-month EBIT margin of 9.49% is 109.5% higher than the 4.53% industry average.
RMNI’s revenue rose 9.4% year-over-year to $108.62 million in the fiscal fourth quarter that ended December 31, 2022. The company’s gross profit rose 8.4% year-over-year to $70.06 million in the same quarter. Also, its non-GAAP net income came in at $15.33 million, and adjusted EBITDA came in at $18.34 million for the same quarter.
RMNI’s revenue for the fiscal first quarter ending March 2023 is expected to come in at 102.34 million, indicating a 4.5% year-over-year growth. The company’s EPS is expected to come in at $0.08 for the same quarter. Additionally, RMNI topped consensus revenue estimates in each of the trailing four quarters.
The stock has gained 4.6% over the past three months and marginally intraday to close the last trading session at $4.06.
RMNI’s robust prospects are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
RMNI has a B grade for Growth, Value, and Quality. Within the Software – Application industry, it is ranked #6 out of 134 stocks.
Click here to see RMNI's Stability, Sentiment, and Momentum ratings.
Rave Restaurant Group, Inc. (RAVE)
RAVE and its subsidiaries operate and franchise pizza buffets, delivery/carry-out (delco), and express restaurants under the Pizza Inn trademark in the United States and internationally. It operates through three segments: Pizza Inn Franchising; Pie Five Franchising; and Company-Owned Restaurants.
In terms of trailing-12-month P/E, RAVE is trading at 3.17x, 78.9% lower than the industry average of 15x. Its trailing-12-month PEG multiple of 0.01 is 97.2% lower than the industry average of 0.37.
RAVE’s trailing-12-month net income margin and ROTA of 70.13% and 60.90% are significantly higher than the industry averages of 4.56% and 3.84%, respectively. Moreover, its trailing-12-month levered FCF margin of 14.31% is 638.2% higher than the industry average of 1.94%.
RAVE’s revenues came in at $2.87 million for the fiscal quarter that ended December 25, 2022, up 6.3% year-over-year. Its income before taxes increased 5.9% year-over-year to $488 thousand.
Its adjusted EBITDA for the same quarter stood at $615 thousand, up 8.8% year-over-year. Its net income attributable to common shareholders and net income per share came in at $348 thousand and $0.02, respectively.
Over the past year, the stock has gained 38.1% to close the last trading session at $1.45. It has gained 11.5% over the past six months.
RAVE’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, equating to a Strong Buy in our proprietary rating system.
In addition, it has an A grade for Quality and a B for Value and Sentiment. RAVE is ranked #4 out of 46 stocks in the B-rated Restaurants industry.
Click here for the additional POWR Ratings for RAVE (Growth, Momentum, and Stability).
Data Storage Corporation (DTST)
DTST provides multi-cloud information technology solutions in the United States. The company offers data protection and disaster recovery solutions, high availability, data vaulting, DRaaS, IaaS, message logic, standby server, support, maintenance, and internet solutions.
On October 24, 2022, DTST announced that its CloudFirst and Nexxis divisions had been ISO/IEC 27001:2013 certified. This certification illustrates that DTST met rigorous international standards, demonstrating the company’s efficiency.
DTST’s forward EV/Sales of 0.07x is 97.4% lower than the industry average of 2.64x, while its forward Price/Sales of 0.47x is 82.1% lower than the industry average of 2.64x. Likewise, its forward EV/EBITDA of 2.26x is 83% lower than the industry average of 13.31x.
DTST’s trailing-12-month asset turnover ratio of 0.87x is 43.3% higher than the industry average of 0.61x.
DTST’s sales came in at $4.42 million for the third quarter that ended September 30, 2022, up 14.5% year-over-year. Its gross profit came in at $1.85 million, up 20.1% year-over-year. Its adjusted EBITDA rose 54.7% from its prior-year quarter to $162.39 thousand.
Analysts expect DTST’s revenue and EPS to come in at $6.40 million and $0.01, respectively, for the fiscal first quarter ending March 2023. It surpassed EPS estimates in three of the four trailing quarters, which is impressive.
DTST has gained marginally over the past three months to close the last trading session at $1.60.
It is no surprise that DTST has an overall B rating, which equates to Buy in our POWR Ratings system.
It has an A grade for Sentiment and a B for Value and Quality. It is ranked #6 out of 66 stocks within the Internet industry.
To see the additional POWR Ratings for Growth, Momentum, and Stability for DTST, click here.
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NOK shares were trading at $4.59 per share on Friday morning, down $0.01 (-0.22%). Year-to-date, NOK has declined -0.78%, versus a 2.49% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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