The SPDR S&P 500 ETF Trust (SPY) has gained more than 70% since hitting a brutal low in March 2020. Though a disconnect between the stock market and the economy persists, the economy has started recovering. With the expectation of resumed business growth in a recovering economy this year, many investors are still chasing high-growth stocks even though they are trading at lofty valuations…
However, several analysts believe that the mass coronavirus vaccination program and the new Biden-Harris Presidential administration will drive a big shift in investments from expensive growth stocks to affordable, quality turnaround candidates.
Irrespective of market movements, a strong business model almost always helps a stock outperform the broader market in the long run. Hence, we think it would be a good idea to bet on companies that are trading at reasonable prices but have solid earnings growth potential.
Infosys Limited (INFY – Get Rating), Manulife Financial Corporation (MFC – Get Rating), United Microelectronics Corporation (UMC – Get Rating) and National Energy Services Reunited Corp. (NESR – Get Rating) are four fundamentally sound companies that are currently trading below $20. These stocks could offer intriguing upside.
Infosys Limited (INFY – Get Rating)
Incorporated and domiciled in India, INFY is one of the most popular technology services outsourcing stocks. The company provides consulting, technology, outsourcing, and next-generation digital services in North America, Europe, India, and internationally. INFY operates through the following segments – Financial Services and Insurance; Manufacturing; Retail; Consumer Packaged Goods and Logistics; Energy, Utilities, Resources and Services; Communication, Telecom OEM and Media; Hi-Tech; Life Sciences and Healthcare, among others.
INFY launched Infosys Cortex, its customer engagement platform last week. The platform leverages technology from Genesys, a global leader in cloud customer experience and contact center solutions, along with Contact Center AI services from Google Cloud and its managed artificial intelligence (AI) and analytics services. INFY also recently launched Infosys Cobalt, offering its applied AI cloud, which is built on NVIDIA DGX A100 systems, the universal system for all AI workloads that delivers unprecedented compute density, performance, and flexibility.
INFY’s fiscal third-quarter results impressed the market. Its total revenues grew 8.4% year-over-year to $3.52 billion. Digital revenues, which represented 50% of its top-line, increased 33.6% year-over-year to $1.76 billion. This was driven primarily by a significant rise in large deals and fast-growing digital services. Solid demand for its services in cloud, IoT, cyber security, software-as-a-service, user experience, data and analytics also served as major drivers. Its adjusted EPS came in at $0.17, rising 12.5% compared to the year-ago quarter.
The company added 139 clients during the fiscal third quarter. It also signed multiple large deals, with total contract values (TCV) of $7.13 billion. The company’s TCV during the reported quarter was the highest in its history. An increasing reliance on technology due to the global remote working culture, along with a depreciating Indian rupee is making INFY’s products more competitive. Analysts expect INFY’s current year revenue and EPS to grow 6% and 10.9%, respectively.
INFY closed Friday’s trading session at $18.18, gaining 47.5% in the past six months. The stock has recently hit its 52-week high of $19.07.
How does INFY stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
B for Peer Grade
A for Industry Rank
A for Overall POWR Rating
The stock is also ranked #2 of 14 stocks in the Outsourcing – Tech Services industry.
Manulife Financial Corporation (MFC – Get Rating)
MFC provides financial advice, insurance, and asset management services in Asia, United States, and internationally. The company offers life and long-term care insurance, guaranteed and partially guaranteed annuity products through insurance agents, brokers, banks, financial planners, and direct marketing. It also manages mutual funds, exchange-traded funds, group retirement and savings products, and institutional asset management services and other banking products.
In December, MFC announced an agreement between VietinBank and its subsidiary, Manulife (Vietnam) Limited, to establish an exclusive 16-year bancassurance partnership to better meet the growing financial and insurance needs of the Vietnamese people. The company continues to extend its product and distribution reach. In the third quarter, MFC sold its first policy in Myanmar, a digitally savvy market with one of the lowest insurance penetration rates in Asia.
MFC will hold a webcast to release its fourth quarter 2020 financial results on February 10, 2021. In the third quarter ended September 30, 2020, the company generated a top line of C$13.4 billion. Though core earnings were…
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