The stock market has already entered into bear territory due to investors’ concerns over persisting factors like the multi-decade high inflation, deepening supply chain constraints, and the possibility of…
the economy witnessing a recession due to the Federal Reserve’s policy tightening. The benchmark SPDR S&P 500 Trust ETF (SPY) is down 18% year-to-date. Notably, the CBOE Volatility Index (VIX) has gained 77.2% year-to-date, reflecting significant market volatility.
Many analysts expect the lingering issues to result in further market pullbacks. According to Tom Galvin, a chief investment officer with City National Rochdale, “Investors should keep their seat belts fastened. This period of volatility is not likely to be over.” However, long-term investors could take advantage of the current situation and bet on stocks possessing solid growth attributes on every dip instead of sitting on the sidelines waiting for a clear direction.
It could be wise to bet on Nutrien Ltd. (NTR), Centene Corporation (CNC), Itochu Corporation (ITOCY), Steel Dynamics, Inc. (STLD), and Teck Resources Limited (TECK), which look undervalued at their current price levels and possess great upside potential.
Nutrien Ltd. (NTR)
NTR is a Canada-based provider of crop inputs and services. The company operates through four segments — Retail Ag Solutions (Retail); Potash; Nitrogen; and Phosphate. It distributes crop nutrients, crop protection products, seeds, and merchandise products worldwide through approximately 2,000 retail locations.
On May 18, 2022, NTR announced its intention to build the world’s largest clean ammonia facility of approximately $2 billion at Geismar, Louisiana. Given its expertise in low-carbon ammonia production, clean ammonia will be manufactured using innovative technology to reduce at least 90% of CO2 emissions, with full production expected by 2027. This new plant would leverage low-cost natural gas, tidewater access to world markets, and high-quality carbon capture and sequestration infrastructure at its existing Geismar facility to serve growing demand in agriculture, industrial, and emerging energy markets. This initiative fits well with its net-zero emissions goals.
NTR’s sales for its fiscal 2022 first quarter ended March 31, 2022, increased 64.4% year-over-year to $7.66 billion. The company’s gross profit came in at $1.83 billion, representing a 181.8% year-over-year improvement. Its EBIT came in at $1.89 billion for the quarter, up 1096.2% from the prior-year period. While its net earnings increased 941.4% year-over-year to $1.39 billion, its EPS grew 1031.8% to $2.49. It had $577 million in cash and cash equivalents as of March 31, 2022.
Analysts expect the company’s EPS to improve 180.3% year-over-year to $17.46 for fiscal 2022 ending December 31, 2022. The consensus revenue estimate of $40.02 billion for the same fiscal year represents a 49% rise from the prior-year period. The company’s EPS is expected to grow at a 33% rate per annum over the next five years.
Over the past three years, NTR’s revenue, EBITDA, and total assets have grown at CAGRs of 16.6%, 28.5%, and 4.8%, respectively. The stock’s 4.26x forward EV/EBITDA is 36.8% lower than the 6.74x industry average. In terms of forward Price/Cash Flow, NTR is currently trading at 4.84x, which is 29.7% lower than the 6.89x industry average. The stock has increased 42.9% over the past six months but declined 14.2% over the past month to close the last trading session at $97.02.
NTR’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Centene Corporation (CNC)
CNC operates as a multi-national healthcare enterprise that provides programs and services to government-sponsored and commercial healthcare programs, focusing on under-insured and uninsured individuals. The company provides its services through primary and specialty care physicians, hospitals, and ancillary providers, primarily through Medicaid, Medicare, and commercial products.
On May 6, 2022, CNC’s Missouri subsidiary, Home State Health, was awarded the MO HealthNet Managed Care General Plan and Specialty Plan, which allows it to continue serving multiple MO HealthNet programs, including…
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