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These 5 Stocks Popped Last Week: Should You Buy?

Volatility in the markets may be expected to continue, as most of the factors contributing to the volatility remain in play.

We may have had a reprieve because of the slide in oil prices as a reaction to the lockdown in China. With around 45 million citizens off the road, China is expected to need less oil, so the reaction in oil prices appears reasonable. But it is unlikely to remain locked down for long given the control it has on its citizens. So the situation can come under control quickly.

Moreover, the scarcity across the rest of the world and uncertainties with respect to Russia’s output ensure that crude prices will remain elevated. We are after all rejoicing because it has come under $100 after three weeks! But this is still a very high rate to pay and it will be reflected in higher cost of transportation, which of course trickles down to all conceivable goods and commodities. And gasoline. And it means that the inflation/stagflation we’ve been seeing creep up, will continue.

There is also little change in other factors contributing to inflation like limited inventories of auto and homes, semiconductor shortages, supply chain issues, tightness in the labor market.

The Fed will publish its minutes shortly and rate hikes will likely start this week. This is a dampener for the market. Thankfully, it comes at a juncture when we have something to cheer about as well. Such as not-as-high crude prices.

What does all this mean for stocks? Should we or should we not put more money into this market? Should we hang on to cash?

Obviously, since the major indexes reacted positively to energy prices, individual stocks must have too. So part of the reason why SeaWorld Entertainment SEAS, Tecnoglass TGLS, Titan International TWI, Univar Solutions UNVR and H&E Equipment Services HEES did well last week can be explained away this way.

But what can’t be explained away is the magnitude of increase in share prices. Because this points to stronger underlying factors that are driving investors to make the most of weak prices.

Our proprietary methodology uses the estimate revisions trend and other factors to allot ranks to stocks. And at the moment, all five carry a Zacks Rank #1, which translates to a Strong Buy rating.

Additionally, the Zacks Style Score system tells us whether it is suitable for all investors (given that only some investors can stomach the inherent risk in growth stocks; while some are looking to buy undervalued stocks that are sure to appreciate over the long term, i.e. a buy to hold strategy; while others just want to ride the momentum for quick gains). The Zacks Value-Growth-Momentum (VGM) Score, when at A or B indicates that the stock is suitable for almost any kind of investor.

The recent estimate revision trend and growth prospects are also worth checking out, because they should be part of the investment decision as well. Particularly because they are indicative of the company’s actual performance, separate from the movement in share prices, which can be manipulated or can fluctuate without ostensible reason.

And even if all of these criteria are satisfied, we would still need to ensure that the recent pop is not so great that the shares have become expensive. In other words, we should buy a stock only if it is reasonably or cheaply valued. An expensive stock is best avoided at all times, and especially right now, when the markets are going crazy.

Let’s dig into the details-

SeaWorld Entertainment

SeaWorld Entertainment is a theme park and entertainment company operating primarily in the United States. The company owns and operates a portfolio of twelve theme parks under the SeaWorld, Busch Gardens, Aquatica, Discovery Cove, Water Country USA, Adventure Island, and Sesame Place brands across several U.S. states (Florida, California, Virginia, Texas).

The shares carry a Zacks Rank #1 and VGM Score B. They have appreciated 9.1% over the past week. This is supported by its 2022 estimate moving up 58 cents (16.5%) in the last 30 days, while the 2023 estimate went up 28 cents (7.0%). What’s more, analysts have been relatively conservative in their estimates in the recent past, which is the reason SeaWorld has a solid surprise history (178.8% in the last quarter and 137.2% average for the preceding four quarters).

SeaWorld’s revenue growth is estimated to be 14.0% and 4.1% in 2022 and 2023, respectively while its earnings growth is expected to be 27.3% and 5.0%, in the two years, respectively.

Valuation: At 2.86X sales, the shares are trading below their median value of 3.22X over the past year and also trailing the S&P 500’s 18.43X. But the industry is trading at 1.93X.

Tecnoglass

Tecnoglass is engaged in manufacturing, selling and installing architectural glass, windows and related aluminum products for the residential and commercial construction industries. It operates primarily in North, Central and South America.

With a Zacks Rank #1, VGM Score A and a 13.5% jump in share prices last week, Tecnoglass is a clear winner. Its particularly encouraging to note that the 2022 estimate up 31 cents (17.1%) in the last 30 days, while the 2023 estimate is up 32 cents (15.3%).

Nor are these estimates likely to be overly optimistic. Tecnoglass has sailed past estimates in the last few quarters. In the last quarter, it beat by 31.6% and the preceding four-quarter average surprise is 39.9%.

The expected 2022 revenue growth of 18.9% and earnings growth of 21.8% are encouraging. And that’s followed up with another 12.2% revenue growth and 13.8% earnings growth estimated for 2023.

Valuation: At 10.84X P/E, the shares are trading below their median value of 14.75X over the past year and also trailing the S&P 500’s 18.43X and the industry’s 17.57X.

Titan International

Titan International is a leading global manufacturer of off-highway wheels, tires, assemblies and undercarriage products. The company produces a broad range of products to meet the specifications of original equipment manufacturers (OEMs) and aftermarket customers in the agricultural, earthmoving/construction and consumer markets in North America, Europe, Latin America, the Commonwealth of Independent States region, the Middle East, Africa, Russia and other places.

Titan International shares carry a Zacks Rank #1 and VGM Score B.

The 15.5% increase in share prices last week is supported by a solid estimate revisions history with the 2022 estimate up 22 cents (23.4%) in the last 30 days, while the 2023 estimate is up 39 cents (37.5%).

Analysts currently expect the company to generate revenue and earnings growth 13.6% and 36.5% in 2022. The following year they are looking for 6.0% revenue growth and 22.8% earnings growth.

There is nothing to suggest that Titan International won’t meet or exceed these expectations. Particularly because it has such a strong surprise history (116.7% in the last quarter and 47.6% average in the preceding 4 quarters).

Valuation: At 11.05X P/E, the shares are trading below their median value of 11.79X over the past year and also trailing the S&P 500’s 18.43X and the industry’s 15.68X.

Univar Solutions

Univar Solutions distributes chemical and related ingredients along with specialty services. The company purchases chemicals from several global chemical producers and dilutes, blends, repackages, stores, transports and markets them to customers across the world. Following the purchase of Nexeo Solutions, it became a leading global chemical and ingredients solutions provider.

Univar’s specialized services include chemical waste removal and ancillary services, e-marketing or digital promotion of chemicals for its producers, on-site storage of chemicals for its customers, support services for pest control and agricultural industries.

Univar’s Zacks Rank #1 and VGM Score B make the shares attractive. But there is the need to ensure that the 15.2% share price appreciation over the past week is supported by strong numbers.

And on that count, we should not be disappointed. Univar’s 2022 estimate is up 67 cents (34.2%) in the last 30 days while the 2023 estimate is up 25 cents (9.9%). What’s more, its revenue is expected to grow 6.0% this year and 2.2% in the next while earnings grow 18.5% and 5.1%, respectively. Univar has topped estimates by 33.3% n the last quarter and an average 31.5% in the preceding four quarters.

Valuation: At 12.09X P/E, the shares are trading below their median value of 13.88X over the past year and also trailing the S&P 500’s 18.43X and the industry’s 11.28X

H&E Equipment Services

Being one of the largest integrated equipment services companies in the U.S. with full-service facilities throughout the Intermountain, Southwest, Gulf Coast & Southeast regions, H&E Equipment Services rents and sells parts and provides service support (including repairs & maintenance) for four core categories of specialized heavy construction and industrial equipment (hi-lift or aerial platform equipment, cranes, earthmoving equipment & industrial lift trucks).

This full-service approach provides the company with multiple points of customer contact, enabling it to maintain a high-quality rental fleet, as well as an effective distribution channel for fleet disposal. It also creates cross-selling opportunities among its new & used equipment sales or rental, as well as parts sales & service operations.

H&E Equipment shares carry a Zacks Rank #1 and VGM Score B.

The shares are up 6.6% in the last week, supported by the estimate revisions trend. Accordingly, the 2022 estimate is up 23 cents (9.6%) in the last last 30 days and the 2023 estimate has just become available ($6.18). H&E toped the Zacks Consensus Estimate by 59.5% in the last quarter and at an average surprise of 21.1% for the preceding 4 quarters.

 H&E is currently expected to generate revenue growth of around 2% and 6.6% in 2022 and 2023, respectively. Its earnings growth is expected to be 34.9% and 135%, respectively

Valuation: At 12.42X P/E, the shares are trading below their median value of 18.18X over the past year and also trailing the S&P 500’s 18.43X and the industry’s 16.67X.

3-Month Price Performance


Image Source: Zacks Investment Research


5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Titan International, Inc. (TWI): Free Stock Analysis Report
 
H&E Equipment Services, Inc. (HEES): Free Stock Analysis Report
 
SeaWorld Entertainment, Inc. (SEAS): Free Stock Analysis Report
 
Tecnoglass Inc. (TGLS): Free Stock Analysis Report
 
Univar Solutions Inc. (UNVR): Free Stock Analysis Report
 
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