The increasing concerns over a potential recession with the continued tightening of monetary policy in response to the surging inflation have kept the stock market under immense pressure lately. The S&P 500 has lost more than 20% year-to-date.
According to economists polled by Reuters, the Federal Reserve could announce another 75 basis-point interest rate hike in July, followed by a half-percentage-point rise in September. “It is, unfortunately, uncomfortably possible that the Fed is going to slam on the brakes and push us into recession,” said economist Mohamed A. El-Erian. So, the market is expected to remain under pressure in the upcoming months.
However, the massive market correction has created a solid opportunity to invest in fundamentally sound stocks Chase Corporation (CCF), Vishay Precision Group, Inc. (VPG), and Interface, Inc. (TILE), which are hovering near their 52-week lows. These stocks are rated Buy in our proprietary POWR Ratings system.
Chase Corporation (CCF)
Headquartered in Westwood, Massachusetts, CCF is a specialty chemicals company that manufactures and sells protective materials for various applications worldwide. It has three operational segments: Adhesives, Sealants, and Additives; Industrial Tapes; and Corrosion Protection and Waterproofing.
For the second quarter ending February 28, 202, CCF’s revenue increased 8% year-over-year to $73.95 million. Its operating income amounted to $12.43 million, while its net income came in at $9.44 million. The company’s adjusted EPS stood at $0.99 over the period.
The company’s shares have declined 23.3% over the past year and 21.9% year-to-date to closing its last trading session at $77.56, 4.3% above its 52-week low of $74.36, which it hit on June 13, 2022.
CCF's POWR Ratings reflect its fundamental strength. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock also has a B grade for Quality, Sentiment, and Stability. Within the B-rated Industrial-Building Materials industry, it is ranked #3 of 47 stocks. To see additional POWR Ratings for Value, Growth, and Momentum for CCF, click here.
Vishay Precision Group, Inc. (VPG)
Headquartered in Malvern, Pennsylvania, VPG designs, manufactures, and markets specialized sensors, weighing solutions, and measurement systems in the United States, Israel, the United Kingdom, the rest of Europe, Asia, and Canada. It operates through three segments: Sensors; Weighing Solutions; and Measurement Systems.
Last month, The KELK brand of VPG introduced the ACCUCAMB Camber Gage Model C885, its advanced solution for true bar shape measurement and strip steering applications. The ACCUCAMB C885 enables two critical process applications for hot strip mill operators to measure bar shapes and positions during active rolling using innovative non-contact optoelectronics.
In the first quarter ending April 2, 2022, VPG’s net revenues increased 24.2% year-over-year to $87.67 million. Its Non-GAAP operating income improved 50.5% from its year-ago value to $9.4 million, while its net earnings amounted to $6.65 million, up 59.9% from its prior-year quarter. The company’s EPS rose 58.1% year-over-year to $0.49.
Analysts expect VPG's revenue to increase 21.3% year-over-year to $91.36 million for the second quarter ending June 2022. The consensus EPS estimate of $0.55 represents an 89.7% improvement year-over-year for the second quarter ending June 2022.
Its shares have plunged 23.3% year-to-date and 4.9% over the past month. The stock closed its last trading session at $28.49, 2.7% above its 52-week low of $27.75, which it hit on June 23, 2022.
VPG's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Sentiment and a B for Value and Quality. Within the A-rated Industrial - Manufacturing industry, it is ranked #1 of 36 stocks.
In total, we rate VPG on eight different levels. Beyond what we've stated above, we have also given VPG grades for Stability, Growth, and Momentum. Get all the VPG ratings here.
Interface, Inc. (TILE)
TILE is a modular flooring company that designs, produces, and sells modular carpet products primarily in the Americas, Europe, and the Asia-Pacific. The company offers modular carpets under the Interface and FLOR brand names; carpet tiles under the GlasBacRE name for use in commercial interiors.
Last month, TILE announced that its Board of Directors authorized a new share repurchase program for up to $100 million of the company's common stock. Laurel Hurd, Chief Executive Officer, said, “Given our strong financial position, including our ability to consistently generate robust free cash flow, we remain committed to returning capital to shareholders via regular quarterly dividends and now share repurchases.”
TILE’s net sales increased 13.7% year-over-year to $288.00 million for the first quarter ending April 3, 2022. Its Non-GAAP operating income grew 53.8% from its year-ago value to $30.60 million, while its Non-GAAP net income improved 68% from its prior-year quarter to $16.80 million. The company’s Non-GAAP EPS rose 64.7% year-over-year to $0.28.
The $0.32 consensus EPS estimate represents a 5.8% improvement year-over-year for the second quarter ending June 2022. Analysts expect TILE's revenue to increase 21.3% year-over-year to $357.70 million for the second quarter ending June 2022. Moreover, the company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters.
TILE has lost 23.8% year-to-date and 10.5% over the past month. The stock closed its last trading session at $12.16, 1.8% above its 52-week low of $11.95, which it hit on June 20, 2022.
It is no surprise that TILE has an overall A rating, equating to Strong Buy in our POWR Ratings system. TILE has a B grade for Growth, Value, and Quality. In the B-rated Industrial - Textiles industry, it is ranked #1 of 5 stocks
Click here to see the additional POWR Ratings for TILE (Stability, Momentum, and Sentiment).
CCF shares were trading at $78.04 per share on Friday afternoon, up $0.28 (+0.36%). Year-to-date, CCF has declined -21.62%, versus a -17.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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