Another above-average hurricane season is likely to hit the country this year, as predicted by the scientists last Thursday at Colorado State University. According to the scientists, there will be at least 19 named storms and nine hurricanes, four of which will be Category 3 or higher. According to Steve Baker, President of PWRSS, "Inclement weather of any type can negatively impact business facilities, personnel, and customers, so it is always best to try and be prepared rather than just waiting to respond."
Due to the hurricane season, businesses and industries could be at severe risk, especially if they are located in hurricane-prone regions. However, companies offering products and services needed to survive and recover from the devastating consequences of hurricanes could benefit.
Fundamentally sound stocks Lowe's Companies, Inc. (LOW), Owens Corning (OC), and AECOM (ACM) could be great additions to one's portfolio, given their solid growth prospects and ability to capitalize on the consequences of the upcoming hurricane season.
Lowe's Companies, Inc. (LOW)
LOW operates as a home improvement retailer internationally through its subsidiaries and offers several products for construction, maintenance, repair, remodeling, and decorating. It also offers home improvement products in various categories such as appliances, paint, hardware, millwork, lawn and garden, lighting, lumber, and building materials.
In February, Instacart and LOW announced a partnership to offer same-day delivery in as fast as one hour, which will be initially available in Boston and Charlotte, to expand in the coming months. Customers can now avail of approximately 20,000 LOW's items, including small home appliances, building supplies, light fixtures, garden, and outdoor essentials, and more, delivered from the store to their door.
LOW's net sales increased 5.1% year-over-year to $21.34 billion in the fourth quarter ended January 28, 2022. Its operating income grew 21.3% from the year-ago value to $1.85 billion, while its net earnings improved 23.3% year-over-year to $1.21 billion. Its EPS increased 34.8% from its prior-year quarter to $1.78.
Analysts expect LOW's revenue to increase 2.5% year-over-year to $28.27 billion in the second quarter (ending July 2022). The company's EPS is expected to grow 0.9% year-over-year to $3.24 in the first quarter ending April 2022. In addition, the company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters. The stock has gained 1.7% over the past year and 4.4% over the past nine months.
LOW's POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
LOW is also rated a B for Quality. Within the C-rated Home Improvement & Goods industry, it is ranked #14 of 64 stocks.
To see additional POWR Ratings for Growth, Value, Sentiment, Stability, and Momentum for LOW, click here.
Owens Corning (OC)
OC is engaged in the manufacturing and marketing of insulation, roofing, and fiberglass composite materials internationally. It has three operational segments: the Composites segment manufactures, fabricates, and sells glass reinforcements in the form of fiber; the Insulation segment produces and sells insulation products for residential, commercial, industrial, and other markets; and the Roofing segment manufactures and sells laminate and strip asphalt roofing shingles, oxidized asphalt materials, and roofing.
OC's net sales increased 10.7% year-over-year to $2.13 billion for the fourth quarter ending December 2021. The operating income grew 18.8% from its year-ago value to $323 million, while its net earnings amounted to $227 million. The company's adjusted EPS rose 16% from its prior-year quarter to $2.20.
The consensus EPS estimate of $2.44 for the first quarter ending March 2022 indicates a 40.9% improvement year-over-year. Analysts expect OC's revenue to increase 16.4% year-over-year to $2.23 billion. In addition, the company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters.
OC's POWR Ratings reflect this promising outlook. The company has an overall rating of B, translating to Buy in our proprietary rating system. OC is also rated a B for Quality and Value. Within the B-rated Industrial - Building Materials industry, it is ranked #15 of 52 stocks.
Click here to see additional POWR Ratings for Growth, Stability, Sentiment, and Momentum for OC.
AECOM (ACM)
ACM provides professional infrastructure consulting services for governments, businesses, and organizations and its subsidiaries in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It operates through three segments: Americas; International; and AECOM Capital.
Last month, ACM was selected by the Texas Department of Transportation (TxDOT) to provide design and engineering services for its Maritime Division. This would enable ACM to deliver services required for port, waterway, and intermodal freight planning for the Texas port system, which includes the major deep-draft ports of Port Houston, the largest in the U.S. by waterborne tonnage; Port of Corpus Christi; Port of Beaumont; and Port Freeport, among others.
Also, last month, ACM announced its Airfield Management Partners joint venture with H.J. Russell & Company, a leading African American-owned construction services business, selected to provide civil airside program and construction management services for Dallas Fort Worth International Airport (DFW). This work supports DFW's long-term Civil Airside Master Plan and also its near-term strategies that reinforce its emphasis on customer experience.
For the first quarter ending December 31, 2021, ACM's revenue amounted to $3.27 billion. The non-GAAP operating income increased 11% year-over-year to $176 million, while its non-GAAP net income grew 35% from its prior-year quarter to $129 million. The company's non-GAAP EPS rose 44% year-over-year to $0.89.
The $0.79 consensus EPS estimate during the second quarter ending March 2022 represents a 17.7% improvement year-over-year. Analysts expect ACM's revenue to increase 4.1% year-over-year to $3.40 billion for the second quarter. Also, the company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters.
The company's shares have surged 13.5% over the past year and 20.5% over the past six months.
According to the POWR Ratings, ACM has a B grade for Growth and Sentiment. In the A-rated Industrial – Services industry, it is ranked #43 of 89 stocks.
In addition to the POWR Ratings grades I have just highlighted, you can see the ACM ratings for Quality, Momentum, Value, and Stability.
LOW shares were trading at $205.31 per share on Wednesday afternoon, up $1.17 (+0.57%). Year-to-date, LOW has declined -20.31%, versus a -6.32% 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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