The Federal Reserve has raised the benchmark interest rates by 75 basis points for the second consecutive month to fight the multi-decades high inflation. While investors are worried that the economy is slipping into a recession, economists caution there’s no reason to panic. Moreover, according to experts, recessions have produced attractive opportunities for long-term investors.
Furthermore, robust corporate earnings reports, despite the challenging macro environment, are providing some optimism. Among the S&P 500 companies that have reported their latest quarterly reports as of July 30, almost 78% topped analyst expectations.
Given this backdrop, we think investors should consider investing in fundamentally sound stocks Playtika Holding Corp. (PLTK), Capri Holdings Limited (CPRI), Masonite International Corporation (DOOR), and Deluxe Corporation (DLX), which are poised to soar in the near term.
Playtika Holding Corp. (PLTK)
Headquartered in Herzliya Pituarch, Israel, PLTK develops mobile games worldwide. The company owns a portfolio of casual and casino-themed games.
PLTK’s revenues increased 5.9% year-over-year to $676.90 million in the fiscal quarter ended March 31, 2022. Net income stood at $83.20 million, up 133.1% from its year-ago value, while its net income per share increased 122.2% year-over-year to $0.20.
The consensus EPS estimate of $0.80 for the fiscal year ending December 2022 represents a 6.4% improvement year-over-year. The consensus revenue estimate of $2.73 billion for the same period represents a 5.6% increase year-over-year.
PLTK closed its last trading session at $13.03. The 12-month median price target of $20.40 indicates a 63.3% potential upside.
PLTK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PLTK is rated A in Value and B in Quality. Within the Entertainment - Toys & Video Games industry, it is ranked #5 of 22 stocks. Click here to see additional POWR Ratings for Growth, Momentum, Sentiment, and Stability for PLTK.
Capri Holdings Limited (CPRI)
Headquartered in London, United Kingdom, CPRI designs, markets, distributes, and retails branded women’s and men’s apparel, footwear, and accessories through three segments: Versace; Jimmy Choo; and Michael Kors.
CPRI’s total revenues increased 24.6% year-over-year to $1.49 billion in the fiscal quarter ended April 2, 2022. Gross profit came in at $956 million, up 29.7% year-over-year, while its net income grew 144.5% from the year-ago value to $81 million. The company’s net income per share increased 144.6% from the prior-year quarter to $0.54 in the same period.
Analysts expect CPRI’s revenue for the fiscal quarter ending September 2022 to come in at $1.39 billion, indicating an increase of 6.8% year-over-year. Also, the company’s EPS is expected to grow 2.2% year-over-year to $1.56 in the same period. It has an impressive earnings surprise history, as it topped Street EPS estimates in three of the trailing four quarters.
CPRI has gained 19.8% over the past month to close the last trading session at $49.40. Its 12-month median price target of $69.87 indicates a 42.6% potential upside.
It is no surprise that CPRI has an overall rating of B, equating to Buy in our POWR Ratings system. The stock also has a B grade in Quality. In the B-rated Fashion & Luxury industry, the company is ranked #17 of 67 stocks.
Beyond what we have stated above, we’ve also rated CPRI for Growth, Value, Stability, Sentiment, and Momentum. Get all the CPRI ratings here.
Masonite International Corporation (DOOR)
DOOR designs, manufactures, markets, and distributes interior and exterior doors for new construction and repair, renovation, and remodeling sectors of the residential and non-residential building construction markets worldwide.
On June 29, DOOR announced the opening of a 36,000-square-foot plant that combines its Solidor® operations into one manufacturing hub to improve production, efficiency, product quality, and sustainability. This purpose-built facility should enhance its operating capability.
For the fiscal first quarter of 2022, DOOR’s net sales increased 12.4% year-over-year to $726 million. Its net income grew 43.8% from the year-ago value to $68 million, while its adjusted EBITDA stood at $125 million, reflecting a 22.3% increase year-over-year. Moreover, its adjusted EPS was $2.89, up 49.7% from the prior-year quarter.
Street expects DOOR’s revenue for the fiscal quarter ended June 2022 to come in at $725.81 million, indicating a 9.6% year-over-year increase. Its EPS is expected to improve 10.4% year-over-year to $2.46. DOOR beat the consensus EPS estimates in all the trailing four quarters.
DOOR’s shares have gained 12.1% over the past month to close the last trading session at $88.31. The company’s 12-month median price target of $108.20 indicates a 22.5% potential upside.
DOOR’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our proprietary rating system.
The company also has a B grade in Value and Growth. Out of the 62 stocks in the Home Improvement & Goods industry, DOOR is ranked #9. To get DOOR’s ratings for Momentum, Stability, Sentiment, and Quality, click here.
Deluxe Corporation (DLX)
DLX provides technology-enabled solutions to enterprises, small businesses, and financial institutions in the United States, Canada, Australia, South America, and Europe. It operates through four segments: Payments; Cloud Solutions; Promotional Solutions; and Checks.
On July 6, DLX announced that its merchant services business - First American, has signed an agreement with Dupaco Community Credit Union, a non-profit, member-owned financial cooperative, to expand a long-term relationship using the One Deluxe model and provide exceptional platforms and solutions for its customers. This strategic collaboration should prove to be beneficial for DLX.
For the fiscal first quarter of 2022, DLX’s revenue increased 26% year-over-year to $556 million. Gross profit came in at $306.80 million, up 16.7% year-over-year, while its adjusted EBITDA grew 10.1% from the year-ago value to $99.60 billion.
Street expects DLX’s EPS for the fiscal quarter ending September 2022 to improve 6.4% year-over-year to $1.17. The consensus revenue estimate of $539.75 million for the same period represents a 1.4% increase year-over-year. The company also surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 14% over the past month to close the last trading session at $25.38.
The company has an overall rating of B, translating to Buy in our proprietary rating system. DLX also has a B grade in Growth. It is ranked #11 of 41 stocks in the B-rated Outsourcing - Business Services industry.
Click here for additional POWR Ratings for Value, Stability, Sentiment, Momentum, and Quality for DLX.
PLTK shares were trading at $12.25 per share on Thursday afternoon, down $0.78 (-5.99%). Year-to-date, PLTK has declined -29.15%, versus a -12.08% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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