Tag: stock analysis

1 Utilities Stock Too Cheap To Ignore

Posted on by The MarketClub Team

It has been a challenging year for the stock market as most equities have witnessed a sell-off due to various macroeconomic and geopolitical concerns.

However, retail energy and renewable energy solutions provider Genie Energy Ltd. (GNE) has gained 84.7% in price year-to-date and 90.6% over the past year to close the last trading session at $10.29.

The stock’s strong performance can be attributed to the rise in energy prices that led to strong earnings for the company.

Post its third-quarter earnings, GNE’s CEO Michael Stein, said, “We reported record third-quarter profit metrics driven by strength in Genie Retail Energy (GRE), our domestic retail energy business. GRE continued to outperform in a volatile energy price environment. We were well-positioned with our customer book and hedges heading into the quarter and were able to drive a 54% gross margin and generate nearly $28 million in Adjusted EBITDA.”

Its Genie Renewables (GREW) segment also did well as it acquired site rights to 64MW solar projects and advanced them through its permitting processes.

“Given the challenging environment in the European energy market, we determined that the risk was beyond our acceptable tolerances. As a result, we exited our remaining international retail operations and no longer serve customers in Scandanavia,” he added.

GNE is trading at a discount to its peers. In terms of trailing-12-month GAAP P/E, GNE's 5.44x is 73.5% lower than the 20.53x industry average. Its trailing-12-month EV/S of 0.55x is 86.4% lower than the 4.05x industry average. Also, the stock's 2.07x trailing-12-month EV/EBITDA is 84.4% lower than the 13.30x industry average.

On November 30, 2022, GNE announced the acquisition of a portfolio of residential and small commercial customer contracts from Mega Energy. GNE’s CEO Michael Stein said, “Our strong balance sheet, with significant cash reserves, positions us to compete for additional books of business at favorable prices. We will continue to look for customer acquisition opportunities as specific markets become more conducive to growth.”

The acquisition helps it acquire new customers across seven states in the Northeast and Midwest. The portfolio comprises approximately 11,000 residential and commercial customer meters, and it is expected to be revenue and earnings accretive for the company immediately. Continue reading "1 Utilities Stock Too Cheap To Ignore" →

2 Retail Stocks Ready for a Santa Claus Rally

Posted on by The MarketClub Team

The Federal Reserve met broad expectations by reducing its interest rate hike to 50 bps this month. However, its emphasis on taming inflation further by raising interest rates in the foreseeable future has dampened the optimism that had kept markets buoyant in the run-up to yesterday’s announcement.

However, in the run-up to year-end festivities, consumer spending is also set to increase, thereby adding more wind to the sails of businesses that have been under pressure by aggressive interest rate hikes and other macroeconomic headwinds for a greater part of the year.

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Hence, it could be wise to buy The TJX Companies, Inc. (TJX) and Five Below, Inc. (FIVE) to capitalize on increased consumer spending during the holidays. These stocks show strong trends.

The TJX Companies, Inc. (TJX)

TJX is an off-price apparel and home fashion retailer in the United States and internationally. The company’s operating segments are Marmaxx; HomeGoods; TJX Canada; and TJX International.

TJX’s revenue has exhibited a 6.6% CAGR over the past three years. During the same time horizon, the company’s EBITDA and net income have also grown at 2% and 2.8% CAGRs, respectively.

During the nine months of the fiscal year ended October 29, 2022, TJX’s net sales increased 2.1% year-over-year to $35.42 billion. During the same period, the company’s net income increased 5% and 8.3% year-over-year to $2.46 billion and $2.08, respectively.

Analysts expect TJX’s revenue and EPS for fiscal 2023 to increase 2% and 9.3% year-over-year to $49.51 billion and $3.12, respectively. The company has surpassed consensus EPS estimates in three of the trailing four quarters.

Owing to its strong performance and solid growth prospects, TJX is currently commanding a premium valuation compared to its peers. In terms of forward P/E, TJX is currently trading at 25.41x compared to the industry average of 12.88x. Also, its forward EV/EBITDA multiple of 17.26 is higher than the industry average of 9.15. Continue reading "2 Retail Stocks Ready for a Santa Claus Rally" →

BBW is Well-Positioned Following Q3 Revenue Beat

Posted on by The MarketClub Team

Build-A-Bear Workshop, Inc. (BBW) operates as a multi-channel retailer of plush animals and related products.

The company operates through three segments: Direct-to-Consumer, Commercial, and International Franchising. It runs around 346 locations managed by corporate and 72 franchised stores in Asia, Australia, the Middle East, Africa, and South America.

On November 30, the company announced record fiscal third quarter results. Its total revenue increased 9.9% year-over-year to $104.48 million, beating the consensus estimate by 1.8% and registering the seventh consecutive quarter of revenue growth.

Sharon Price John, BBW President and Chief Executive Officer, attributed this solid performance to momentum and consistency in business with solid brand interest from consumers. She expressed her confidence that the company is on track to deliver the most profitable year in its 25-year history.

Mirroring the above sentiment, the stock has gained 45.3% over the past month to close the last trading session at $25.17 despite the broader market remaining volatile on concern over the Fed’s potential rate hikes to bring inflation down to its 2% target.

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BBW is trading above its 50-day and 200-day moving averages of $17.33 and $17.28, respectively, indicating an uptrend.

Here is what may help the stock maintain its performance in the near term.

Solid Track Record

Over the past three years, BBW’s revenue has exhibited a 10.5% CAGR, while its EBITDA has grown at a stellar 99.4% CAGR. The company has increased its EPS at a 55% CAGR during the same period. Continue reading "BBW is Well-Positioned Following Q3 Revenue Beat" →

1 Tech Stock That's Safe And 1 That's Not

Posted on by The MarketClub Team

Recent data suggests that the U.S. economy has been more resilient than expected, despite the Fed’s efforts to cool it down through monetary tightening. However, the market widely expects the central bank to implement a lower rate hike in its meeting this month.

However, many economists believe that the terminal interest rates will beat the earlier estimates. This might tighten fund availability for growing businesses while softening consumer demand in the year ahead.

Hence it would be safe to bet on stocks with an encouraging outlook while avoiding the weak ones.

Given the uncertain economic outlook, do you expect a Santa Claus Rally this year?

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Given its strong trends, it could be wise to buy NVIDIA Corporation (NVDA) to capitalize on increased consumer spending on electronics during holidays. On the other hand, CrowdStrike Holdings, Inc. (CRWD) might be best avoided now, given its downtrend.

NVIDIA Corporation (NVDA)

NVDA is a global provider of graphics, computation, and networking solutions. The company operates through two segments: Graphics and Compute & Networking.

NVDA’s revenue has exhibited a 41.8% CAGR over the past three years. During the same time horizon, the company’s EBITDA and net income have also grown at 51.6% and 35.2% CAGRs, respectively.

For the fiscal third quarter, ended October 30, 2022, NVDA’s non-GAAP operating income increased 15.9% sequentially to $1.54 billion, while its non-GAAP net income came in at $1.46 billion, up 12.7% quarter-over-quarter. This resulted in a sequential increase of 13.7% in non-GAAP EPS to $0.59 during the same period.

Analysts expect NVDA’s revenue and EPS for the fiscal fourth quarter to increase 1.5% and 37.9% sequentially to $6.02 billion and $0.80, respectively. The company has surpassed consensus EPS estimates in two of the trailing four quarters. Continue reading "1 Tech Stock That's Safe And 1 That's Not" →

ADT Hit a New 52-Week High

Posted on by The MarketClub Team

Provider of security, interactive, and smart home solutions ADT Inc. (ADT) hit a new 52-week high of $9.82 on December 2, 2022. ADT’s stock has gained 15.9% in price year-to-date and 16.9% over the past year to close the last trading session at $9.64.

ADT’s EPS and revenue surpassed the consensus estimates in the last quarter. Its EPS came 52.1% higher than analyst estimates, while its revenue beat the consensus estimate by 0.6%. Higher revenues from the CSB, Commercial, and ADT Solar segments drove revenues higher.

Total CSB revenue increased 7% year-over-year to $1.11 billion in the third quarter, while its total Commercial revenue rose 12% year-over-year to $314 million. Furthermore, ADT’s Solar segment contributed $179 million to its total revenue.

ADT’s President and CEO, Jim DeVries, said, “ADT’s strong third-quarter results demonstrate our continued momentum – setting records in customer retention, RMR balance, and revenue payback. Our performance to date validates our progress on key initiatives, outlined earlier this year during our Investor Day, to meaningfully grow revenue, earnings, and cash flows, as well as reduce debt.”

On September 6, 2022, ADT announced that State Farm would make an equity investment of $1.20 billion in ADT, resulting in State Farm owning approximately 15% of ADT. ADT also announced a new partnership with State Farm to expand opportunities to combine next-generation security, innovative smart home technology, and reimagined risk-mitigation capabilities to monitor, detect, prevent, and minimize homeownership risks.

Post the announcement, the stock had a gap-up opening and has not looked back since.

ADT Chart

Source: TradingView

State Farm will also invest up to $300 million in an opportunity fund to support product innovation, technology, and marketing that seeks to differentiate and improve the customer experience for homeowners. Continue reading "ADT Hit a New 52-Week High" →