The Federal Reserve’s latest interest rate hike of 0.75%, the largest in nearly three decades, is expected to keep Wall Street on edge. Furthermore, the Fed indicated more aggressive raises ahead to continue its fight against inflation.
According to Axonic Capital's Peter Cecchini, the Federal Reserve's furious policy tightening will only increase the chances of a prolonged economic recession and a deep sell-off in the stock market.
Last week, the S&P 500 recorded its worst weekly performance since March 2020, losing 5.8%. This decline also marked its 10th drop in the last 11 weeks. JPMorgan analysts warned that the S&P 500's decline implies an 85% chance of recession.
Despite the market’s continued correction, fundamentally sound stocks RCM Technologies, Inc. (RCMT), Alpha Metallurgical Resources, Inc. (AMR), and Urban One, Inc. (UONEK) have gained more than 50% year-to-date. They have also rated a Strong Buy in our proprietary POWR Ratings system.
RCM Technologies, Inc. (RCMT)
Headquartered in Pennsauken, New Jersey, RCMT provides business and technology solutions in the United States, Canada, Puerto Rico, and Serbia. It has three operational segments: Engineering; Specialty Health Care; and Life Sciences and Information Technology.
For the first quarter ended April 2, 2022, RCMT’s revenue increased 84% year-over-year to $81.96 million. Its operating income grew 557.1% from its year-ago value to $9.04 million, while its net income improved 547.5% to $6.52 million. The company’s EPS rose 675% year-over-year to $0.62.
Analysts expect RCMT's revenue to increase 61.7% year-over-year to $79.13 million for the second quarter ending June 2022. The consensus EPS estimate of $0.53 represents a 348% improvement year-over-year for the second quarter ending June 2022.
Moreover, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters. The stock has gained 208.7% year-to-date and 233.5% over the past six months.
RCMT's POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock also has an A grade for Growth and a B for Sentiment and Value. Within the A-rated Outsourcing - Staffing Services industry, it is ranked #4 of 18 stocks.
To see additional POWR Ratings for Stability, Quality, and Momentum for RCMT, click here.
Alpha Metallurgical Resources, Inc. (AMR)
AMR is a mining company that produces, processes, and sells met and thermal coal in Virginia and West Virginia. As of December 31, 2021, it operated twenty active mines and eight coal preparation and load-out facilities.
This month AMR announced various positive financial updates, including the elimination of its remaining term loan balance. On June 3, 2022, AMR made a voluntary prepayment of $99.4 million on its term loan, which removed all remaining principal and paid the loan in full.
Also, in connection with AMR’s improved financial position, the company has received a reduction of $40.1 million in collateral requirements related to its self-insured workers' compensation at certain locations in West Virginia.
In the first quarter ending March 31, 2021, AMR’s total revenues increased 177.5% year-over-year to $1.07 billion. Its income from operations came in at $453.09 million compared to a loss of $16.50 million in the previous period.
Its net income amounted to $21.58 million, compared to a net loss of $32.93 million in the prior period. The company’s EPS stood at $20.52 compared to a loss per share of $1.78 in the previous period.
The consensus EPS estimate of $21.23 for the third-quarter ending September 2022 represents a 382.5% year-over-year growth. Analysts expect revenue to increase 194.7% year-over-year to $1.16 billion for the second quarter ending June 2022. The company’s shares have surged 208.7% year-to-date and 193.5% over the past nine months.
AMR'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 Growth and a B for Value and Momentum. Within the A-rated Coal industry, it is ranked #3 of 11 stocks.
In total, we rate AMR on eight different levels. Beyond what we've stated above, we have also given AMR grades for Stability, Sentiment, and Quality. Get all the AMR ratings here.
Urban One, Inc. (UONEK)
Headquartered in Silver Spring, Maryland, UONEK functions as an urban-oriented multi-media company in the United States. The company has four operational segments: Radio Broadcasting; Cable Television; Reach Media; and Digital.
Recently, UONEK signed a definitive asset purchase agreement with Emmis Communications to purchase its Indianapolis Radio Cluster. Under the terms of the agreement, UONEK will purchase WYXB (B105.7FM), WLHK (97.1FM), WIBC (93.1FM), and translators W228CX and W298BB (The Fan 93.5FM and 107.5FM), and Network Indiana.
UONEK’s net revenue increased 22.9% year-over-year to $112.35 million for the first quarter ending March 31, 2022. Its operating income grew 53.8% from its year-ago value to $36.54 million, while its net income increased significantly to $16.37 million.
The company’s EPS amounted to $0.30 over the period. The stock has gained 57.5% year-to-date and 59.9% over the past six months.
It is no surprise that UONEK has an overall A rating, equating to Strong Buy in our POWR Ratings system. UONEK has a B grade for Growth, Value, and Quality. In the B-rated Entertainment – Publishing industry, it is ranked #1 of 8 stocks.
Click here to see the additional POWR Ratings for UONEK (Stability, Momentum, and Sentiment).
RCMT shares were unchanged in premarket trading Monday. Year-to-date, RCMT has gained 208.71%, versus a -22.73% 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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