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2 Stocks Down 50% in Year-to-Date That Are Buys Now

The probability of aggressive interest rate increases by the Fed later this year, and the Ukraine-Russia war, have weighed on the stock market so far this year. However, April has traditionally been one of the best months of the year for stocks. Therefore, we think the recent market dip could be an opportune time to invest in fundamentally sound stocks Masimo (MASI) and Smith-Midland (SMID). Read on.

The major stock market indices were up in March, but their performance for the first quarter was the worst since the onset of the COVID-19 pandemic. Investors’ concerns about surging inflation, the consequences of the Ukraine-Russia War, supply chain disruptions, and the Fed's decision to raise the interest rates later this year resulted in increased stock selling and significant price dips.

However, April is historically one of the best months of the year for the S&P 500. According to Sam Stovall, chief investment strategist at CFRA, the S&P 500 has been higher 70% of the time and has gained an average of 1.7% in all Aprils since World War II. The S&P was 3.6% up in March, and the momentum is expected to continue. Also, the robust employment rate, which is evidenced by the addition of 431,000 jobs in March, should also help the market regain its stability.

Given this backdrop, we think it could be prudent to bet on fundamentally sound stocks Masimo Corporation (MASI) and Smith-Midland Corporation (SMID), which are down more than 50% in price year-to-date.

Masimo Corporation (MASI)

MASI in Irvine, Calif., develops, manufactures, and markets noninvasive monitoring technologies and hospital automation solutions internationally. The company offers Masimo signal extraction technology (SET) pulse oximetry with measure-through motion and low perfusion pulse oximetry monitoring to address the primary limitations of conventional pulse oximetry.

MASI's product revenue increased 11% year-over-year to $327.58 million for the fourth quarter, ending Jan.1, 2022. Its non-GAAP operating income grew 23.6% from its year-ago value to $84.24 million, while its non-GAAP net income amounted to $70.07 million, up 22.3% from its prior-year quarter. Its  non-GAAP EPS improved 23.5% year-over-year to $1.21.

The $1.00 consensus EPS estimate for the first quarter, ending March 31, 2022, represents an 11.2% improvement year-over-year. Analysts expect MASI's revenue to increase 7.3% year-over-year to $320.95 million for the same period. In addition, it has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has declined 49.7% in price year-to-date. However, it has gained 2% over the past month.

MASI'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 distinct factors, each with its own weighting.

The stock also has a B grade for Quality. Within the Medical - Devices & Equipment Industry, it is ranked #26 of 161 stocks.

To see additional POWR Ratings for Growth, Value, Sentiment, Stability, and Momentum for MASI, click here.

Click here to checkout our Healthcare Sector Report for 2022

Smith-Midland Corporation (SMID)

SMID, along with its subsidiaries, invents, develops, manufactures, markets, leases, licenses, sells, and installs precast concrete products, primarily for use in the construction, highway, utilities, and farming industries. It offers SlenderWall, a patented, lightweight, energy-efficient concrete and steel exterior wall panel for building construction; Its Sierra Wall provides sound and sight barriers for use alongside highways around residential, industrial, and commercial properties. SMID is headquartered in Midland, Va.

During its fiscal year 2021, SMID's revenue increased 15% year-over-year to $50.6 million. The operating income improved 64% from its year-ago value to $6.2 million, while its net income grew 181.5% from the prior period to $7.6 million. The company's EPS rose 184% year-over-year to $1.45.

The stock has declined 60.7% in price year-to-date. However, it has surged 52.1% over the past year.

SMID's strong fundamentals are reflected in its POWR Ratings. The stock has a B grade for Quality and Sentiment. In the B-rated Industrial - Building Materials industry, it is ranked #34 of 52 stocks.

In total, we rate SMID on eight distinct levels. Beyond what we have stated above, we have also given SMID grades for Growth, Value, Momentum, and Stability. Get all the SMID ratings here.    

Click here to check out our Industrial Sector Report for 2022      

MASI shares were trading at $144.42 per share on Friday afternoon, down $2.84 (-1.93%). Year-to-date, MASI has declined -50.67%, versus a -5.32% 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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