High inflation led the Federal Reserve to hike interest rates seven times in 2022. However, inflation seems to be cooling off, but we still have a long way to go to return to the Fed’s target rate. According to the central bank’s median forecast, interest rates would climb as high as 5.1% this year, which is expected to create jitters in the U.S. market.

However, the stock market has managed to scrape out minor gains in the initial weeks of this year. Barry Bannister, chief equity strategist of investment bank Stifel, believes that the U.S. economy would avoid a recession in the first half of 2023 and might achieve a ‘soft landing’ if inflation continues to fall over the next few months.

Given this backdrop, one should not hesitate to load up some quality stocks with a defensive nature that could thrive in an adverse economic environment. Hence, considering the strong fundamentals and solid growth prospects of Myers Industries, Inc. (MYE) and Xperi Inc. (XPER), these stocks could be ideal additions to one’s portfolio.

Myers Industries, Inc. (MYE)

MYE is a manufacturer of a wide range of polymer and metal products for industrial, agricultural, automotive, commercial, and consumer markets. It is engaged in the distribution of tire service supplies in Ohio. The company operates through two segments: Material Handling and Distribution.

On October 17, 2022, the company introduced a broad portfolio of reusable packaging solutions at Pack Expo 2022. The new set of solutions is expected to be highly demanded by various industries, such as industrial manufacturing, food processing, retail/wholesale distribution, agriculture, and automotive, which should boost the company’s revenues.

MYE’s net sales increased 14% year-over-year to $228.06 million for the third quarter that ended September 30, 2022. Its adjusted operating income increased 75.7% year-over-year to $22.01 million, while its adjusted net income grew 76.9% from the prior-year value to $15.02 million.

The company’s adjusted EPS came in at $0.41, representing a 78.3% year-over-year increase. In addition, its adjusted EBITDA increased 57.2% year-over-year to $27.17 million.

In terms of forward EV/Sales, MYE is trading at 1.08x, 27.4% lower than the industry average of 1.49x. Its forward Price/Sales multiple of 0.95 is 16.6% lower than the industry average of 1.14.

The consensus EPS estimate of $0.29 for the fiscal fourth quarter (ended December 2022) represents a 26.1% improvement year-over-year. The consensus revenue estimate of $220.63 million for the last quarter represents a 10.6% increase from the same period the prior year. The company has an excellent earnings surprise history, as it surpassed the EPS estimates in each of the trailing four quarters.

Shares of MYE have gained 43.5% over the past three months and 22.8% over the past year to close the last trading session at $23.73.

MYE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It has a B grade for Growth, Stability, Sentiment, and Quality. Within the A-rated Industrial - Manufacturing industry, it is ranked #4 out of 36 stocks. To see the other ratings of MYE for Value and Momentum, click here.

Xperi Inc. (XPER)

Software and services provider XPER offers consumers a seamless end-to-end entertainment experience, from choice to consumption, in the home, in the car, and on the go. The company has three business categories: Pay- TV, Consumer Electronics; Connected Car; and Media Platform.

On January 4, 2023, XPER entered into a partnership with LG Electronics to integrate DTS:X, its immersive audio technology, into LG’s latest OLED and Premium LCD TVs. This new line of LG TVs is expected to deliver a cinematic experience to consumers while transforming their listening experience.

“DTS is enabling a new level of audio experience, bringing the quality sound consumers expect in a theater to the home, to help transform the listening experience of LG TV users.”, said Jea Yoo, president of Korea at XPER.

XPER’s total revenue increased 3.3% year-over-year to $121.64 million for the third quarter that ended September 30, 2022. Its total current assets came in at $336.30 million for the period September 30, 2022, compared to $277.14 million for the period ended December 31, 2021.

In terms of forward EV/Sales, XPER is trading at 0.60x, 77.2% lower than the industry average of 2.62x. Its forward Price/Sales multiple of 0.77x is 70.8% lower than the industry average of 2.63x.

For the fiscal year 2023 (ending December), Street expects XPER’s revenue to increase 6.2% year-over-year to $528.28 million. Its EPS is expected to increase by 15% per annum over the next five years.

The stock has gained 2.4% over the past five days to close the last trading session at $9.11.

XPER’s POWR Ratings reflect this promising outlook. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The stock has a B grade for Growth, Sentiment, and Quality. Among the 92 stocks in the B-rated Semiconductor & Wireless Chip industry, it is ranked #3.

Click here to see the other ratings of XPER for Value, Momentum, and Stability.

MYE shares were trading at $23.68 per share on Wednesday afternoon, down $0.05 (-0.21%). Year-to-date, MYE has gained 6.52%, versus a 2.75% rise in the benchmark S&P 500 index during the same period.

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.

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