3 Top Bargain Stocks to Buy Now: AutoNation, Natus Medical, and Donnelley Financial Solutions Worsening geopolitical tensions and looming interest rate hikes have dampened investor sentiment regarding the stock market. Nevertheless, the economy is expected to maintain its recovery this year. So, we think...
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Worsening geopolitical tensions and looming interest rate hikes have dampened investor sentiment regarding the stock market. Nevertheless, the economy is expected to maintain its recovery this year. So, we think it could be wise to bet on quality stocks AutoNation (AN), Donnelley Financial (DFIN), and Natus Medical (NTUS), which are trading at discounts to their peers. Read on.
Since the beginning of the year, the stock market has witnessed significant volatility on concerns over the prospect of multiple interest rate hikes this year and on geopolitical tensions. Russia's invasion of Ukraine is the biggest such action in Europe since World War II. The event might have significant implications for the global stock markets in the next few weeks. However, the U.S. economy is expected to continue recovering this year, lending significant support to the stock market.
Given the selloffs witnessed by the stock market lately, many quality stocks are currently trading at bargains. These companies' robust financials could help them rebound quickly.
Fundamentally sound stocks AutoNation, Inc. (AN), Donnelley Financial Solutions, Inc. (DFIN), and Natus Medical Incorporated (NTUS), which are currently trading at discounts to their peers, could be solid bets now.
AutoNation, Inc. (AN)
Automotive retailer AN, which is headquartered in Fort Lauderdale, Fla., operates through three segments: Domestic; Import; and Premium Luxury. As America's largest automotive retailer, the company owns and operates more than 300 locations from coast to coast.
On Feb. 17, 2022, Mike Manley, AN CEO, said, "We expect consumer demand for personal vehicle ownership to remain strong for the foreseeable future, and we are accelerating our self-sustaining used vehicle business to meet this demand through our sourcing capabilities, selection of vehicles, footprint, digital tools, and core efficiencies."
AN's total revenue came in at $6.58 billion, up 13.8% year-over-year for the fourth quarter. ended Dec. 31, 2021. Its gross profit was $1.32 billion, up 33.9% year-over-year, while its net income came in at $387.1 million, up 155.5% year-over-year. Furthermore, its EPS increased 239.3% year-over-year to $5.87.
The stock's 0.41x and 0.23x respective forward EV/S and P/S are lower than the 1.26x and 1.01x industry averages.
Analysts expect AN's revenue to increase 6.9% year-over-year to $27.64 billion in its fiscal year 2022. Its EPS is estimated to grow 23.6% per annum over the next five years. It surpassed the EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 36.5% in price to close the last trading session at $106.50.
AN's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system.
AN has an A grade for Value and a B grade for Growth and Quality. Within the B-Rated Auto Dealers & Rentals industry, it is ranked #5 of 26 stocks. Click here to see the additional POWR Ratings for Momentum, Stability, and Sentiment for AN.
Donnelley Financial Solutions, Inc. (DFIN)
Chicago-based DFIN operates as a risk and compliance solutions company worldwide. It has four segments: Capital Markets – Software Solutions (CM-SS); Capital Markets – Compliance and Communications Management (CM-CCM); Investment Companies – Software Solutions (IC-SS); and Investment Companies – Compliance and Communications Management (IC-CCM).
On Dec. 13, 2021, DFIN acquired Guardum, a leading data security and privacy software provider that helps companies locate, secure, and control data. Craig Clay, president of Global Capital Markets at DFIN, said, "Incorporating Guardum's data security and public information technology into our platform creates privacy intelligence by identifying and protecting our clients' sensitive data, automating time-consuming processes, and reducing the risk of exposing sensitive data to comply with the growing number of privacy regulations in an ever-changing digital world."
DFIN's total net sales came in at $232.8 million, up 10.7% year-over-year for the fourth quarter. ended Dec. 31, 2021. Its non-GAAP net earnings came in at $37.7 million, up 216.8% year-over-year. Also, its EPS came in at $0.73, compared to a $1.07 loss per share.
DFIN's 1.36x forward EV/S is 52.8% lower than the 2.88x industry average. Its 1.15x forward P/S is 64.6% lower than the 3.26x industry average.
For the quarter ended March 2022, analysts expect DFIN's revenue to be $221.18 million, representing a 3.2% year-over-year rise. The company's EPS is expected to increase 10% per annum for the next five years. It has surpassed EPS estimates in three of the trailing four quarters. And over the past year, the stock has gained 41.4% in price to close the last trading session at $32.11.
DFIN has an overall B rating, which equates to a Buy in our POWR Ratings system.
Also, the stock has an A grade for Value and a B grade for Quality. Within the Financial Services (Enterprise) industry, it is ranked #13 of 112 stocks. Click here to see the additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for DFIN.
Note that DFIN is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
Natus Medical Incorporated (NTUS)
NTUS provides medical device solutions to diagnose and treat central nervous and sensory system disorders worldwide. It is a leading provider of medical device solutions for diagnosing and treating major nervous and sensory system disorders. NTUS is headquartered in Pleasanton, Calif.
On Feb. 24, 2022, Thomas J. Sullivan, President and CEO, NTUS, said, "As a result of a strategic review of our markets, Natus will realign its portfolio and commercial infrastructure to focus on the clinical areas of the Brain, Neural Pathways, and eight Sensory Nervous Systems. We believe a focus on higher value markets will position us for increased growth while also enabling us to reduce complexity to improve our execution and long-term margin expansion."
For its fiscal fourth quarter, ended Dec. 31, 2021, NTUS' revenue increased 8.4% year-over-year to $128.66 million. In addition, its non-GAAP net income came in at $16.19 million, up 24% year-over-year, while its non-GAAP EPS was $0.47, up 20.5% year-over-year.
NTUS' 1.57x forward EV/S is 66% lower than the 4.60x industry average Its 1.69x forward P/S is also lower than the 5.37x industry average.
NTUS' revenue is expected to come in at $485 million in its fiscal year 2022, representing a 2.4% year-over-year rise. And its EPS is also expected to grow 22% per annum for the next five years. The stock closed last trading session at $24.00.
It's no surprise that NTUS has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Growth and Value and a B grade for Quality.
NTUS is ranked #1 of 167 in the Medical - Devices & Equipment industry. Click here to see the additional POWR Ratings for NTUS (Momentum, Stability, and Sentiment).
Click here to checkout our Healthcare Sector Report for 2022
AN shares were unchanged in premarket trading Friday. Year-to-date, AN has declined -8.86%, versus a -9.82% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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