Got $3,000? These 3 Stocks Could Double Earnings Over the Next Few Years In the wake of the U.S. Congress' passage of a $1 trillion infrastructure package late last week, the S&P 500 closed at a record high at the beginning of this...
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In the wake of the U.S. Congress' passage of a $1 trillion infrastructure package late last week, the S&P 500 closed at a record high at the beginning of this week. Also, a decline in jobless claims, declining COVID-19 cases, and estimated strong growth in the fourth quarter are fostering investor bullishness. Therefore, we think it could be worth betting on fundamentally sound stocks ArcelorMittal (MT), US Foods (USFD), and Sanderson Farms (SAFM). These stocks possess strong growth attributes and could double their earnings over the next few years. So, let's examine these names more closely.
All three major U.S. stock market indices closed at record highs at the beginning of this week after the U.S. House of Representatives passed a $1.2 trillion infrastructure bill last week. Moreover, analysts expect the stock market to remain upbeat in the coming months on favorable economic data. Citi's Anthony Pettinari said in a note that "We view this generational investment as a significant catalyst for growth for a number of our stocks."
The Labor Department reported yesterday that weekly jobless claims decreased to 267,000. After slow growth in the third quarter, the U.S. economy is expected to achieve strong growth in the fourth quarter. In addition, more economic growth is expected next year, fueled by the continued expansion in consumer and government spending, which have raised investors' confidence.
Given this backdrop, if one has $3,000 in disposable cash, we think one should consider investing in the fundamentally strong growth stocks of ArcelorMittal (MT), US Foods Holding Corp. (USFD), and Sanderson Farms Inc. (SAFM) because their earnings could more than double over the next few years.
ArcelorMittal (MT)
Headquartered in Luxembourg City, Luxembourg, MT is a steel manufacturer that owns and operates steel manufacturing and mining facilities in Europe, North and South America, Asia, and Africa. The company's major steel products include semi-finished and finished flat products, electro-galvanized coils and sheets, piles, and seamless and welded pipes and tubes. Also, MT offers mining products that comprise concentrates, pellets, sinter feeds, and pulverized coal injections.
This month, MT and the government of Quebec announced a CAD$205 million ($164.68 million) investment by ArcelorMittal Mining Canada in its Port-Cartier pellet plant, enabling this facility to convert its entire 10 million tonnes annual pellet production to direct reduced iron pellets by the end of 2025. During the construction phase of the project, some 250 jobs are expected to be created.
MT's sales increased 37.6% year-over-year to $35.54 billion for the six months ended June 30, 2021. The company's gross margin grew 2,153.2% from its the year-ago value to $8.13 billion. Its operating income came in at $7.07 billion, compared to a $606 million operating loss in the prior-year quarter. Also, the company's net income amounted to $6.58 billion, versus a $1.65 billion net loss in the year-ago quarter.
MT's revenue is estimated to increase 45.3% year-over-year to $77.39 billion in its fiscal year 2021. In addition, the company surpassed consensus EPS estimates in three of the trailing four quarters. Also, its EPS is expected to grow 1,753.2% in the current year. MT's EPS is expected to grow at a 272.2% rate per annum over the next five years. The stock has gained 37.7% in price over the past nine months and 102% over the past year.
MT's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Momentum, Growth, and Value. We have also graded MT for Stability, Sentiment, and Quality. Click here to access all of MT's ratings. MT is ranked #5 of 33 stocks in the A-rated Steel industry.
Note that MT is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
US Foods Holding Corp. (USFD)
Incorporated in 2007, USFD in Rosemont, Ill., is a food company and foodservice distributor that serves approximately 300,000 restaurants and foodservice operators. The company offers fresh, frozen, dry food, meats and seafood, dairy, and beverage products to national restaurant chains, hospitals, hotels, country clubs, government and military organizations, colleges, and retail locations.
For its fiscal third quarter, ended October 2, 2021, USFD's net sales increased 34.9% year-over-year to $7.89 billion. The company's gross profit grew 27.4% from its year-ago value to $1.24 billion. Its operating income rose 73.1% from the prior-year quarter to $135 million. And the company's net income increased 700% year-over-year to $64 million.
USFD's revenue is expected to increase 27.9% year-over-year to $29.28 billion in its fiscal 2021. The company's EPS is expected to increase 1,744.4% in the current year. Also, USFD's EPS is expected to grow 220% per annum over the next five years. The stock has gained 5.3% in price over the past three months and 18.6% over the past year.
USFD's POWR Ratings reflect this promising outlook. Also, the stock has an A for Growth, a B grade for Value and Momentum.
In addition to the POWR Rating grades I have just highlighted, one can see USFD's ratings for Stability, Sentiment, and Quality here. The stock is ranked #32 of 80 stocks in the Food Makers industry.
Sanderson Farms, Inc. (SAFM)
SAFM is a vertically integrated poultry processing company that markets and distributes fresh, frozen, and prepared chicken products in the United States. The Laurel, Miss.-headquartered company offers ice-packed, chill-packed, bulk-packed, and frozen chicken under the Sanderson Farms brand. In addition, SAFM provides prepared chicken products and consumer packaged partially cooked or marinated chicken items to distributors and food service establishments.
During its fiscal third quarter, ended July 31, 2021, SAFM's net sales increased 41.4% year-over-year to $1.35 billion. The company's operating income grew 439.8% from its year-ago value to $215.22 million. Its net income rose 402.2% from the prior-year quarter to $164.76 million. And the company's EPS increased 398.6% year-over-year to $7.38.
SAFM's revenue is expected to increase 31.3% year-over-year to $4.68 billion in its fiscal 2021. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Its EPS is estimated to grow 1,434.6% in the current year and is estimated to increase 112.7% per annum over the next five years. The stock has soared 47.5% in price over the past year.
SAFM's POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has an A grade for Growth, and a B grade for Value and Quality.
In addition to the POWR Rating grades I have just highlighted, one can see SAFM's ratings for Stability, Sentiment, and Momentum here. SAFM is ranked #10 in the Food Makers industry.
MT shares were trading at $32.60 per share on Thursday morning, up $1.63 (+5.26%). Year-to-date, MT has gained 43.49%, versus a 25.51% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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