Buy Now: Top 3 Stocks in Their Industries With the Most Growth Potential at the End of April The US stock market has been on a rollercoaster ride lately, with concerns over the debt ceiling and the looming threat of a recession. However, investors looking for ideal investments...
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The US stock market has been on a rollercoaster ride lately, with concerns over the debt ceiling and the looming threat of a recession. However, investors looking for ideal investments can consider buying fundamentally strong stocks Koninklijke Ahold Delhaize (ADRNY), Suburban Propane Partners (SPH), and Nature's Sunshine Products (NATR), which are the top stocks in their respective industries. Keep reading.
Despite the macroeconomic headwinds, investors remain optimistic about the prospects for long-term economic growth, interest rates, and inflation, as reflected in yesterday's massive stock rally. The Dow Jones Industrial Average jumped more than 500 points, notching its best day since January 6, 2023.
In this article, I have identified three high-growth potential stocks Koninklijke Ahold Delhaize N.V. (ADRNY), Suburban Propane Partners, L.P. (SPH), and Nature's Sunshine Products, Inc. (NATR), which are the top three stocks in their respective A-rated industries as per our proprietary rating system.
While the US economy grew at a slower rate of 1.1% in the first quarter of this year, compared to economists' expectations of 2%, the growth rate was still more moderate than the previous two quarters.
The slowdown was due to businesses rebalancing inventories and reducing spending in response to Federal Reserve rate hikes. Additionally, fears of a banking sector meltdown and a looming debt ceiling crisis contributed to economic uncertainty during the January-to-March period.
Moreover, Congress had approved trillions of dollars in spending over the last decade, resulting in the national debt tripling since 2009.
Though the debate over raising the debt ceiling has become a political formality, economists warn that failure could have severe economic repercussions, including a 10% halt in economic activity, three million job losses, higher interest rates, and a surge in home loan costs.
Treasury Secretary Janet Yellen has cautioned that a default on the debt would produce an economic and financial catastrophe, raising the cost of borrowing into perpetuity and making future investments substantially more expensive.
As a result, investors should consider investing in the following quality stocks:
Koninklijke Ahold Delhaize N.V. (ADRNY)
Headquartered in Zaandam, the Netherlands. ADRNY is a retail food and e-commerce company that operates retail food stores and e-commerce primarily in the United States and Europe under various brands, such as Food Lion, Stop & Shop, Hannaford, and Delhaize.
On March 28, 2023, ADRNY announced that it had successfully priced a €500 million ($551.71 million) green bond, with a term of 5 years, maturing on April 4, 2028.
This follows the company's previous ESG-labelled financings, including its Sustainability Bond issuance in 2019, a €1 billion ($1.10 billion) Sustainability-Linked RCF launched in 2020 and refinanced to €1.5 billion ($1.66 billion) in 2022, and a Sustainability-Linked Bond issuance in 2021.
These ESG-labelled financings demonstrate the company's commitment to aligning its funding strategy with its sustainability strategy and overall ESG ambitions.
On the same day, ADRNY announced that it had repurchased 480,000 of its common shares between March 20, 2023, and March 24, 2023, as part of its €1 billion ($1.10 billion) share buyback program announced on November 9, 2022. The shares were bought at an average price of €30.56 ($33.72) per share, for a total consideration of €14.70 million ($16.22 million).
The share buyback program is a part of the company's capital allocation strategy, which aims to create value for shareholders by returning excess cash to them.
During the fourth quarter of 2022, ADRNY's net sales increased 15.9% year-over-year to €23.36 billion ($25.77 billion), with online sales rising 12.4% year-over-year to €2.45 billion ($2.70 billion). Its operating income rose 30.5% from the year-ago value to €1.17 billion ($1.29 billion).
Additionally, the company's net income and EPS grew 27.6% and 32.4% year-over-year to €809 million ($892.66 million) and €0.82, respectively.
ADRNY's net income and EPS have grown at CAGRs of 13% and 16.9% over the past three years.
Street expects ADRNY's EPS to increase 3.5% year-over-year to $2.81 for the fiscal year 2023. The company's revenue for the ongoing year is expected to grow 6.3% year-over-year to $98.82 billion. Furthermore, the company surpassed its consensus revenue estimates in three of the four trailing quarters, which is remarkable.
Shares of ADRNY have gained 28.3% over the past nine months to close the last trading session at $34.70.
ADRNY's POWR Ratings reflect its promising outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ADRNY has an A grade for Quality and Stability and a B for Value and Stability. It is ranked at the top of 37 stocks in the A-rated Grocery/Big Box Retailers industry.
In addition to the POWR Ratings just highlighted, access ADRNY ratings for Growth and Momentum here.
Suburban Propane Partners, L.P. (SPH)
SPH is involved in the retail marketing and distribution of propane, fuel oil, and refined fuels. The company has four operating segments: Propane; Fuel Oil and Refined Fuels; Natural Gas and Electricity; and All Other.
In December 2022, SPH acquired an RNG platform with two operating facilities producing RNG, or renewable natural gas. The acquisition was made from Equilibrium, and the partnership formed between the two parties will serve as a long-term growth platform for the identification, development, and operation of additional RNG projects.
On April 20, 2023, SPH declared a quarterly distribution of $0.325 per common unit, payable on May 9, 2023. This quarterly distribution rate equates to an annualized rate of $1.30 per common unit, which translates to a yield of 8.47% on the prevailing price level. The stock has a four-year average dividend yield of 10.37%.
During the fiscal first quarter ended December 24, 2022, SPH's total revenue increased 5.9% year-over-year to $397.47 million. Its operating income grew 67.3% from the prior-year quarter to $62.32 million. The adjusted EBITDA rose 4.1% year-over-year to $90.04 million.
Moreover, net income and net income per common unit increased 113.1% and 108.8% from the prior-year quarter to $45.39 million and $0.71.
SPH's net income and revenue have grown at CAGRs of 26.4% and 25.4% over the past three years and at CAGRs of 32.1% and 30.9% over the past five years.
Analysts expect SPH to report EPS and revenue of $2.14 and $1.42 billion, respectively, for the fiscal year 2023. The company has exceeded consensus EPS estimates in three of the trailing four quarters.
The stock has gained 4.1% over the past month to close the last trading session at $15.63.
It's no surprise that SPH has an overall B rating, translating to Buy in our proprietary rating system.
The stock has an A grade for Momentum and a B for Quality. It is ranked #2 among the two stocks within the MLPs – Gas industry.
To access additional POWR Ratings for Value, Growth, Stability, and Sentiment for SPH, click here.
Nature's Sunshine Products, Inc. (NATR)
NATR is a natural health and wellness company engaged in the manufacturing and direct selling of nutritional and personal care products. The company offers general health products related to blood sugar support, bone health, cellular health, sleep, sports, energy, and vision.
NATR's selling, general and administrative expenses decreased 14.5% year-over-year to $38.84 million for the fourth quarter that ended December 31, 2022. Its net sales came in at $102.75 million. Gross profit was $74.16 million, while net income attributable to common shareholders came in at $1.95 million. Also, its earnings per share attributable to common shareholders came in at $0.10.
NATR's EBITDA and EBIT have grown at CAGRs of 22.2% and 63.6% over the past five years.
NATR's EPS is expected to rise 600% year-over-year to $0.28 for the fiscal year 2023. The company's revenue is expected to rise 1.9% year-over-year to $429.70 million for the current year. Additionally, the stock has topped consensus revenue estimates in each of the trailing four quarters.
The stock has gained 29.6% year-to-date to close the last trading session at $10.78.
NATR's sound prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has an A grade for Sentiment and Quality and B for Value. Within the A-rated Medical - Consumer Goods industry, it is ranked first among seven stocks.
Click here to see NATR'S additional ratings for Growth, Momentum, and Stability.
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these "death trap" stocks are lurking in your portfolio:
ADRNY shares were unchanged in premarket trading Friday. Year-to-date, ADRNY has gained 22.71%, versus a 8.25% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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