4 undervalued stocks to buy before you take off
Major stock indexes rallied last week and today’s index futures indicate bullish investor sentiment. A strong start to the third quarter earnings season is the key catalyst. The market was also supported by reports that the first jobless claims fell below 300,000 for the first time since the pandemic.
While the inflationary environment and supply chain constraints remain a concern, continued low interest rates and strong corporate earnings are expected to continue to support market dynamics in the near term.
Therefore, we believe that it might be wise to bet on quality stocks SS&C Technologies Holdings, Inc. (SSNC), Amdocs Limited (DOX), Criteo SA (CRTO) and EchoStar Corporation (SATS). They all appear to be undervalued at their current price points.
SS&C Technologies Holdings, Inc. (SSNC)
SSNC is a hedge fund, private equity administrator and mutual fund transfer agency based in Windsor, Connecticut. The company owns and operates securities accounting, front-to-back-office operations, regulatory reporting and healthcare information processes. Its products and services also enable professionals in the financial services and healthcare industries to automate complex business processes.
This month, SSNC was selected as a director and technology partner by Mammoth Scientific, a health science and technology venture capital firm, for its first $ 100 million fund. SSNC’s private market offerings are expected to enable start-ups like Mammoth to quickly commercialize and facilitate integrated operations through this collaboration.
SSNC’s total revenue for the second quarter, ended June 30, 2021, increased 10.6% year-on-year to $ 1.26 billion. The company’s gross profit rose 16.4% from its value a year ago to $ 595 million. Its operating profit increased 29.7% from the previous year quarter to $ 312.9 million. And the company’s net profit rose 12% year-on-year to $ 189.8 million.
Analysts expect SSNC’s revenue to grow 6.3% year-on-year to $ 4.97 billion in its 2021 fiscal year. The company has an impressive track record of earnings surprises; it has beaten consensus EPS estimates in each of the past four quarters. In addition, its EPS is expected to increase by 11.9% in the current year.
In terms of EV / forward sales, SSNC is currently trading at 4.97x, which is 18.9% below the industry average 4.18x. In addition, its non-GAAP futures P / E of 15.12x is 38.8% lower than the industry average of 24.7x. SSNC’s stock price has jumped 9.6% in the past nine months and 12.7% in the past year.
SSNC’s strong fundamentals are reflected in its POWR odds. The stock has an overall A rating, which equates to a strong buy in our proprietary rating system. POWR ratings assess stocks based on 118 distinct factors, each with its own weight.
Additionally, the stock has a B rating for value, sentiment, and quality. We also rated SSNC for growth, stability and momentum. Click here to access all SSNC assessments. SSNC is ranked n Â° 3 out of 60 stocks in the Software – Company industry.
Click here to view our Software Industry Report for 2021
Amdocs Limited (DOX)
DOX is a software service provider providing solutions to the communications, pay television, entertainment and media industries. The company’s services include managed services, digital business operations, quality engineering services, cloud services, consulting services and integration services. DOX is headquartered at Saint Peter Port, the Channel Islands.
Last month, DOX was selected to provide business support systems by Orange for Europe’s first experimental 5G autonomous (SA) cloud network. Using its agility, scalability and cloud native automation platform, DOX intends to create a true cloud native business support system that supports Orange’s 5G use cases.
In its fiscal third quarter, ended June 30, 2021, DOX revenue increased 3.9% year-over-year to $ 1.07 billion. The company’s operating profit rose 5% from its value a year ago to $ 154.92 million. Its net profit increased 21.4% from the previous year quarter to $ 146.15 million. In addition, the company’s EPS increased 26.7% year-on-year to $ 1.14.
DOX revenue is expected to grow 4.6% year-on-year to $ 3.88 billion in its 2022 fiscal year. Additionally, the company has an impressive record of surprising earnings; it has beaten consensus EPS estimates in three of the past four quarters. In addition, its EPS is expected to rise 8.2% next year.
In terms of advance VE / Sales, the DOX is currently trading at 2.35x, which is 43.7% below the 4.18x industry average. Additionally, in terms of futures price / pound, the stock is currently trading at 2.77x, which is 54.5% below the industry average 6.10x. The DOX share price has jumped 14.3% in the past nine months and 36.9% in the past year.
DOX’s POWR ratings reflect this promising outlook. The stock has an overall B rating, which is equivalent to a purchase in our proprietary rating system. Additionally, the stock has a B rating for momentum, quality, and value.
In addition to the POWR ratings I just outlined, we can see DOX ratings for Stability, Feeling, and Growth here. DOX is ranked # 4 in the Software – Company industry.
Recently, the Reitmeister Total Return Portfolio (RTR) closed a winning trade on DOX for a gain of 25%. Learn more about the RTR service here.
Criteo SA (CRTO)
Based in Paris, France, CRTO is a digital performance marketing company that provides open Internet marketing and monetization services. The company’s solution consists of the Criteo engine, data assets, inventory access, and its advertiser and publisher platforms. It serves companies in the digital retail, travel and classifieds industries.
CRTO’s net income increased 144.4% year-over-year to $ 15.03 million for the second quarter ended June 30, 2021. Company cash and cash equivalents increased slightly for the six months ended on June 30, 2021, to reach $ 489.52 million. Its revenue increased 26% from the previous year quarter to $ 551.31 million. In addition, the company’s gross profit increased 25.3% year-on-year to reach $ 182.87 million.
For fiscal 2021, analysts expect CRTO’s revenue to grow 9.3 percent year-over-year to $ 901.77 million. It has beaten consensus EPS estimates in each of the past four quarters. In addition, the company’s EPS is expected to increase by 15.7% in the current year.
In terms of EV / forward sales, CRTO is currently trading at 2.11x, which is 19.1% below the industry average of 2.61x. In addition, its forward EV / EBITDA of 6.5x is 34.6% lower than the industry average of 9.94x. The CRTO share price has jumped 95.8% in the past nine months and 207.5% in the past year.
It’s no surprise that CRTO has an overall rating of B, which equates to a purchase in our POWR rating system. In addition, the stock has an A rating for growth and a B rating for momentum and quality.
Click here to see additional POWR ratings for CRTO (Value, Stability & Sentiment). Within the Internet services industry, CRTO is ranked # 4 out of 38 stocks.
EchoStar Corporation (SATS)
Established in 2007, SATS is a global provider of satellite communication solutions. The Englewood, Colorado, The company operates through two segments: Hughes and EchoStar Satellite Services (ESS). In addition, it provides network technologies, managed services and communications solutions to corporate clients, which include aviation and government companies.
This month, the National Company for Telecommunications Services (NCTS) selected one of SATS ‘segments, the Hughes JUPITER system, to provide the ground segment for the operation of the Ka-band TIBA-1 satellite. The Hughes JUPITER system is an essential ingredient of a resilient and reliable broadband network that will contribute to the social and economic development of Egypt.
For the second quarter ended June 30, 2021, SATS ‘total revenue increased 8.8% year-over-year to $ 499.83 million. The company’s net profit was $ 35.02 million, compared to a net loss of $ 14.84 million in the second quarter of 2020. Its total adjusted EBITDA increased 16% from its value at a year ago to reach $ 186.69 million. The company’s cash and cash equivalents were $ 716.52 million for the six-month period ended June 30, 2021.
Analysts expect SATS revenue for its 2021 fiscal year to be $ 1.97 billion, up 4.5% year-over-year. The company has an impressive history of profit surprises; it has beaten consensus EPS estimates in each of the past four quarters. In addition, its EPS is expected to increase by 517.1% in the current year and 2,800% in the next quarter.
In terms of EV / forward sales, SATS is currently trading at 1.22x, which is 53.2% below the industry average of 2.61x. Additionally, in terms of its forward EV / EBITDA, the stock is currently trading at 3.48x, 64.9% lower than the industry average 9.94x. The SATS share price has jumped 10.8% in the past three months and 16.8% since the start of the year.
SATS ‘strong fundamentals are reflected in its POWR ratings. The stock has an overall B rating, which is equivalent to a purchase in our POWR rating system. Additionally, the stock has a B rating for growth, value and quality.
We also rated SATS for momentum, stability and sentiment. Click here to access all SATS ratings. In dimension B Technology – Electronics industry, SATS is ranked # 8 out of 45 stocks.
Shares of SSNC were trading at $ 73.45 per share on Tuesday morning, up $ 0.72 (+ 0.99%). Year-to-date, SSNC has gained 1.64%, compared to a 21.50% increase in the benchmark S&P 500 over the same period.
About the Author: Priyanka Mandal
Priyanka is an avid investment analyst and financial journalist. After get a master’s degree in economics, her interest in financial markets motivated her to start her career in investment research. Following…
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