Stock market pressure will be likely to continue due to uncertainty over interest rate hikes by the Fed and tighter lending criteria. In the face of market uncertainty, you may want to consider buying quality stocks such as Simpson Manufacturing (SSD), Gibraltar Industries(ROCK), or Silvercrest Asset Management Group(SAMG), which are all well-positioned to maintain their momentum. Read more ....
Stock market volatility has been caused by fears of an imminent recession due to the high benchmark interest rate and tighter lending criteria. Investors could take advantage of stocks that are gaining momentum.
It would be wise to invest in Simpson Manufacturing Co., Inc., Gibraltar Industries, Inc., and Silvercrest Asset Management Group Inc. The stocks are showing good momentum and should continue to do so in the short term.
Let's first discuss the factors that are affecting investor confidence.
The inflation rate has been declining for 10 consecutive months. In April, the annualized inflation rate was 4.9%. The Fed has not reduced its inflation target to 2% despite the drop. Fed Chair Jerome Powell said that the central banks could opt out of raising its benchmark interest rates during its next meeting.
The strong growth in employment and the rise of 4.7% in April in the Personal Consumption Expenditures Index over the previous year indicate that macroeconomic data are stubborn, which could lead to a need to tighten monetary policy for longer.
In addition, it is likely that the banking crisis which has yet to abate will lead to stricter lending standards. The high borrowing costs are likely to limit economic growth. It may be smart to purchase the stocks featured to take advantage of their momentum.
Take a look at the fundamentals.
Simpson Manufacturing Co., Inc.
SSD is a company that designs, engineers and manufactures concrete and wood construction products. The company provides wood construction products, prefabricated lateral systems and asphalt for use in concrete and masonry construction.
SSD's gross profit margin for the 12-month trailing period is 45.02%, which is 50.3% more than the industry average of 29.96%. SSD's EBITDA margin of 25.31% for the trailing 12-month period is 91.4% greater than the average industry EBITDA ratio of 13.23%. The stock's trailing-12 month levered FCF is 7.46%, which is 43.6% more than the average industry margin of 5.20%.
SSD's first-quarter net sales ended March 31, 2023 increased by 8.3% over the previous year to $534.43 millions. Gross profit increased 6.8% compared to the previous quarter, reaching $252,88 million. Total assets of the company increased by 12.1% to $2.56 Billion. The company's net income and earnings per share were $87.95 and $2.05 respectively.
Analysts anticipate SSD's revenue and EPS to grow by 3.8% and 5.1% respectively in fiscal 2024, to $7.70 billion and $2.14billion. In each of the last four quarters, it exceeded the consensus EPS estimate. The stock closed the last trading day at $120.84 after gaining 36.9% in the past year.
The stock of SSD is currently trading above the 50-day and its 200-day moving averags, which are $115.57 & $99.57 respectively.
SSD's POWR ratings reflect this positive outlook. SSD's overall rating is B, which in our rating system translates into a Buy. The POWR ratings assess stocks based on 118 factors, each of which has its own weighting.
It is ranked 35th out of 91 stocks within the B-rated industrial - equipment industry. It is rated A for Momentum, and B for Sentiment and quality. You can click here to view the other SSD ratings for Growth, Stability, and Value.
Gibraltar Industries, Inc.
ROCK is a manufacturer and distributor of building products in North America, Asia, and the agtech and residential markets. It is divided into four segments: Renewables Residential Agtech Infrastructure.
ROCK's trailing-12 month net income margin of 6.45% is 0.5% more than the industry average of 6.42%. The 10.73% EBIT trailing-12 month margin is 10.7% more than the average industry of 9.69%. The stock's trailing 12-month FCF margin of 7.50% is 44.4% greater than the average industry figure of 5.20%.
ROCK's net revenue for the quarter ending March 31, 2023 was $293.27 millions. The gross profit of the company increased by 18.6% compared to the previous quarter, reaching $76.93million. The company's adjusted net profit increased by 10.2% from the previous-year quarter, to $21.76 millions. Its adjusted earnings per share (EPS) was $0.70, which represents a 16.7% increase year-over-year.
ROCK's revenue and EPS are expected to grow by 1.8% and 0.3% respectively, for the quarter ending September 30th, 2023. These figures will be $1.14 million and $392.53 millions. In three of the last four quarters, it has exceeded the Street's EPS estimate. In the past year the stock gained 31.6%, closing the last trading day at $55.14.
ROCK's shares are trading above their 50-day and its 200-day moving averages of $50.60, and $48,68 respectively.
ROCK's Power Ratings are a reflection of solid prospects. It is rated B overall, which in our rating system translates into Buy.
It is ranked 4th out of 33 stocks in the Industrial - Metals B-rated industry. Momentum, Sentiment, and Quality are all A grades. Click here to see ROCK's ratings for Growth, Value and Stability.
SAMG is an advisory firm that offers financial services and family office support. The company provides services to ultra-high net worth individuals, families and their trusts. It also serves endowments, foundations and other institutional investors. It manages other investment funds, including funds of funds.
SAMG's EBITDA margin of 23.67%, based on the trailing-12 month EBITDA figures, is 14.9% greater than the industry average of 20.60%. The industry average Return on Common Equity for the trailing 12 months is 11.10%. SAMG's 16.95% is 14.9% higher. Its 0.63x asset turnover ratio trailing-12 months is 216% greater than the industry's average of 0.20x.
SAMG's revenue in the first quarter of 2023 ended at $29.43 millions. The adjusted net income for the quarter was $5.04m and its adjusted EPS was $0.35. Its adjusted EBITDA was $8.18 millions.
Analysts predict that SAMG's earnings per share (EPS) and revenue will increase by 13.7% and 8.0%, respectively, for the quarter ending on September 30, 2023. These figures are $0.39 and $11.37 million. In the past three-month period, the stock gained 5.6% and closed the last trading day at $19.26.
The stock of SAMG is currently trading above the 50-day and 20-day moving averages, which are $18.23 and 18.18 respectively.
SAMG's POWR ratings reflect this positive outlook. The overall rating is B, which in our rating system translates into Buy.
It is ranked 8th out of 54 stocks within the Asset Management sector. It is rated B for Stability, Quality, and Momentum. You can click here to view the other ratings for SAMG, including Growth, Value and Sentiment.
The bear market is not over...
This is why Steve Reitmeister, a 40-year investment veteran, has created a timely presentation that includes a trading strategy and his top picks.
SSD shares remained unchanged in Wednesday's premarket trading. SSD shares have gained 37.02 % year-to-date compared to a 9.78% increase in the benchmark S&P 500 during the same time period.
About the Author: Dipanjan B.
Dipanjan has been interested in stock markets since he was a child. Dipanjan obtained a Master's Degree in Finance and Accountancy. Dipanjan is a financial journalist and investment analyst. He has a keen interest in analyzing and reading about emerging trends on financial markets.