The stock market kick-started 2022 on a bright note after shrugging off the omicron variant infection worries, with the S&P 500 index and Dow Jones Industrial Average hitting record highs on the first trading day of 2022. The S&P 500 notched up seventy new highs in 2021.
However, increasing market volatility driven by the Fed’s hawkish monetary policies and rising concerns regarding the spread of COVID-19 variants caused benchmark indexes to slump last week. The CBOE Volatility Index has risen 22% year-to-date, while the tech-heavy Nasdaq 100 reported its worst weekly performance since February 2021.
Given this backdrop, we think that investing in fundamentally sound value stocks might help investors hedge market volatility to a degree. And Wall Street analysts expect mid-cap stocks OneMain Holdings, Inc. (OMF), Vontier Corporation (VNT), and Herbalife Nutrition Ltd. (HLF) to rally more than 30% in price in the coming months.
OneMain Holdings, Inc. (OMF)
OMF is an Evansville, Ind.-based financial service holding company that provides personal loan products, offers optional credit insurance and other products, services loans owned by the company and third parties. It pursues strategic acquisitions and dispositions of assets and businesses. It also provides origination, underwriting, and servicing of personal loans. It has a market capitalization of $6.88 billion.
OMF’s pre-tax income increased 10.2% year-over-year to $376 million for the third quarter, ended Sept.30, 2021. The company’s net income increased 15.2% year-over-year to $288 million. Also, its EPS came in at $2.17, representing a 16.6% increase of 16.6% from the same period last year.
Analysts expect OMF’s EPS to increase 77.4% year-over-year to $10.77 in its fiscal 2021. Its revenue is expected to increase 13.9% year-over-year to $3.92 billion in fiscal 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. In terms of forward P/S, OMF’s 1.71x is lower than the 3.57x industry average.
Over the past year, the stock has gained 6.2% in price to close Friday’s trading session at $53.13. Wall Street analysts expect the stock to hit $71.25 in the near term, indicating a potential 34.1% upside.
OMF’s POWR Ratings reflect solid prospects. The company has an overall B rating, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has a B grade for Quality. It is ranked #3 of 52 stocks in the Consumer Financial Services industry. Click here to see the other ratings of OMF for Growth, Value, Momentum, Stability, and Sentiment.
Vontier Corporation (VNT)
VNT in Raleigh, N.C., researches and develops, manufactures, sells, and distributes critical technical equipment, components, software, and services for manufacturing, repair, and servicing worldwide in the mobility infrastructure industry. It offers a range of solutions that include environmental sensors, fueling equipment, field payment hardware, remote management, vehicle tracking, and workflow software. It has a market capitalization of $5.17 billion.
On Dec.3, 2021, VNT announced its intention to reduce absolute Scope 1 and 2 greenhouse gas emissions by 45% by 2030, considering 2020 as the base year. In line with the Paris Climate agreement, it seeks to become carbon neutral by 2050. VNT will utilize the Vontier Business System to implement, track and monitor emission reduction towards its targets.
For its fiscal third quarter, ended Oct. 1, 2021, VNT’s sales increased 2.9% year-over-year to $768.5 million. The company’s non-GAAP net earnings increased 1.6% year-over-year to $136.60 million. And its non-GAAP EPS for the nine months ended Oct. 1, 2021, increased 27.3% year-over-year to $2.05.
For its fiscal year 2021, VNT’s EPS and revenue are expected to increase 15.4% and 11.4%, respectively year-over-year to $2.85 and $3.01 billion. It surpassed consensus EPS estimates in each of the trailing four quarters. In terms of forward non-GAAP P/E, VNT’s 10.72x is lower than the 24.60x industry average.
The stock has risen marginally in price over the past nine months to close Friday’s trading session at $30.58. However, Wall Street analysts expect the stock to hit $44 in the near term, indicating a potential 44% upside.
VNT’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which translates to a Buy according to our proprietary rating system.
It has a B grade for Value, Sentiment, and Quality. Within the 93-stock Industrial – Equipment industry, it is ranked #25. To see the additional ratings of VNT for Growth, Momentum, and Stability, click here.
Note that VNT is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Herbalife Nutrition Ltd. (HLF)
HLF is a global nutrition company that develops and sells weight management, healthy meals and snacks, sports and fitness, energy, and targeted nutritional products, as well as personal care products. Its product categories include meal replacement, protein shakes, drink mixes, dietary and nutritional supplements, facial skincare, hair care products. It has a market capitalization of $4.85 billion. HLF is headquartered in George Town, the Cayman Islands.
On Sept. 20, 2021, HLF opened its latest distribution center in Hagerstown, Maryland. The facility will help HLF meet the growing demand for its nutrition products in the Eastern and Northeastern regions of the U.S.
HLF’s Asia Pacific segment’s revenue increased 10.6% year-over-year to $393.50 million for the third quarter, ended Sept. 30, 2021. The company’s non-GAAP EPS came in at $1.21, representing a 5.2% increase year-over-year. Its adjusted net income for nine months ended Sept. 30, 2021, increased 11.5% year-over-year to $458.70 million.
Analysts expect HLF’s EPS and revenue for its fiscal 2021 to increase 30.51% and 5.6%, respectively, year-over-year to $4.84 and $5.85 billion. HLF’s 7.42x forward EV/EBITDA is 42% lower than the 12.82x industry average.
Over the past month, the stock has gained 11.5% in price to close Friday's trading session at $43.29. Wall Street analysts expect the stock to hit $58 in the near term, indicating a potential 34% upside.
HLF’s POWR Ratings reflect solid prospects. The company has an overall B rating, which translates to a Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Value. It is ranked #3 of 9 stocks in the Medical – Consumer Goods industry. Click here to see the additional ratings of HLF for Growth, Momentum, Stability, and Sentiment.
OMF shares were trading at $54.47 per share on Monday afternoon, up $1.34 (+2.52%). Year-to-date, OMF has gained 8.85%, versus a -3.45% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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