Impressive corporate earnings and a strengthening job market have lately driven a surge in the major benchmark indexes to new highs. However, the overall market remains highly volatile on concerns over rising inflation and the resurgence of COVID-19 cases worldwide. Many analysts expect a broader market correction in the near term.
Because a market correction will cause highly priced stocks to lose significant value, we think it could be wise to bet on stocks that are currently trading at reasonable price levels and have sufficient fundamental strength to generate gains.
Centerra Gold Inc. (CGAU), Alliance Resource Partners, L.P. (ARLP), Global Cord Blood Corporation (CO), and Blueknight Energy Partners, L.P. (BKEP) are currently trading below $10, and these stocks are well-positioned to deliver solid returns in the coming months. So, it could be wise to bet on these stocks now.
Centerra Gold Inc. (CGAU)
Headquartered in Toronto, Canada, CGAU is a gold mining company that acquires, explores, develops, and operates international gold and copper properties. The company operates the Kumtor Mine in the Kyrgyz Republic, the Mount Milligan Mine in Canada, the Oksut Mine in Turkey, and The Thompson Creek Metals.
Its gold production for the full year 2020 came in at 824,059 ounces, which marginally exceeded the upper end of its guidance. The company had produced 82.8 million pounds of copper for the full year 2020, which was within its guidance range.
For its fiscal quarter ended March 31, 2021, CGAU’s revenues were $401.85 million, which represents a 6.1% improvement year-over-year. The company’s earnings from operations have been reported at $119.02 million, up 249.6% from the prior-year period. CGAU’s adjusted net earnings increased 81.5% year-over-year to $84.20 million. Its adjusted EPS increased 75% year-over-year to $0.28. The company had $823.23 million in cash and cash equivalents as of March 31, 2021. The stock closed Friday’s trading session at $7.51.
In terms of forward EV/Sales, CGAU is currently trading at 1.18x, which is 34% lower than the 1.79x industry average. In terms of forward EV/EBITDA, CGAU is currently trading at 3.19x, which is 59% lower than the 7.76x industry average.
It's no surprise that CGAU has an overall A rating, which translates to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock also has an A grade for Value and Quality, and a B grade for Growth and Sentiment. Click here to see the additional POWR Ratings for CGAU’s Stability and Momentum.
CGAU is ranked #1 of 39 in the Miners - Gold industry.
Click here to check out our Gold and Silver Industry Report for 2021
Alliance Resource Partners, L.P. (ARLP)
ARLP in Tulsa, Okla., is a diversified natural resource company that produces and markets coal primarily to utilities and industrial users in the United States. The company also offers various industrial and mining technology products and services, such as miner and equipment tracking systems and proximity detection systems. It produces coal from seven mining complexes. Its subsidiaries operate in Illinois, Indiana, Kentucky, Maryland, and West Virginia.
ARLP’s Oil & Gas Royalties segment benefited from significantly higher commodity prices and greater than anticipated sales volumes in the first quarter of 2021. Consequently, positive free cash flow has helped ARLP reduce its total debt and finance lease obligations by $52.90 million.
In its effort to explore value-creating opportunities, the company announced a new Coal Royalties segment to its Oil & Gas Royalties segment on April 26, 2021, thus forming a larger, enhanced total royalties group. By combining these activities, ARLP expects to realize cost efficiencies and improve its ability to secure lower-cost financing by aggregating cash flow from these two segments.
ARLP’s total revenues came in at $362.44 million for its fiscal second quarter ended June 30, 2021, representing a 42% improvement year-over-year. The company's income from operations has been reported at $55.01 million for the quarter, compared to a $35.10 million loss in the prior-year period. ARLP’s net income came in at $44.04 million, versus a $46.66 million loss in the year-ago period. Its EPS has been reported at $0.34, compared to a $0.37 loss per share in the prior-year period. As of June 30, 2021, ARLP had $37.75 million in cash and cash equivalents.
Analysts expect the stock’s EPS to improve 71.4% in the current quarter, ending September 30, 2021, to $0.36. The stock surpassed the Street’s EPS estimates in three of the trailing four quarters. A $417.90 million consensus revenue estimate for the current quarter represents a 17.5% rise year-over-year. ARLP has rallied 141.5% over the past nine months and 12.6% over the past month. It ended Friday’s trading session at $7.85.
In terms of forward EV/Sales, ARLP’s 0.97x is 59.4% lower than the 2.38x industry average. In terms of forward EV/EBITDA, ARLP is currently trading at 3.20x, which is 58.8% lower than the 7.76x industry average.
ARLP’s POWR Ratings reflect its solid prospects. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system.
ARLP has an A grade for Quality and Sentiment, and a B grade for Value and Momentum. In addition to the POWR Ratings grades we've just highlighted, one can see ARLP’s ratings for Stability and Growth here.
Of 11 stocks in the A-rated MLPs - Other industry, ARLP is ranked #3.
Global Cord Blood Corporation (CO)
CO is a Hong Kong-based life science enterprise that provides umbilical cord blood storage and ancillary services. The company also preserves donated cord blood units, provides matching services on such donated units, and delivers matching units to patients in need of transplants.
In an announcement dated December 30, 2020, China’s National Health Commission (NHC) issued a new policy stating that no applications for cord blood banking licenses will be accepted in 2021 to improve public health and medical safety, refine cord blood banking-related policies, monitoring processes, and enforcement measures. This policy should benefit CO in becoming China’s leading cord blood banking operator in the near term.
CO’s revenues came in at $46.14 million for its fiscal fourth quarter ended March 31, 2021, representing a marginal improvement from the prior-year period. The company's net income increased 31.7% year-over-year to $19.50 million. CO’s EPS has been reported at $0.16, up 31.3% from the year-ago period. The company had $961.29 million in cash and cash equivalents as of March 31, 2021.
CO has gained 38.6% over the past year and 20.9% over the past six months. It closed Friday’s trading session at $5.03. In terms of trailing-12-month Price/Sales, CO’s 3.45x is 56.7% lower than the 7.98x industry average. In terms of trailing-12-month Price-to-Book, CO is currently trading at 0.91x, 75.4% lower than the 3.72x industry average.
CO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.
The stock has an A grade for Quality, and a B grade for Growth, Value, and Stability. To see additional POWR Ratings for CO’s Momentum and Sentiment, click here.
CO is ranked #3 of 56 stocks in the Medical - Diagnostics/Research industry.
Click here to checkout our Healthcare Sector Report for 2021
Blueknight Energy Partners, L.P. (BKEP)
BKEP owns, operates, and develops a diversified portfolio of complementary midstream energy assets. The company provides integrated terminaling, storage, processing, gathering, and transportation services for companies engaged in producing, distributing, and marketing crude oil and asphalt products in the United States. BKEP is based in Oklahoma City, Okla.
With the closing of the sale of BKEP’s crude oil terminaling segment to Enbridge, Inc. (ENB) for $132 million on March 1, 2021, BKEP has exited the crude oil business, strategically positioning the partnership as a pure-play terminaling company. With an improved leverage profile and available liquidity, the company believes itself to be well-positioned to identify and capture growth opportunities and benefit from long-term positive investment trends in the U.S. infrastructure sector.
BKEP’s total revenues for its fiscal second quarter, ended June 30, 2021, increased 7.7% year-over-year to $27.76 million. The company's operating income came in at $8.70 million for the quarter, up 31.3% from the prior-year period. Its net income came in at $7.28 million, representing a 439.1% year-over-year improvement. BKEP’s EPS was $0.02, compared to a $0.12 loss per share in the prior-year period. The company had $415,000 in cash and cash equivalents as of June 30, 2021.
BKEP has gained 130.3% over the past year and 63.7% over the past six months. It closed Friday’s trading session at $3.34. In terms of trailing-12-month Price-to-Book, BKEP is currently trading at 0.36x, which is 75.9% lower than the 1.49x industry average. In terms of trailing-12-month Price/Sales, BKEP is currently trading at 1.20x, 10.8% lower than the 1.35x industry average.
BKEP’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system.
The stock has an A grade for Value, and a B grade for Sentiment and Quality. In addition to the POWR Ratings grades we've just highlighted, one can see BKEP ratings for Growth, Stability, and Momentum here.
Of the 11 stocks in the A-rated MLPs - Other industry, BKEP is ranked #4.
Click here to check out our Industrial Sector Report for 2021
CGAU shares were trading at $7.27 per share on Monday afternoon, down $0.24 (-3.20%). Year-to-date, CGAU has declined -37.25%, versus a 19.04% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.4 Top Stocks to Buy Under $10 in August appeared first on StockNews.com