Theatrical exhibition company AMC Entertainment Holdings, Inc. (AMC) is one of the most popular meme stocks of all time. Shares of AMC have gained 2,028.3% year-to-date, and 358.1% over the past three months. The company undertook aggressive marketing campaigns to extend its rally, such as announcing free popcorn and special screening offers to retail shareholders in June. However, the company scrapped its plans to issue 25 million additional shares yesterday, which caused its stock’s price to decline.
AMC grabbed retail investors’ attention initially because it was heavily shorted by institutional investors and hedge funds worldwide. But the company’s bleak earnings growth prospects make its current rally unsustainable. Analysts expect AMC’s EPS to decline at a rate of 217% per annum over the next five years.
However, with the improving job market and rising consumer spending, coupled with surging equity markets, we think make fundamentally sound stocks The Home Depot, Inc. (HD), Linde plc (LIN), Lowe's Companies, Inc. (LOW), and ABB Ltd (ABB) well positioned to soar in the coming months.
The Home Depot, Inc. (HD)
HD is the world’s largest home improvement retailer. It sells various building materials, home improvement products, lawn and garden products, and décor products. It also provides installation, home maintenance, and professional service programs to do-it-yourself and professional customers. HD is based in Atlanta, Ga.
On June 23, HD introduced "Rent Online, Pick-up in Store" technology to enhance customer experience. In the era of digitization and online shopping, this facility should expand its customer base further, strengthening its market position. On April 15, HD announced the opening of three new distribution centers across Florida, expanding the company’s market reach markedly.
HD’s net sales increased 32.7% year-over-year to $37.50 billion in its fiscal first quarter, ended May 2. Its operating income grew 76.5% from its year-ago value to $5.78 billion, while its net income improved 84.6% year-over-year to $4.15 billion. The company’s EPS increased 85.6% year-over-year to $3.86.
Analysts expect HD’s revenues to increase 8.6% year-over-year to $143.45 billion in the current year. A $14.19 consensus EPS estimate for the current year represents an 18.8% rise from the last year. HD has an impressive earnings surprise history also; it beat the consensus EPS estimates in each of trailing four quarters. Shares of HD have gained 27.9% over the past year, and 20.2% year-to-date.
It is no surprise that HD has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A grade for Momentum, and a grade B for Sentiment and Quality. Among the 65 stocks in the A-rated Home Improvement & Goods industry, HD is ranked #31.
To see additional HD Ratings for Growth, Stability, and Value, click here.
Linde plc (LIN)
LIN is an industrial gas company that operates primarily in North and South America, Europe, the Middle East, Africa, and the Asia Pacific. The company provides atmospheric gases and process gases and builds equipment that produces industrial gases. Its product line includes gaseous medication and related medical products and devices.
On March 8, LIN announced that it had been selected by Norwegian ferry operator Norled to supply liquid hydrogen and related infrastructure to the world's first hydrogen-powered ferry. This should significantly contribute to LIN’s revenues.
LIN’s sales increased 7.5% year-over-year to $7.24 billion in its fiscal first quarter, ended March 31. Its operating profit stood at $1.21 billion, up 65.5% from the same period last year. Its net income grew 71% from its year-ago value to $980 million. The company’s EPS increased 73.8% year-over-year to $1.86.
A $7.33 billion consensus revenue estimate for its fiscal third quarter (ending September 2021) indicates a 9.6% increase year-over-year. The Street expects the company’s EPS to rise 16.7% from the prior year quarter to $2.51 in the current quarter. LIN also has an impressive earnings surprise history; it beat the consensus EPS estimates in each of trailing four quarters.
LIN has gained 6.3% over the past six months to close yesterday’s trading session at $288.50. The stock has gained 28.4% over the past year.
LIN has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. LIN has an A grade for Momentum, and a B grade for Growth, Stability, Sentiment, and Quality. It is ranked #29 of the 99 stocks in the B-rated Chemicals industry.
Click here to see more of LIN’s component grades.
Lowe's Companies, Inc. (LOW)
LOW is a home improvement retailer that offers products for construction, maintenance, repair, remodeling, and decorating. The company also offers installation services through independent contractors in various product categories, extended protection plans, and in-warranty and out-of-warranty repair services. LOW is based in Mooresville, N.C. On May 3, LOW launched "Lowe's House of Curators," its home décor curation series. This should be a hit amid the current home renovation trend. On April 22, LOW announced the acquisition of STAINMASTER brand, the most recognized and trusted carpet brand on the market. This should allow the company to enhance its product offerings and capitalize on the extended growth opportunities.
LOW’s net sales increased 24.1% year-over-year to $24.42 billion in its fiscal first quarter, ended April 30. Its operating income grew 63% from its year-ago value to $3.25 billion, while its net income improved 73.6% year-over-year to $2.32 billion over the period. The company’s EPS increased 82.4% year-over-year to $3.21.
A $91.44 billion consensus revenue estimate for the current year indicates a 2.1% improvement compared to the last year. Analysts expect the company’s EPS to come in at $10.97 in the current year, indicating a 23.8% rise from the prior year. Also, LOW surpassed the Street’s EPS estimates in three of the trailing four quarters, which is impressive.
LOW has gained 21.3% year-to-date. The stock has gained 43.5% over the past year.
LOW has an overall B rating, which equates to Buy in our proprietary rating system. The stock has an A grade for Momentum, and a B for Quality and Sentiment. It is ranked #24 in the Home Improvement & Goods industry.
Beyond what we’ve stated above, we have also rated LOW for Value, Growth, and Stability. Click here to view all LOW Ratings.
ABB Ltd (ABB)
Headquartered in Switzerland, ABB is a technology driven manufacturer and seller of electrification, industrial automation, and robotics and motion products. The company operates in more than 100 countries through four segments: Electrification Products, Robotics and Motion, Industrial Automation and Power Grids.
On July 2, it was announced that ABB was to supply chargers for sustainable parcel delivery by Austria’s postal service. This demonstrates ABB’s global presence in the electric vehicle charging space.
On June 9, ABB partnered with Axpo to apply the companies’ complementary skills to make green hydrogen more accessible and affordable. Given the rising importance of zero-emission alternatives, this initiative could generate substantial returns over the long term.
ABB’s revenues increased 11% year-over-year to $6.90 billion in the fiscal first quarter, ended March 31. Its income from operations grew 114% from its year-ago value to $797 million. Its net income stood at $502 million, up 34% from the same period last year. The company’s EPS increased 41% year-over-year to $0.25.
Analysts expect ABB’s revenues to increase 6% year-over-year to $6.98 billion in the current quarter, ending September 2021. The $0.35 consensus EPS estimate for the current quarter indicates a 66.7% improvement year-over-year. The company also beat the consensus EPS estimates in each of the trailing four quarters. ABB has gained 42.9% over the past year, and 23.6% year-to-date.
It is no surprise that ABB has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. ABB has an A grade for Momentum, and a grade B for Growth, Stability, Sentiment, and Quality. Out of the 84 stocks in the A-rated Industrial - Machinery industry, ABB is ranked #6.
Click here to view additional ABB Ratings for Value.
Click here to check out our Industrial Sector Report for 2021
HD shares were trading at $323.48 per share on Wednesday afternoon, up $4.22 (+1.32%). Year-to-date, HD has gained 23.19%, versus a 16.97% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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