4 Top Value Stocks Perfect for a Volatile Market

Factors like surging COVID-19 cases, the debt crisis of China’s Evergrande Group, and the Federal Reserve’s signal to tighten the monetary policy earlier than expected have been leading to volatility in the markets. Though the Fed has kept the benchmark interest rates near zero for now to support the economy, analysts expect the market to remain highly volatile in the near term.

Given this backdrop, highly-priced stocks could witness a pullback. So, it could be wise to bet on value stocks. Despite possessing sound fundamentals, Arkema S.A. (ARKAY), Industrias Bachoco, S.A.B. de C.V. (IBA), Natus Medical Incorporated (NTUS), and Movado Group, Inc. (MOV) are currently trading at discounts to their peers.

So, these stocks could be solid bets now to dodge the short-term market volatility and gain in the long run.

Arkema S.A. (ARKAY)

Based in France, ARKAY manufactures and sells specialty chemicals and advanced materials for construction, packaging, automotive, electronics, food, and pharmaceutical industries worldwide. The company operates through four segments ─ Adhesive Solutions; Advanced Materials; Coating Solutions; and Intermediates.

ARKAY signed an agreement on August 31, 2021, to acquire Ashland Global Holdings Inc. (ASH)’s Ashland Performance Adhesives business for $1.65 billion. ASH’s portfolio of high-performance adhesive solutions in high-value-added industrial applications will support ARKAY’s ambition to become a pure Specialty Materials player by 2024 in the U.S. market.

In an announcement dated July 6, 2021, ARKAY became a shareholder and technological partner of Verkor, a French start-up specialized in the production of high-performance batteries. As Verkor plans to launch its first Gigafactory for battery production in Europe, ARKAY, along with other industry leaders, will provide a wide range of high-performance materials and products for batteries to meet the growing demand. This will enable ARKAY’s cutting-edge materials and innovative solutions to gain more market reach.

For the fiscal second quarter that ended June 30, 2021, ARKAY’s net sales increased 25.9% year-over-year to €2.40 billion ($2.80 billion). The company’s operating income came in at €1.06 billion ($1.24 billion), up 349.2% from the prior-year period. ARKAY’s adjusted net income came in at €267 million ($312.53 million), representing a 196.7% rise from the prior-year period. Its adjusted EPS increased 196.6% year-over-year €3.50. As of June 30, 2021, the company had €2.42 billion ($2.83 billion) in cash and cash equivalents.

ARKAY’s EPS is estimated to rise 74.7% year-over-year to $10.83 in the current year. Analysts expect its revenue to be $10.26 billion for the current year, representing a 6.9% year-over-year improvement. The stock has gained 26.8% over the past year and 9.9% over the past month. It ended yesterday’s trading session at $132.17.

In terms of non-GAAP forward PEG, ARKAY is currently trading at 0.43x, which is 66% lower than the 1.25x industry average. In terms of forward Price/Sales, ARKAY is currently trading at 0.98x, which is 25.2% lower than the industry average of 1.31x.

ARKAY’s POWR Ratings reflect this promising outlook. The stock has an overall grade of A, which equates to a Strong Buy rating in our proprietary 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 Value and Stability, and a B grade for Quality. Click here to see additional grades for ARKAY such as Growth, Sentiment, and Momentum.

Of the 93 stocks in the B-rated Chemicals industry, ARKAY is ranked #1.

Industrias Bachoco, S.A.B. de C.V. (IBA)

IBA operates as a poultry producer in Mexico and the United States, engaged in the breeding, processing, and marketing of chicken, eggs, swine, balanced animal feed, and other meat products. It also produces medicines and vaccines for animal consumption and provides insurance coverage to its affiliates. The products are sold through wholesalers, retailers, directly to supermarkets and foodservice operators.

For the fiscal second quarter that ended June 30, 2021, IBA’s net sales increased 27% year-over-year to $1.05 billion. The company’s gross profit came in at $198.50 million, up 113.2% from the prior-year period. Its operating income came in at $104.70 million, representing a 2422.7% year-over-year improvement. IBA’s net income came in at $72.30 million, compared to a loss of $1.20 million in the prior-year period. Its earnings per ADR came in at $1.48, versus a $0.03 loss per share in the year-ago period. The company had $1.08 billion in cash and cash equivalents as of June 30, 2021.

Analysts expect IBA’s EPS to improve 34% in the current year to $4.93. The consensus revenue estimate of $3.92 billion representing a 13.5% rise year-over-year. The stock has gained 23.1% over the past year and 5.1% over the past month. It closed yesterday’s trading session at $46.01.

IBA’s 3.53x forward EV/EBITDA is 70.9% lower than the 12.11x industry average. In terms of forward Price/Sales, IBA is currently trading at 0.58x, 61.5% lower than the industry average of 1.49x.

IBA’s POWR Ratings reflect this promising outlook. The stock has an overall grade of A, which equates to a Strong Buy rating in our proprietary ratings system.

The stock has an A grade for Value and Sentiment, and a B grade for Growth, Stability, and Quality. Click here to see additional grades for IBA, including Momentum.

IBA is ranked #1 out of 81 stocks in the Food Makers industry.

Natus Medical Incorporated (NTUS)

NTUS is a medical device company that develops, manufactures, and markets screening products focused on diagnosing and treating central nervous and sensory system disorders for patients of all ages. The company operates through three strategic business units ─ Neurology; Newborn Care; and Hearing & Balance. It serves university medical centers, hospitals, clinics, research laboratories, and others.

A five-year contract was awarded to NTUS on September 27, 2021, to include Natus Patient Monitoring and Capital Equipment (PMCE) in the United States Government Healthcare System Electronic Catalog (ECAT). This agreement enables the Department of Defense (DoD) and Veterans Affairs (VA) health systems to gain easier access to the NTUS portfolio. NTUS is looking forward to delivering innovative solutions to the United States veteran and active-duty military patients in need.

On August 3, 2021, NTUS announced the completion of the first successfully performed clinical case using NTUS’ newly launched XactTrode family of platinum subdural electrodes for epilepsy surgical monitoring. NTUS is ready to launch XactTrodes in the U.S. market with this success and expects to see a massive demand for the electrodes in the coming months.

For its fiscal second quarter that ended June 30, 2021, NTUS’ revenue increased 36.8% year-over-year to $115.98 million. The company’s non-GAAP gross profit came in at $69.76 million, representing a 59.7% year-over-year improvement. Its non-GAAP operating income came in at $13.57 million, versus a $4.66 million loss in the prior-year period. NTUS’ non-GAAP net income came in at $9.85 million, compared to a $4.41 million loss in the prior-year period. Its non-GAAP EPS came in at $0.29, versus a $0.13 loss per share in the year-ago period. As of June 30, 2021, the company had $62.49 million in cash and cash equivalents.

Analysts expect the stock’s EPS to improve 205.1% year-over-year to $1.19 in the current year. The consensus revenue estimate of $472 million for the current year indicates a 13.5% rise from the prior-year period. NTUS surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive. And its EPS is expected to grow at a 22% rate per annum over the next five years. NTUS has gained 43.9% over the past year to close yesterday’s trading session at $24.86.

In terms of forward EV/Sales, NTUS’ 1.66x is 76.3% lower than the 6.99x industry average. In terms of forward Price/Sales, NTUS is currently trading at 1.76x, which is 78.2% lower than the industry average of 8.08x.

It’s no surprise that NTUS has an overall grade of A, which equates to a Strong Buy rating in our POWR Ratings system. The stock has an A grade for Growth and Value, and a B grade for Quality. Click here to see additional grades for NTUS, including Stability, Sentiment, and Momentum.

Of the 180 stocks in the Medical - Devices & Equipment industry, NTUS is ranked #2.

Click here to checkout our Healthcare Sector Report for 2021

Movado Group, Inc. (MOV)

MOV designs, manufactures, and distributes watches, jewelry, and other accessories and provides after-sales and shipping services worldwide. Its products are sold to jewelry store chains, department stores, licensors' retail stores, independent distributors, and directly to consumers via its e-commerce platforms.

For the fiscal second quarter that ended July 31, 2021, MOV’s adjusted net sales increased 96.4% year-over-year to $173.87 million. The company’s adjusted gross profit came in at $98.45 million, up 117.1% from the prior-year period. Its adjusted operating income came in at $25.46 million, compared to a loss of $593,000 in the prior-year period. Its adjusted net income came in at $20.07 million, versus a $1.74 million net loss in the year-ago period. Its adjusted EPS came in at $0.85, compared to a loss of $0.07 in the prior-year period. As of July 31, 2021, the company had $199.72 million in cash and cash equivalents.

The consensus EPS estimate of $2.95 for the current year represents a 220.7% year-over-year improvement. MOV’s revenue is estimated to rise 41.4% year-over-year to $716.20 million in the current year. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. MOV’s EPS is expected to grow at a 15% rate per annum over the next five years.

The stock has gained 239.7% over the past year and 10.5% over the past three months. It ended yesterday’s trading session at $34.82.

MOV’s 0.92x forward EV/Sales is 37.1% lower than the 1.46x industry average. In terms of forward Price/Sales, MOV is currently trading at 1.12x, 10.8% lower than the industry average of 1.26x.

MOV’s POWR Ratings reflect this promising outlook. The stock has an overall grade of A, which equates to a Strong Buy rating in our proprietary ratings system.

The stock has an A grade for Value and Quality, and a B grade for Growth and Momentum. Click here to see additional grades for MOV, including Stability and Sentiment.

MOV is ranked #2 out of 62 stocks in the A-rated Fashion & Luxury industry.

ARKAY shares were trading at $132.57 per share on Tuesday afternoon, up $0.40 (+0.30%). Year-to-date, ARKAY has gained 16.64%, versus a 17.76% rise in the benchmark S&P 500 index during the same period.

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.

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