While the S&P 500 declined more than 18% year-to-date on concerns over several macroeconomic and geopolitical headwinds, shares of Energy Transfer LP (ET), Casey’s General Stores (CASY), and Universal Logistics Holdings (ULH) have gained significantly. The fundamental strength of these stocks may allow them to see further gains in the coming months. Continue reading….
This year, the stock market witnessed a massive sell-off on concerns over the Fed’s continued interest rate hikes to tame the multi-decade high inflation and the consequences of the geopolitical issues. However, some sectors, such as energy, logistics, and consumer essentials, have remained resilient to market downturns because of their own dynamics.
While rising energy prices due to the geopolitical crisis benefitted the energy sector, surging demand for transportation amid supply-chain disruptions has helped the logistics sector. On the other hand, retailers offering consumer essentials witnessed resilience because of the inelastic demand for their products.
Investors’ confidence in these sectors’ prospects amid the uncertainties surrounding the economy has helped fundamentally sound stocks Energy Transfer LP (ET), Casey’s General Stores, Inc. (CASY), and Universal Logistics Holdings, Inc. (ULH) deliver solid returns this year. Given their favorable sector dynamics and fundamental strength, these stocks may still have enough upside left.
Energy Transfer LP (ET)
ET provides energy-related services. The company owns and operates natural gas transportation pipelines and natural gas storage facilities in Texas and Oklahoma. It also sells natural gas to electric utilities, independent power plants, local distribution and other marketing companies, and industrial end-users.
On August 24, 2022, ET announced its subsidiary, Energy Transfer LNG Export, LLC, entering into a 20-year LNG Sale and Purchase Agreement (SPA) with Shell NA LNG LLC related to its Lake Charles LNG project. President of ET, Tom Mason, believes that the agreement demonstrates the company’s belief in the project and its commitment to continuing to deliver much-needed natural gas supplies to markets worldwide.
ET’s total assets increased 2.6% to $108.77 billion for the second quarter ended June 30, 2022, compared to $105.96 billion for the fiscal year ended December 31, 2021. Its net income increased 78.6% year-over-year to $1.62 billion. The company’s total revenues increased 71.8% year-over-year to $25.95 billion. Additionally, its EPS came in at $0.39, representing a 95% increase from the prior-year quarter.
ET’s EPS and revenue for the quarter ended September 30, 2022, are expected to increase 85% and 44.3% year-over-year to $0.37 and $24.04 billion, respectively. It has an impressive earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters. The stock has gained 55.2% year-to-date to close the last trading session at $12.77.
ET’s POWR Ratings reflect solid prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the B-rated Energy – Oil & Gas industry, ET is ranked #27 of 94 stocks. The company has an A grade for Momentum and a B for Value.
Click here to see the additional POWR Ratings of ET for Growth, Stability, Sentiment, and Quality.
Casey’s General Stores, Inc. (CASY)
CASY operates convenience stores under the Casey’s and Casey’s General Store names. It offers a selection of food, beverages, tobacco and nicotine products; health and beauty aids; automotive products; and other non-food items.
On May 31, 2022, CASY surpassed 5 million members enrolled in its loyalty program, ‘Casey’s Rewards.’ CASY’s Digital Experiences VP, Art Sebastian, said, “Our members are highly engaged, providing us with information and feedback that enables us to further personalize their experience. We are leveraging our marketing technology capabilities to ensure we make every interaction with our guests as relevant as possible.”
CASY’s total revenue increased 40% year-over-year to $4.45 billion for the fiscal first quarter ended July 31, 2022. The company’s net income increased 28.3% from the year-ago period to $152.93 million. In addition, its adjusted EBITDA gained 20.6% year-over-year to $293.21 million, while its EPS came in at $4.09, representing a 28.2% increase from the prior-year quarter.
CASY’s EPS and revenue for the quarter ending October 31, 2022, are expected to increase 12.6% and 24.4% year-over-year to $2.92 and $4.06 billion, respectively. It has an impressive earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters. The stock has gained 17.9% year-to-date to close the last trading session at $232.71.
CASY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which translates to a Strong Buy in our proprietary rating system. It is ranked #3 out of 38 stocks in the A-rated Grocery/Big Box Retailers industry. It has a B grade for Growth, Value, Sentiment, and Quality.
We have also given CASY a grade for Momentum and Stability. Get all CASY ratings here.
Universal Logistics Holdings, Inc. (ULH)
ULH provides transportation and logistics solutions in the United States, Mexico, Canada, and Colombia. It offers truckload services; domestic and international freight forwarding, customs brokerage services; and final mile and ground expedite services.
For the fiscal third quarter ended October 1, 2022, ULH’s total assets increased 5.4% to $1.20 billion, compared to $1.14 billion for the fiscal year ended December 31, 2021. Its total operating revenues increased 13.5% year-over-year to $505.69 million, while its net income increased 371.9% year-over-year to $48.48 million.
In addition, its EPS came in at $1.84, representing a 384.2% increase from the prior-year quarter.
ULH has a commendable earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. The stock has gained 69.7% year-to-date to close the last trading session at $32.00.
ULH’s POWR Ratings reflect this positive outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system. It is ranked #2 of 17 stocks in the A-rated Air Freight & Shipping Services industry. In addition, it has an A grade for Growth and Sentiment.
To see the other ratings of ULH for Value, Momentum, Stability, and Quality, click here.
ET shares were trading at $12.82 per share on Tuesday morning, up $0.05 (+0.39%). Year-to-date, ET has gained 64.60%, versus a -17.69% 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.