In the US, the gap between the market and the Fed now looks huge. The market thinks there will be a soft landing with cooling inflation and the Fed cutting rates. Certainly the economic picture looks more compelling in the US than six months ago. Both the S&P500 and the NASDAQ are showing signs of life. Much of the optimism is coming from traders who think the Fed is done hiking.
With the tech sector still taking a battering, we are starting to see some other sectors popping up on our US equity screens that we have not seen in a while. Here are five of the best as we move forward to the end of January. All have excellent fundamentals. Our thanks to Deshe Analytics for their assistance with this analysis.
1. TD SYNNEX Corp NYSE:SNX
Increasing threats to cloud environments are not going away. TD SYNNEX just announced the launch of a new fraud defence solution that works with Microsoft Azure for small and medium businesses. It also just announced a 35 cent quarterly cash dividend. Impressive results came out on 10 January, making a strong case for overperformance. A big (+49%) change in cash and equivalents was also noticed by investors. Shares are above the five, 50 and 200 days moving averages. Stock is on a bull run from 19 January, up 15% over the last month. Already close to its 52 week high but still some way to go before it reaches its highs from 2021.
2. FRMO Corp [OTC:FRMO]
Shares in FRMO have been struggling yet the company came out with some very good numbers in November. This is a listed holding company with a range of different assets that you could call an inflation hedge. It has strong exposure to the crypto space, which is why some investors have likely been avoiding it, or indeed getting out. It also owns Bitcoin mining equipment and has slowly been accumulating Bitcoin. It has a big stake in Winland Holdings which has been acquiring trade claims from the bankruptcy of Mt Gox (remember that?) It even has a stake in Digital Currency Group, which in turn owns the management company of the famous Grayscale Bitcoin investment trust. FRMO stock is being punished post-FTX, but could be an interesting upside play if you feel crypto will rally again soon.
3. Perimeter Solutions NYSE:PRM
Perimeter Solutions is looking in excellent shape and recently announced an equity buy-back program to the tune of $100m. The company makes lubricant additives and fire fighting chemicals. Stock is up over 6% in the last 30 days and has plenty of upside. At time of writing it was trading at just over nine bucks. With the strong fundamentals currently being exhibited, we’d expect it to reach $13-14. Excellent results were published in November. It stacks up extremely well against peers in its sector like Air Products & Chemicals Inc or indeed Corteva Inc. The company looks like it will continue to maintain its strong balance sheet metrics going forward too.
4. Vision Energy Corp [OTC:VENG]
OTC-traded Vision Energy is a hydrogen-focused developer with strong exposure to European markets, so surprising to see it listed on the US OTC market. The company has over $400m market cap. It specialises in the development of next-gen terminals for bulk storage of green fuels for the European market. It is focusing on the North Sea port of Vlissingen in the Netherlands which could easily become a major hub for hydrogen imports into the EU. The stock was moved to the Pink Market due to “an ongoing promotional campaign” on 11 January. Vision Energy has also just reported that it has an MOU with Linde Engineering to co-invest and develop hydrogen production through ammonia back-cracking processes.
5. IDT Corp NYSE:IDT
Our final stock to look at today: IDT is a play on the rapidly expanding online communications and payments sectors. Caveat emptor: it just told the SEC it was delaying its 10Q filing, but this could be nothing to worry about. The company looks in great shape though and is operating in a very high margin sector. The stock has responded to the positive financial outlook for IDT: it’s up 3.82% this month, up 12% over six months. It is trading pretty close to six month highs which saw it nudge 30 bucks. However, IDT looks like it could have some enormous upside based on historical performance and if management can keep putting out results like they did for Q4. A forty buck stock price looks realistic: stock is currently around the $30 mark.
