Yesterday was a rough day for the stock market as the major indexes retreated from their fresh highs. A higher-than-expected decline in retail sales is primarily responsible for the market’s retreat. Furthermore, a decline in consumer sentiment and concerns over the resurgence of COVID-19 contributed to the volatility. However, the major benchmark indexes are still hovering near their all-time highs, making most quality stocks expensive.
According to a FactSet report, most S&P 500 companies have reported second-quarter revenues that are higher than the mean revenue estimate, which has offset investors’ concerns significantly and helped the benchmark indexes soar. So, while it’s hard to find quality stocks at reasonable prices, there are several out there that are still trading at affordable prices.
For example, shares of Tile Shop Holdings, Inc. (TTSH), Lincoln Educational Services Corporation (LINC), and Huttig Building Products, Inc. (HBP) are currently trading at less than $10, but they possess strong fundamentals. In addition, they have an overall A (Strong Buy) rating in our proprietary POWR Ratings system. So, we think it could be wise to scoop up their shares now.
Tile Shop Holdings, Inc. (TTSH)
TTSH is a leading specialty retailer of manufactured and natural stone tiles, setting, and maintenance materials Its offerings include marble, travertine, ceramic, porcelain, and glass. The Plymouth, Minn., company currently operates 143 stores in 31 states and the District of Columbia.
The company announced on June 14 that it had received approval from The Nasdaq Stock Market to approve its application for relisting. Also, TTSH’s CEO, Cabell Lolmaugh, said on August 5, “The strong execution by the Tile Shop team made it possible for us to take advantage of the strong demand for home improvement products and help us establish a new quarterly sales record.”
TTSH’s net sales increased 42% year-over-year to $96.19 million for the second quarter, ended June 30, 2021, with 41.6% comparable-store sales growth. The company’s net income came in at $5.49 million, versus a $760,000 loss in the year-ago period. Also, its EPS was $0.11, compared to a $0.02 loss per share in the prior year’s quarter. The stock has gained 68.6% year-to-date to close yesterday’s trading session at $7.25.
TTSH’s POWR Rating reflects this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
The stock has an A grade for Quality, and a B grade for Growth, Momentum, and Sentiment. Click here to access TTSH’s ratings for Value and Stability as well. TTSH is ranked #1 of 40 stocks in the B-rated Specialty Retailers industry.
Lincoln Educational Services Corporation (LINC)
One of the leading diversified career-oriented post-secondary education providers, LINC has been operating for 75 years. The West Orange, N.J.-based company operates 22 campuses in 14 states under four brands: Lincoln College of Technology, Lincoln Technical Institute, Lincoln Culinary Institute, and Euphoria Institute of Beauty Arts and Sciences.
On July 12, LINC announced the introduction of Mazda Automotive Student Training (MAST) at its Columbia, Md. campus. The course is expected to provide several career opportunities to the graduates, especially in the automotive field.
LINC’s revenue came in at $80.46 million for the second quarter, ended June 30, 2021, representing a 28.8% year-over-year rise. The company’s operating income for the quarter increased 197.6% year-over-year to $3.45 million, while its net income increased 209.8% year-over-year to $2.43 million. Furthermore, its EPS came in at $0.06, up 200% year-over-year.
For its fiscal year 2021, LINC’s revenue and EPS are expected to increase 11.2% and 55.6%, respectively, year-over-year to $325.80 million and $0.56. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has soared 4.6% in price over the past six months to close yesterday’s trading session at $6.19.
It’s no surprise that LINC has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has a B grade for Value, Sentiment, and Quality.
Click here to see the additional POWR Ratings for LINC (Growth, Stability, and Momentum). LINC is ranked #1 of 33 stocks in the Outsourcing – Education Services industry.
Huttig Building Products, Inc. (HBP)
HBP is one of the nation’s leading distributors of millwork and specialty building products for new residential construction and remodeling. The company serves dealers in 41 states through 27 distribution centers that cover a substantial portion of the U.S. housing market. In addition, its customer base includes National and independent building material dealers and Home centers. HBP is based in St. Louis, Mo.
Jon Vrabely, the company’s President and CEO, said on July 28, “The strong underlying fundamentals of the residential construction market, combined with the sustainable improvements we have achieved in the business, positions us very well to continue generating solid results in the future.”
For the second quarter. ended June 30, 2021, HBP’s net sales increased 28.9% year-over-year to $247.40 million. The company’s operating income increased 532% from its year-ago period to $15.80 million. While its net income for the quarter increased 831.3% year-over-year to $14.90 million, its EPS came in at $0.54, representing an 800% year-over-year rise. The stock has rallied 17.4% over the past month to close yesterday’s trading session at $5.88.
HBP’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, the stock has an A grade for Growth and Value, and a B grade for Momentum and Quality.
In addition to the POWR Rating grades we’ve just highlighted, one can see HBP’s ratings for Stability and Sentiment here. HBP is ranked #1 of 54 stocks in the B-rated Industrial – Building Materials industry.
Click here to check out our Industrial Sector Report for 2021
TTSH shares were unchanged in premarket trading Wednesday. Year-to-date, TTSH has gained 68.60%, versus a 19.54% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More…
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