Quadrix, our quantitative-stock system, crunches about 100 different individual metrics, helping us sift through thousands of stocks, suggests Richard Moroney, editor of Upside, a newsletter focused on growth investing in small and mid cap stocks.
For our purposes, timely stocks tend to score well for the Performance, Momentum, and Earnings Estimates categories. We review three of our favorite stocks below. These stocks look particularly timely, based on these criteria.
All earn above-average Momentum, Earnings Estimates, and Performance scores. Each stock comes from an industry group that also earns strong Overall and Performance scores, suggesting the groups are timely and have solid fundamentals.
AMERCO (UHAL) looks particularly timely in Quadrix, scoring in the top quarter of our research universe for Momentum, Earnings Estimates, and Performance. For each of these categories, AMERCO scores above its industry average for trucking stocks. Its Overall rank of 96 ranks in the top one-third of the trucking industry.
For the 12 months ended September, AMERCO’s per-share profits nearly tripled, while sales grew 32% and operating cash flow 53%. Recent results are getting a boost from strong demand for the company’s U-Haul self-moving equipment, along with higher occupancy rates and capacity growth for its self-storage business.
The single-analyst consensus projects AMERCO will increase earnings per share 61% and sales 14% in the December quarter, followed by 91% profit growth on 11% higher revenue in the March quarter.
Analyst estimates for both quarters are up sharply in the past month. The stock has surged 56% in 2021 yet trades at just 14 times trailing earnings, below its own five- year norm of 18 and industry median of 17. AMERCO is a Best Buy.
Titan Machinery (TITN) shares rallied to a record high after the company delivered an upbeat October-quarter report. Adjusted earnings per share surged 81% to $0.96, well ahead of the consensus of $0.68. Sales, up 26% to $454 million, also comfortably exceeded analysts’ expectations.
A dealer of farm and construction equipment, Titan said sales rose 28% for its U.S. agriculture business, 1% for its U.S. construction segment, and 51% for its overseas operations. Management raised guidance for fiscal 2022 ending January, with its midpoint for earnings per share now at $2.50, implying 98% and up from its prior midpoint of $2.10.
Titan appears confident that recent operating momentum is sustainable. Higher commodity prices are supporting demand for agricultural equipment, while construction equipment will likely get a boost from the U.S. infrastructure bill.
The company is raising prices on its 2022 equipment models, as it did on 2021 models, helping boost profit margins. In the October quarter, Titan’s operating margin reached its highest level for any quarter since 2008. In Quadrix, the stock scores above 75 for Momentum, Earnings Estimates, and Performance, contributing to an Overall rank of 95. Titan is rated Buy.
Ultra Clean (UCTT) earns a Quadrix Overall rank of 96, second-highest among the 32 stocks in the semiconductor-equipment industry. Ultra Clean scores above 90 for Momentum, Earnings Estimates, and Performance — the same can be said of just 27 other stocks in the S&P 1500 Index.
Both per-share profits and sales have grown by double-digit rates in each of the past eight quarters, while cash from operations has risen by more than 35% in four straight quarters.
The company appears to have a long runway for more growth, with Ultra Clean noting in October that high demand for its products and services should continue for the “foreseeable future.” The company says the wafer-fabrication equipment market’s upswing appears sustainable over the long haul.
Ultra Clean anticipates December-quarter profit growth of 38% to 59%; although analyst estimates are rising, the current consensus of 48% growth offers upside potential.
Ultra Clean has topped the consensus profit estimate in 11 straight quarters. Analysts now expect 12% higher earnings in 2022. Up 76% in 2021, the stock trades at just 12 times estimated 2022 profits, below its industry median of 17. Ultra Clean is a Best Buy.
