A sense of uncertainty has gripped the U.S. stock markets since the beginning of March. Rising inflationary concerns, surging bond yields, and the end of the big-tech rally are threatening the stock market valuation bubble. Consequently, the possibility of a broader market sell-off cannot be ruled out.
The Federal Reserve’s dovish monetary policy and the just-passed COVID-19 recovery package are the major factors fueling inflation fears. Also, Fed Chairman Jerome Powell’s statement that the central bank’s current policy stance is ‘appropriate’ and that inflation moves as ‘transitory,’ unnerved investors.
So, we think investors should adopt a stock-picking strategy that will help them reap returns over the long term. According to a recent note from the Bank of America, inflation is "well-contained" and the current volatility favors growth-oriented stocks more than value stocks.
Hence, we believe fundamentally-sound growth stocks Gold Fields Limited (GFI), Companhia Siderurgica Nacional S.A. (SID), and Ironwood Pharmaceuticals, Inc. (IRWD) are good picks on every dip if the market starts selling off. They belong to various sectors but have been performing consistently for years.
Gold Fields Limited (GFI)
GFI is a South African gold producer with reserves and resources in Chile, South Africa, Ghana, Australia, and Peru. The company’s Salares Norte project is on schedule and production is expected to be completed in the first quarter of 2023.
During the fourth quarter, ended 31 December 2020, GFI produced 593 million oz of gold and earned revenues of $1,866 per oz. The company’s normalized profit for the year rose to $879 million from $343 million posted in the prior-year period.
Analysts expect GFI’s revenue for the year ending December 31, 2021 to be $4 billion, representing a 2.2% year-over-year decline. Its EPS is expected to surge 33% to $1.33 for the full year of 2021.
GFI has risen 43.8% over the past year to close yesterday’s trading session at $9.10. Over the past six months, the stock slumped 28.8%.
It’s no surprise that GFI has an overall rating of B, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
GFI has a B grade of B for both Growth and Momentum. In the B-rated, 46-stock Miners - Gold industry, it is ranked #15.
In addition to the POWR Rating grades I've just highlighted, you can see the GFI ratings for Stability, Value, Quality, and Sentiment.
Companhia Siderurgica Nacional S.A. (SID)
SID is an integrated steel producer in Brazil and Latin America. Steel, Mining, Logistics, Cement, and Energy are the five segments in which it operates. Among the products the company sells are flat steel products, hot-rolled products, and heavy and light-gauge hot-rolled coils and sheets.
During the fourth quarter ended December 31, 2020, SID climbed 12% year-over-year to R$9.7 million, driven by sales in the Steel and Mining sector. In 2020, its total sales hit 4,651,000 tons, climbing 3% over 2019, due primarily to higher sales in the domestic market despite the pandemic.
Analysts expect SID’s revenue for the quarter ending March 31, 2021 to be $1.7 billion, representing a 39.8% year-over-year rise. SID ended yesterday's trading session at $5.98, rallying 209.8% over the past year. During the past six months, SID surged 110.6%.
Due to its bright prospects, SID has an overall rating of A, which translates to a Strong Buy in our POWR Rating system. SID has a Growth, Sentiment, and Momentum Grade of B. In the A-rated, 35-stock Steel industry, it is ranked #7.
Click here to see the additional POWR Ratings for SID (Stability, Quality, and Value)
Ironwood Pharmaceuticals, Inc. (IRWD)
IRWD, a healthcare company, is primarily involved in the development and commercialization of gastrointestinal (GI) products. The company sells linaclotide, a guanylate cyclase type-C agonist for the treatment of adults suffering from irritable bowel syndrome. IRWD has strategic partnerships with AbbVie, Astellas Pharma, and AstraZeneca for the development and commercialization of linaclotide.
During the fourth quarter, ended December 31, 2020, IRWD’s revenue fell 7.6% year-over-year to $116.6 million. Its EPS for the quarter declined to $0.27 from $0.31 posted in the prior-year period. LINZESS U.S. net sales climbed 10% year-over-year in 2020 to $931 million.
Analysts expect IRWD’s revenue for the quarter ending March 31, 2021 to be $90.2 million, representing a 12.8% year-over-year increase. Its EPS is expected to grow at the rate of 72.6% per annum over the next five years. The company expects its full year 2021 revenue to be in the range of $370 to $385 million.
IRWD ended yesterday’s trading session at $10.55, declining 7.9% over the year. During the past six months, IRWD climbed 9.9%.
IRWD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our POWR Ratings system. IRWD has a Value and Quality Grade of A and a Growth grade of B. In the 240-stock Medical - Pharmaceuticals industry, it is ranked #15.
To see additional POWR Ratings for Momentum, Sentiment, and Stability for IRWD, Click here.
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
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GFI shares were trading at $9.39 per share on Thursday afternoon, up $0.07 (+0.75%). Year-to-date, GFI has gained 1.29%, versus a 5.58% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education.
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