Investors are shrugging off concerns surrounding the rapid spread of the COVID-19 Delta variant. The markets opened on a bullish note on the first trading day in August. In fact, the S&P 500 index entered its seventh straight month of gains today, while the Dow Jones Industrial Average (DJIA) trading near its record highs.
The U.S. Senate finalized the text of a $1 trillion bipartisan infrastructure bill over the weekend, driving investor optimism despite several headwinds. Consequently, growth stocks are expected to see big gains.
Companhia Siderúrgica Nacional S.A. (SID) and Matson, Inc. (MATX) are expected to benefit from the current backdrop given their solid growth attributes. Thus, we think these two stocks are ideal bets now.
Companhia Siderúrgica Nacional S.A. (SID)
SID operates as an integrated steel producer in Brazil and Latin America. The company operates in five segments: Steel; Mining; Logistics; Energy; and Cement.
On June 11, SID announced the completion of its Luxembourg finance subsidiary’s, CSN Resources S.A., cash tender offer for all its outstanding 7.625% senior unsecured guaranteed notes due 2023.
The company has an impressive growth history. SID’s revenues have improved at a 30.6% CAGR over the past three years, while its EBIT increased at an 83.1% CAGR over this period. In addition, its levered free cash flow improved at an 113.8% CAGR over the past three years.
SID’s net sales increased 147.4% year-over-year to R$15.39 billion ($2.98 billion) in its fiscal second quarter, ended June 30. Its gross profit stood at R$8.28 billion ($1.60 billion), up 349.4% from the same period last year. And its net income improved by 1,136.3% year-over-year to R$5.51 billion ($1.07 billion).
Analysts expect SID’s revenues to increase 80.5% year-over-year to $3.00 billion in the current quarter, ending September 2021. A $0.75 consensus EPS estimate for the current ongoing quarter indicates a 1,775% rise from the same period last year. SID has an impressive earnings surprise history also; it beat the consensus EPS estimates in three out of the trailing four quarters.
Shares of SID have gained 263.3% over the past year and 61.5% over the past six months.
It is no surprise that SID has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
The stock also has an A grade for Growth, Sentiment, Momentum, and Quality. Among the 35 stocks in the A-rated Steel industry, SID is ranked #4.
To see additional SID ratings for Stability and Value, click here.
Matson, Inc. (MATX)
MATX provides ocean transportation and logistics services. Its Ocean Transportation business is conducted through its subsidiary, Matson Navigation Company, Inc. (MatNav). MAATX is based in Honolulu, Hawaii.
On June 24, MATX declared a $0.30 quarterly dividend per common share to be paid on September 2. This represents a 30.4% increase over the prior dividend.
MATX’s EBITDA increased at a 28.5% CAGR over the past three years, while its EBIT increased at a 41.4% CAGR over the period. In addition, its tangible book value improved at a 55.4% CAGR over the past three years.
MATX’s total operating revenue increased 66.9% year-over-year to $874.90 million in its fiscal second quarter, ended June 30. Its operating income came in at $213.90 million, indicating a 317.8% rise from the same period last year. Its net income increased 395.4% from its year-ago value to $162.50 million. The company’s EPS increased 388.2% year-over-year to $3.71.
A $783.28 million consensus revenue estimate for its fiscal second quarter ending September 2021 indicates a 21.6% increase year-over-year. The Street expects the company’s EPS to rise 64.4% from the prior year quarter to $2.68 in the current quarter. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters.
MATX gained 85.9% over the past year to close yesterday’s trading session at $67.12. The stock has gained 17.8% year-to-date.
MATX has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. In addition, MATX has an A grade for Growth and a B grade for Value, Momentum, and Quality. It is ranked #1 among the 48 stocks in the Shipping industry.
Click here to view additional MATX ratings for Sentiment and Stability.
SID shares were trading at $8.92 per share on Monday afternoon, up $0.02 (+0.22%). Year-to-date, SID has gained 51.74%, versus a 17.94% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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