The stock market experienced a steep fall in the last trading session, with the Dow Jones Industrial Average (DJIA) dropping 2.7%, while the S&P 500 and the Nasdaq Composite lost 2.9% and 3.5%, respectively.
The last session’s sell-off could be attributed to the steeper-than-expected May inflation data. Analysts expected inflation to remain flat in May, but the consumer price index witnessed the highest increase since December 1981. This calls for aggressive interest rate hikes.
The market correction on fears of the Fed’s aggressive monetary policy tightening pushing the economy into a recession has led to several quality stocks currently trading at significant discounts. According to Morningstar, small-cap stocks were trading at a 19% discount as of May 31, 2022.
Given this backdrop, investors can consider adding fundamentally strong small-cap stocks P.A.M. Transportation Services, Inc. (PTSI), Urban One, Inc. (UONEK), and Natural Grocers by Vitamin Cottage, Inc. (NGVC) to their portfolios.
P.A.M. Transportation Services, Inc. (PTSI)
PTSI, through its subsidiaries, operates as a truckload transportation and logistics company. It operates as a truckload dry van carrier, transporting general commodities throughout the continental United States and in certain Canadian provinces. Its operations are classified into truckload services or brokerage and logistics services. It offers a dedicated dry van and expedited international logistics and power solutions. Its freight consists of automotive parts, expedited goods, and consumer goods. It has a market capitalization of $607.89 million.
PTSI’s operating revenue increased 47.4% year-over-year to $219.44 million for the first quarter ended March 31, 2022. The company’s adjusted net income increased 121.5% year-over-year to $26.46 million. Also, its adjusted EPS came in at $1.18, representing an increase of 126.9% year-over-year.
Analysts expect PTSI’s EPS for the quarter ending June 30, 2022, to increase 310.7% year-over-year to $1.15. Its revenue for fiscal 2022 is expected to increase 26% year-over-year to $891.30 million. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past three months, the stock has lost 60.5% to close the last trading session at $27.30.
PTSI’s POWR Ratings reflect solid prospects. According to our proprietary rating system, it has an overall rating of A, translating to a Strong Buy. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Sentiment and a B grade for Growth, Value, Momentum, and Quality. It is ranked first among 22 stocks in the A-rated Trucking Freight industry. Click here to see the rating of PTSI for Stability.
Urban One, Inc. (UONEK)
UONEK is an urban-oriented, multi-media company. The company’s core business is its radio broadcasting franchise, which is a radio broadcasting operation that primarily targets African American and urban listeners. Its segments include radio broadcasting, cable television, Reach Media, and digital. It has a market capitalization of $303.70 million.
For the fiscal first quarter ended March 31, 2022, UONEK’s net revenue increased 22.8% year-over-year to $112.34 million. The company’s adjusted EBITDA increased 38.9% year-over-year to $42 million. Also, its net income increased 53.7% year-over-year to $36.53 million.
UONEK’s EPS is expected to increase 52.2% per annum over the next five years. The stock has declined 13.8% over the past month to close the last trading session at $5.26.
UONEK’s strong prospects are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Value, Sentiment, and Quality. Within the B-rated Entertainment – Publishing industry, it is ranked first out of eight stocks. To see the other ratings of UONEK for Momentum and Stability, click here.
Natural Grocers by Vitamin Cottage, Inc. (NGVC)
NGVC is a specialty retailer of natural and organic groceries and dietary supplements. The company’s products in its stores include body care, pet care, household, and general merchandise and books and handouts. In addition, it carries a range of products associated with special diets such as gluten-free, vegetarian, and non-diary. It has a market capitalization of $384.14 million.
On February 1, 2022, NGVC announced its plans to close its 645 East 400 South, Suite A, Salt Lake City store by March 31, 2022. The closing down is part of the company’s commitment to enhancing operating efficiencies across its store base.
NGVC’s net sales increased 4.9% year-over-year to $271.82 million for the second quarter ended March 31, 2022. The company’s adjusted EBITDA increased 11.8% year-over-year to $16.06 million. Also, its net income increased 35.1% year-over-year to $6.35 million. In addition, its EPS came in at $0.28, representing an increase of 33.3% year-over-year.
Analysts expect NGVC’s EPS and revenue for fiscal 2022 to increase 5.5% and 4.2% year-over-year to $0.96 and $1.10 billion, respectively. Over the past month, the stock has lost 9.8% to close the last trading session at $16.94.
NGVC’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Sentiment and a B grade for Growth, Value, Stability, and Quality. It is ranked #3 out of 37 stocks in the A-rated Grocery/Big Box Retailers industry. Click here to see the rating of NGVC for Momentum.
PTSI shares were trading at $27.68 per share on Tuesday afternoon, up $1.16 (+4.37%). Year-to-date, PTSI has declined -22.04%, versus a -21.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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