The stock market has been volatile lately due to investors’ concerns surrounding the continuing increase in COVID-19 cases and a potential debt default by China’s troubled property giant Evergrande Group. However, the major stock market indexes rallied yesterday after the Federal Reserve pledged to keep its bond-buying program and ultralow interest-rate policy in place for now to support the economy. In addition, Evergrande is expected to pay interest payments on an onshore bond.
According to the Labor Department, the consumer price index (CPI) in August increased 5.3% from a year earlier and 0.3% from July, which was lower than expected, signaling that inflation may be starting to cool. Furthermore, the economy has seen a substantial decline in the unemployment rate recently.
Against this backdrop, we think it could be wise to bet on quality stocks ZIM Integrated Shipping Services Ltd. (ZIM), Teradata Corporation (TDC), and Dillard's, Inc. (DDS). These stocks are rated Strong Buy in our proprietary POWR Ratings system. They have gained more than 100% in price this year and still have plenty of upside to deliver.
ZIM Integrated Shipping Services Ltd. (ZIM)
Headquartered in Haifa, Israel, ZIM provides container shipping and related services, and operates 101 vessels with a global network of 69 weekly lines. In addition, the company offers seaborne transportation and logistics services comprising dry, reefer, project, out of gauge, breakbulk and dangerous cargo services.
On June 21, 2021, ZIM and Alibaba.com (BABA) agreed to extend their cooperation agreement for two more years. Eli Glickman, ZIM’s President and CEO, said, “It is part of our innovative strategic vision, and we are very proud to extend and expand this partnership with Alibaba.com to enhance the customer experience and further capitalize on growing eCommerce trends."
ZIM’s revenues increased 200% year-over-year to $2.38 billion for its fiscal second quarter, ended June 30, 2021. The company’s adjusted EBITDA grew 820% year-over-year to $1.34 billion, while its net income increased 3,452% year-over-year to $888 million. Also, its adjusted EPS came in at $7.38, up 3108.7% year-over-year.
ZIM’s EPS is expected to be $23.79 in its fiscal year 2021, representing a 373.9% year-over-year increase. In addition, the company’s revenue is expected to increase 158.8% year-over-year to $2.62 billion for the quarter ending September 30, 2021. The stock has gained 378.3% in price year-to-date to close yesterday’s trading session at $55.
ZIM’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates 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 a B grade for Growth, Value, Momentum, and Quality. Within the Shipping industry, ZIM is ranked #2 of 48 stocks. To see the additional POWR Ratings for ZIM (Stability and Sentiment), click here.
Teradata Corporation (TDC)
Hybrid cloud analytics software provider TDC’s solutions and services are composed of software, hardware, and related business consulting and support services. It offers primarily Teradata Vantage, which is an analytics platform. Also, the company serves various industries such as financial services, government, retail, and telecommunications. TDC is headquartered in San Diego, Calif.
On May 4, 2021, TDC announced a set of enhancements for Teradata Vantage on Alphabet Inc.’s (GOOGL) Google Cloud. The enhancements make it easier for its consumers to use the services. This could lead to increasing demand for the company’s services in the near term.
TDC’s revenue surged 7% year-over-year to $491 million for the second quarter, ended June 30, 2021. Its non-GAAP operating income grew 83% year-over-year to $117 million, while its non-GAAP net income increased 219% year-over-year to $83 million. Its non-GAAP EPS came in at $0.74, up 208.3% year-over-year.
Analysts expect TDC’s EPS and revenue to increase 50.4% and 4.6%, respectively, year-over-year to $1.97 and $1.92 billion in its fiscal year 2021. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 135.6% in price so far this year to close yesterday’s trading session at $52.94.
It’s no surprise that TDC has an overall A rating, which equates to a Strong Buy in our POWR Rating system. In addition, the stock has an A grade for Growth and Value, and a B grade for Quality.
Click here to see TDC’s ratings for Sentiment, Stability, and Momentum as well. TDC is ranked #1 of 3 stocks in the A-rated Technology - Storage industry.
Dillard's, Inc. (DDS)
DDS operates retail department stores in the Southeastern, Southwestern, and Midwestern areas of the United States. Its stores offer merchandise, including fashion apparel, accessories, cosmetics, home furnishings, and other consumer goods. DDS is based in Little Rock, Ark.
On August 19, DDS declared a cash dividend of $0.20 per share on the company's Class A and Class B common stock, representing a $0.05 increase from the prior $0.15 dividend. The decision is indicative of the company's financial strength.
DDS’ sales increased 70.9% year-over-year to $1.57 billion for its fiscal second quarter, ended June 30, 2021. The company’s net income came in at $185.70 million, versus an $8.60 million loss in the year-ago period. Also, its EPS came in at $8.81 compared to a $0.37 loss per share in the prior year period.
For its fiscal year 2021, analysts expect DDS’ EPS and revenue to increase 1,245% and 43.4%, respectively, year-over-year to $31.83 and $6.36 billion. In addition, it surpassed the Street’s EPS estimates in each of the trailing four quarters. The stock has gained 233% in price year-to-date to close yesterday’s trading session at $209.99.
DDS’ POWR Ratings reflect solid prospects. The company has an overall A rating, which translates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Growth, Value, and Quality.
Click here to see the additional POWR Ratings for DDS (Momentum, Stability, and Sentiment). DDS is ranked #8 of 63 stocks in the A-rated Fashion & Luxury industry.
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ZIM shares were trading at $58.90 per share on Thursday afternoon, up $3.90 (+7.09%). Year-to-date, ZIM has gained 412.17%, versus a 20.11% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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