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Underperformers Back in the Office

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Jane Fraser made history when Citi hired her to become the first female CEO of a big Wall Street bank. Immediately confronted with the unprecedented stress of the COVID-19 pandemic, one of Fraser’s first major decisions was implementing a flexible hybrid work culture. She made the decision to fight pandemic burnout, improve employee well-being, and give the bank an edge in competing for top talent.


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Under Citi’s hybrid work policy, most employees can work three days in-office and two days from home. CNN reports that Fraser, speaking at the World Economic Forum (WEF) in Davos, Switzerland, indicated that productivity at Citi is carefully measured, and collaboration and mentorship work best when done together.

So workers who do not produce well when working a hybrid schedule return to the office for job coaching. However, Fraser said she does not want Citi to return to its 80s model of banking, so the hybrid option will remain in place.

Fraser also believes Citi will have to work in the future to strike a balance between in-person collaboration and giving workers flexibility. “I think we’re in for a world of pretty tight labor supply,” she said. Additionally, people who left the workforce aren’t returning as expected, so Fraser said it’s on her company “to keep listening to our people to get that balance right.”

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3 Penny Stocks to Buy in February

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Moderating inflation and a better-than-expected GDP report could bode well for the stock market in the near term. However, amid recession worries, it would be wise if inexpensive quality penny stocks Overseas Shipholding Group (OSG), ARC Document Solutions (ARC), and Data Storage Corporation (DTST) could be added to your portfolio in February. Read on….

According to the Commerce Department, the U.S. economy expanded for the fourth quarter of last year at a 2.9% annualized pace, higher than the Dow Jones analysts’ estimate of 2.8%.

In addition, the December CPI moderated for the sixth consecutive time, rising 6.5% year-over-year. Although investors are optimistic about this data, recession fears remain mixed as they focus on monetary policy and the upcoming Fed decision.

A “soft landing” scenario seems to be standing on shaky ground. Gregory Daco, the chief economist at EY-Parthenon consulting group, anticipating a recession, commented, “So across the economy there are more indications that the economy is slowing down materially, and that’s typically the sign of the onset of a recession.”

Although penny stocks are usually associated with volatility, against this backdrop, investors could scoop up inexpensive stocks that have the potential to grow over time. Hence, fundamentally sound penny stocks Overseas Shipholding Group, Inc. (OSG), ARC Document Solutions, Inc. (ARC), and Data Storage Corporation (DTST) might be solid buys this month.

Overseas Shipholding Group, Inc. (OSG)

OSG is the owner and operator of a fleet of oceangoing vessels engaged in transporting crude oil and petroleum products in the U.S. flag trade. The company serves independent oil traders, refinery operators, and government entities.

On December 8, 2022, OSG announced that it had exercised options to extend its six bareboat charter agreements with American Shipping Company ASA for an additional three-year term commencing in December 2023.

“We believe the market continues to support attractive commercial opportunities for these vessel leases to supplement the strong and stable cash flow generation from our niche businesses,” said Sam Norton, OSG’s President and CEO.

On November 15, 2022, the company’s Board of Directors announced the purchase of $5 million shares of its common stock from Cyrus Capital at $2.86 per share. The price paid in this share purchase equates to an enterprise value of roughly 4.5 times the expected adjusted EBITDA for 2022, an implied valuation considered very attractive for OSG.

In terms of trailing 12-month EV/Sales, OSG is trading at 1.77x, 8.6% lower than the industry average of 1.93x. Its trailing 12-month Price/Sales multiple of 0.74 is 44.1% lower than the industry average of 1.32.

OSG’s shipping revenues increased 30.9% year-over-year for the third quarter that ended September 30, 2022, to $123.06 million. The company’s net income came in at $13.25 million, compared to a net loss of $16.01 million in the year-ago period. Also, its EPS came in at $0.15, compared to a loss per share of $0.18 in the prior-year period.

Over the past six months, the stock has gained 59.4% to close the last trading session at $3.73. Over the past month, it has gained 29.1%. OSG is currently trading higher than its 50-day and 200-day moving averages of $3.09 and $2.69, respectively, indicating an uptrend.

OSG’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It has an A grade for Momentum and Quality and a B for Growth, Value, and Sentiment. In the 46-stock A-rated Shipping industry, it is ranked first.

Click here to see the additional ratings of OSG for Stability.

ARC Document Solutions, Inc. (ARC)

Digital printing company ARC provides digital printing and document-related services in the United States. It provides managed print services, cloud-based document management software, and other digital hosting services.

ARC’s trailing-12-month EV/Sales of 0.69x is 60.8% lower than the industry average of 1.77x, while its trailing-12-month Price/Sales of 0.49x is 63.6% lower than the industry average of 1.35x.

Its trailing-12-month gross profit margin of 33.20% is 14.5% higher than the industry average of 28.99%. Also, its trailing-12-month EBITDA margin of 13.68% is 5.4% higher than the industry average of 12.98%.

On December 8, 2022, ARC announced it would pay a dividend of $0.05 per share on February 28, 2023. This reflects the shareholder return ability of the company.

ARC’s net sales increased marginally year-over-year to $73.10 million for the third quarter that ended September 30, 2022. Its adjusted net income came in at $3.70 million, up 15.6% year-over-year, while its EPS came in at $0.09, representing an increase of 12.5% year-over-year.

Over the past six months, the stock has gained 24.2% to close the last trading session at $3.49. Moreover, it has gained 44.2% over the past three months. It is trading higher than its 50-day and 200-day moving averages of $3.05 and $2.90, respectively.

ARC’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.

Also, the stock has an A grade for Value, Sentiment, and Quality. Within the B-rated Outsourcing – Business Services industry, it is ranked first among 42 stocks.

Click here for the additional POWR Ratings of ARC (Growth, Momentum, and Stability).

Data Storage Corporation (DTST)

DTST provides multi-cloud information technology solutions in the United States. The company offers data protection and disaster recovery solutions, high availability, data vaulting, DRaaS, IaaS, message logic, standby server, support, maintenance, and internet solutions.

On October 24, 2022, DTST announced that its CloudFirst and Nexxis divisions had been ISO/IEC 27001:2013 certified. This certification illustrates that DTST met rigorous international standards, demonstrating the company’s efficiency.

DTST’s forward EV/Sales of 0.10x is 96.5% lower than the industry average of 2.85x, while its forward Price/Sales of 0.50x is 82.6% lower than the industry average of 2.89x.

DTST’s sales came in at $4.42 million for the third quarter that ended September 30, 2022, up 14.5% year-over-year. Its gross profit came in at $1.85 million, up 20.1% year-over-year. Its adjusted EBITDA rose 54.7% from its prior-year quarter to $162.39 thousand.

Analysts expect DTST’s revenue and EPS to come in at $6.40 million and $0.01, respectively, for the fiscal first quarter ending March 2023. It surpassed EPS estimates in three of the four trailing quarters, which is impressive.

DTST has gained 17.6% over the past month and 1.2% intraday to close the last trading session at $1.74. It is trading higher than its 50-day moving average of $1.71.

It is no surprise that DTST has an overall B rating, which equates to Buy in our POWR Ratings system.

It has an A grade for Sentiment and a B for Value and Quality. It is ranked #6 in the 66-stock Internet industry.

To see the additional POWR Ratings for Growth, Momentum, and Stability for DTST, click here.

Consider This Before Placing Your Next Trade…

We are still in the midst of a bear market.

Yes, some special stocks may go up. But most will tumble as the bear market claws ever lower.

That is why you need to discover the brand new “Stock Trading Plan for 2023” created by 40-year investment veteran Steve Reitmeister. There he explains:

  • Why it’s still a bear market
  • How low stocks will go
  • 9 simple trades to profit on the way down
  • Bonus: 2 trades with 100%+ upside when the bull market returns

You owe it to yourself to watch this timely presentation before placing your next trade.

Stock Trading Plan for 2023 >


OSG shares were unchanged in premarket trading Wednesday. Year-to-date, OSG has gained 29.07%, versus a 6.29% rise in the benchmark S&P 500 index during the same period.


About the Author: Sristi Suman Jayaswal

The stock market dynamics sparked Sristi’s interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy.Having earned a master’s degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.

More…

The post 3 Penny Stocks to Buy in February appeared first on StockNews.com

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1 Airline Stock to Buy Right Now and 1 to Continue to Avoid

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The airline industry is anticipated to remain upbeat and post a profit this year due to improved demand. Therefore, quality stock Copa Holdings (CPA) might be a solid buy right now. However, Virgin Galactic Holdings (SPCE) might be best avoided, given its weak fundamentals. Read on….

Amid the pandemic-induced domestic and international air travel restrictions, the aviation industry suffered. However, the industry has witnessed significant improvements recently and is poised to remain resilient in the foreseeable future.

Although recession fears have sparked concerns about consumer spending, airline executives remain optimistic about travel demand which is not likely to wane any time soon. In 2023, the International Air Transport Association (IATA) anticipates the airline industry to tip into profitability and garner a global net profit of $4.70 billion.

Moreover, passengers are taking advantage of the return of their freedom to travel. A recent IATA poll of travelers across 11 global markets revealed that nearly 70% are traveling as much or more than they did prior to the pandemic. And, while the economic situation concerns 85% of travelers, 57% have no intention to curb their travel habits.

Furthermore, since people’s preference for air travel is rising, the need for low-cost services is also increasing. The global low-cost airlines market is projected to reach $302.85 billion by 2030, growing at a CAGR of 9.9% from 2022 to 2030.

Given this backdrop, fundamentally strong airline stock Copa Holdings, S.A. (CPA) might be a solid buy now. However, Virgin Galactic Holdings, Inc. (SPCE) might be best avoided due to its weak fundamentals.

Stock to Buy:

Copa Holdings, S.A. (CPA)

Based in Panama City, Panama, CPA provides airline passenger and cargo services. The company offers approximately 204 daily scheduled flights to 69 destinations from its Panama City hub to 29 countries in North, Central, and South America and the Caribbean.

In terms of forward EV/Sales, SPCE is trading at 1.49x, 14.3% lower than the industry average of 1.74x. Also, its forward EV/EBITDA multiple of 6.45 is 40.9% lower than the industry average of 10.92.

The stock’s trailing 12-month net income margin of 14.27% is 115.1% higher than the 6.63% industry average. Also, the stock’s trailing-12-month ROCE of 28.97% is 103.5% higher than the 14.24% industry average.

CPA’s total operating revenue in the third quarter that ended September 30, 2022, increased 16.7% from the prior quarter (ended June 30, 2022) to $809.45 million. Its adjusted net profit rose 773.8% sequentially to $115.06 million, while its adjusted earnings per share increased 809.4% from the prior quarter to $2.91.

Street EPS estimate of $2.60 for the fiscal first quarter ending March 2023 reflects a rise of 271.8% year-over-year. Its revenue estimate for the same quarter of $855.89 million indicates an improvement of 49.7% from the prior-year quarter. Additionally, the company topped consensus EPS estimates in each of the trailing four quarters.

Over the past six months, the stock has gained 37%, closing the last trading session at $92.08. It has gained 22.4% over the past three months.

This promising prospect is reflected in its POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

CPA has an A grade for Quality and a B grade for Growth. Out of 31 stocks in the Airlines industry, it is ranked #7.

Beyond what we’ve stated above, we have also given CPA grades for Value, Momentum, Stability, and Sentiment. Get all CPA ratings here.

Stock to Avoid:

Virgin Galactic Holdings, Inc. (SPCE)

SPCE is an integrated aerospace company that develops human spaceflight for private individuals and researchers in the United States. It also manufactures air and space vehicles. In addition, it designs, develops, and manufactures spacecraft and engages in ground and flight testing and post-flight maintenance of spaceflight vehicles.

In terms of forward EV/Sales, SPCE is trading at 521.12x, significantly higher than the industry average of 1.74x. Also, its forward Price/Sales multiple of 871.86 is significantly higher than the industry average of 1.35.

The stock’s trailing-12-month ROCE of negative 54.33% compares to the industry average of 14.24%. Its trailing-12-month ROTA of negative 34.16% compares to the industry average of 5.21%.

SPCE’s revenue declined 70.3% year-over-year to $767 thousand in the third quarter that ended September 30, 2022. Its operating loss and net loss widened by 75.2% and 200.9% from the year-ago values to $145.56 million and $145.55 million, respectively.

The company’s net loss per share amounted to $0.55, widening 71.9% from the same quarter the prior year. Also, its adjusted EBITDA loss increased 89.8% year-over-year to $128.52 million for the same period.

Street expects SPCE’s revenue to be $666.67 thousand in the fiscal first quarter ending March 2023. Its EPS is expected to decline 47.2% to negative $0.53 for the same quarter. It failed to surpass the EPS estimates in three of the trailing four quarters.

Shares of SPCE have declined 25.8% over the past six months to close the last trading session at $5.52.

SPCE’s POWR Ratings reflect its poor prospects. The company has an overall rating of F, equating to a Strong Sell in our proprietary rating system.

It has an F grade for Value, Stability, and Sentiment and a D for Growth and Quality. Within the same industry, it is ranked last.

Click here to see SPCE’s rating for Momentum.

Consider This Before Placing Your Next Trade…

We are still in the midst of a bear market.

Yes, some special stocks may go up. But most will tumble as the bear market claws ever lower.

That is why you need to discover the brand new “Stock Trading Plan for 2023” created by 40-year investment veteran Steve Reitmeister. There he explains:

  • Why it’s still a bear market
  • How low stocks will go
  • 9 simple trades to profit on the way down
  • Bonus: 2 trades with 100%+ upside when the bull market returns

You owe it to yourself to watch this timely presentation before placing your next trade.

Stock Trading Plan for 2023 >


CPA shares were unchanged in premarket trading Wednesday. Year-to-date, CPA has gained 10.71%, versus a 6.29% rise in the benchmark S&P 500 index during the same period.


About the Author: Sristi Suman Jayaswal

The stock market dynamics sparked Sristi’s interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy.Having earned a master’s degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.

More…

The post 1 Airline Stock to Buy Right Now and 1 to Continue to Avoid appeared first on StockNews.com

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Why the Bear Market Might End on 2/1?

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The stock market (SPY) is at a fork in the road coming into the 2/1 Fed announcement at 2pm ET. However, in this case there are 4 different directions stocks could head from here and thus 4 trading plans you should be aware of now. 40 year investment pro Steve Reitmeister spells it all out in his timely commentary below.

January has been quite bullish. Not just the solid overall gains for stocks, but the very Risk On nature of the groups that outperformed.

At this stage investors are holding their breath waiting for the next Fed announcement on Wednesday 2/1 @ 2pm ET. Anything is possible including a softening of their hawkish stance that would give bulls a green light to keep running ahead.

Just as likely is the Fed doubling down on their previous statements that would have stocks tumbling lower once again.

Indeed, a lot hangs on Wednesday’s announcement. So, let’s discuss how each possible outcome would alter our trading plans.

Market Commentary

I see 4 possible scenarios after this very crucial Fed announcement on February 1. Let’s review each and how it would affect our trading plans to carve out profits from the stock market.

Scenario 1: Raging Bull (the Bear is Dead!)

In this scenario the Fed makes a clear and evident pivot in their rate hike regime. Meaning that they see inflation coming down faster than expected and will not have to keep rates high through the end of the year as previously stated.

This unexpected dovish tilt will delight investors as it greatly increases the odds of a soft landing for the economy with stocks raging higher. This should compel investors to abandon their bear market outlook quickly and switch to more Risk On selections that would outperform in a new bull market.

Or simply, sell everything that did well in 2022 and buy the investments that did poorly last year with emphasis on growth over value.

Note that I think the odds of the Fed pivoting so obviously at this stage is incredibly low. The next section is the more probable bullish possibility.

Scenario 2: Cautious Bull

Here we get more subtle hints from the Fed of a potential future pivot in policy. Like they are encouraged by moderating inflation…and will keep rates higher for longer to make sure that rating inflation is good and dead…but just maybe they won’t have to do it for as long as previously stated.

This would increase the current bullish bias in the market. However, the total upside would be more limited as investors would still be too worried about the next Fed statement. And will also be very cautious as they view economic data which is tilting more and more towards recession.

In this case, I would recommend being moderately bullish. Whereas Scenario 1 would compel investors getting back to 100% long…this would be more like 50% long the stock market. And yes, that should be with the same kind of Risk On selections noted above. Just a smaller allocation with ample cash on hand.

Note that this scenario still leaves open the chance that the Fed stays hawkish too long and we still tip over into recession with bear market coming back on the scene. That explains why only 50% long as downside risks still exist.

Scenario 3: Bear Returns with a Vengeance

The Fed has proactively talked down bulls at 2 previous junctures putting an end to premature rallies. I am referring to the famed Jackson Hole speech in August where Powell scared everyone senseless ending the 18% summer rally with new lows in the offing.

A more subtle version of this happened at the beginning of December where he reiterated the “higher rates for longer” mantra more times than I can count. Plus it was clear that they would rather risk recession than leaving any flames of inflation in the economy as that is the greater long term evil.

So if Powell gets back on the “bully pulpit“, or in any way implies that bulls are WAY ahead of themselves, then the bear market comes back with a vengeance. That’s because the longer the Fed stays hawkish…the higher the odds a hard landing (recession) for the economy.

In this case, stay bearish and stick with the 2022 bear market playbook with inverse ETFs and conservative stocks to squeeze out profits as the market heads lower.

Scenario 4: Dazed & Confused

This is where the Fed gives mixed signals. Still hawkish for a long time to save face given previous statements. And yet do tip their hat a little to moderating inflation.

This gray area leads to a trading range until investors have more facts in hand. I suspect that 4,000 is the low end with 4,200 at the high end. This comes hand in hand with a ton of volatility as each new headline has investors recalibrate the bull/bear odds.

This trading range evolves into 1 of the 3 other scenarios in the future depending on future Fed statements and health of the economy. The more you think it will become like scenario 1 or 2 means you tilt more bullish on your trading strategy. And if you still believe that the bearish scenario 3 is where we end up…then you play the trading range with the same degree of caution.

Conclusion

Yes, there is a lot riding on the Fed statement. I am prepared for any of these scenarios to play out with 2 and 3 being the most likely followed by 4.

No doubt you are thinking to yourself “isn’t there an easier way to invest in the stock market?”

Unfortunately not.

The future outlook for the economy, and thus stock prices, is never 100% certain. And thus it is MOST confusing at the 180 degree turns from bearish to bullish or vice versa.

Once we make that big turn, then we get on to the straightaway. Once there the outlook becomes clearer allowing us to enact plans with a greater degree of certainty.

I will of course dissect every word of the Fed announcement to determine which scenario we are in with appropriate change in trading strategy to quickly follow.

Hold onto the steering wheel tight and be ready for anything!

What To Do Next?

Watch my brand new presentation: “Stock Trading Plan for 2023” covering:

  • Why 2023 is a “Jekyll & Hyde” year for stocks
  • Why the Bear Market Could Come Back
  • 9 Trades to Profit Now
  • 2 Trades with 100%+ Upside Potential as New Bull Emerges
  • And Much More!

Watch “Stock Trading Plan for 2023” Now >

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, StockNews.com and Editor, Reitmeister Total Return


SPY shares fell $0.47 (-0.12%) in after-hours trading Tuesday. Year-to-date, SPY has gained 6.29%, versus a % rise in the benchmark S&P 500 index during the same period.


About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.

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The post Investor Alert: Why the Bear Market Might End on 2/1? appeared first on StockNews.com

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