The global economy appears paralyzed by soaring inflation amid geopolitical warfare and tighter financial conditions. The International Monetary Fund has cut its global growth projections for 2022 and 2023, citing global macroeconomic pressures. He now expects the global economy to grow 3.2% this year, slowing further to 2.9% next year. The organization pinned the global economic outlook as “dark and more uncertain.”
On the other hand, the Fed will likely go ahead with another rate hike this week. However, traders assess the chances of Fed suspends inflation-fighting efforts amid signs of a slowing economy.
In addition, this month, the first jobless claims reached its highest level since mid-November. Claims reached 251,000 for the week ended July 16, up 7,000 from the previous week. This indicates a cooling in the labor market.
Despite the uncertain macroeconomic environment, we believe that the fundamentally strong stocks of business services Civeo Corporation (CVEO), ARC Document Solutions, Inc. (BOW), TriNet Group, Inc. (TNET) and The Brink’s Company (BCO) could be ideal purchases now. Global business process outsourcing market expected to reach $513 billion by 2030, growing at a CAGR of 8.5%.
Civeo Corporation (CVEO)
CVEO is a workforce accommodation company that provides hospitality services to the natural resources industry in Canada, Australia and the United States. The company develops lodges and villas, provides food and maintenance, and offers development activities for workforce accommodation facilities.
On July 18, CVEO announced that it had secured a contract renewal to continue providing rooms and hospitality services at its Wapasu Lodge in the Canadian oil sands for Imperial Oil Resources Limited. This could benefit the company.
CVEO’s revenue increased 32.1% year over year to $165.68 million in the first quarter ended March 31. Its operating profit increased 142.8% from the previous year’s value to $4.24 million, while its net profit improved 120.2% year-on-year. the other. at $1.91 million. The company’s net earnings per share rose 108.6% from its value a year ago at $0.06.
The consensus EPS estimate of $0.44 for the third quarter ending September 2022 indicates a 10,132.6% year-over-year improvement. Consensus revenue is expected to be $172.78 million for the same period, an 11.4% growth over the prior year period.
The stock has gained 33.8% over the past year and 38.9% since the start of the year to close its last trading session at $26.62.
CVEO POWR Rankings reflect this promising prospect. The company’s overall A rating translates to a strong buy in our proprietary rating system. POWR ratings rate stocks on 118 different factors, each with its own weighting.
CVEO is rated A in growth and sentiment and a B in value, stability and quality. In category B Outsourcing – Business Services industry, it is ranked #1 out of 43 stocks.
To see an additional POWR rating for Momentum for CVEO, Click here.
ARC Document Solutions, Inc. (BOW)
ARC provides digital printing and document services in the United States. The company offers managed print services, cloud-based document management software and other digital hosting services.
ARC announced in April that its board of directors had declared a quarterly dividend of $0.05 per share, payable to shareholders on August 31. This reflects the company’s cash-generating capacity.
ARC’s net sales increased 12.6% year over year to $69.49 million for the first quarter ended March 31. Its adjusted net income attributable to ARC was $1.98 million, representing a 115% year-over-year growth. His Adjusted EBITDA increased 3.6% from the prior year quarter to $9.08 million. Adjusted EPS increased 150% from the prior year period to $0.05.
Analysts expect ARC’s FY2022 EPS to be $0.26, representing 18.2% year-over-year growth. The company’s revenue is expected to increase by 5.4% over the previous year to reach $286.90 million for the same period.
ARC has gained 25.5% over the past year and 1.5% over the past five days to close its latest trading session at $2.61.
It’s no surprise that ARC has an overall A rating, which equates to a Strong Buy in our POWR rating system.
ARC has an A rating for value and quality and a B for growth and sentiment. It is ranked #2 in the Outsourcing Industry – Business Services.
Beyond what we stated above, we also gave ARC ratings for Momentum and Stability. Get all ARC ratings here.
TriNet Group, Inc. (TNET)
TNET provides human resources (HR) solutions, payroll, employee benefits, and employment risk mitigation services for small and medium-sized businesses in the United States.
In May, TNET announced the launch of a major overhaul of its customer-facing technology platform. The updated platform is expected to make it easier for SMEs to access basic necessities when needed. This could improve customer satisfaction.
For the first quarter that ended March 31, TNET’s total revenue increased 14.9% year-on-year to $1.22 billion. Its operating profit rose 47.8% from the year-ago quarter to $204 million. Adjusted net earnings and adjusted net earnings per share were $168 million and $2.55, up 51.4% and 53.6% from the prior year period.
The Street EPS estimate for the year ending December 2023 of $5.61 indicates a 9.3% year-over-year improvement. Similarly, Street’s revenue estimate for the same year of $1.33 billion indicates a 7.4% improvement over the previous year. Additionally, TNET has exceeded consensus EPS estimates in each of the past four quarters, which is impressive.
Over the past year, TNET’s stock has gained 10.4% to close its last trading session at $80.91. It has gained 5.6% over the past month.
This promising outlook is reflected in TNET’s POWR ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.
TNET has a B rating for value, stability, and quality. It is ranked #5 in the same industry.
Click here to see additional POWR ratings for TNET (Growth, Momentum and Sentiment).
The Brink’s Company (BCO)
BCO provides secure transportation, cash management and other security-related services internationally. The Company’s offerings include armored transportation of valuables, automated teller machine (ATM) management services, network infrastructure and money transfer services.
On May 5, BCO declared a regular quarterly dividend of 20 cents per share on its common stock, which was payable June 1. This reflects the company’s ability to generate returns for shareholders.
BCO’s revenue increased 9.8% year-on-year to $1.07 billion in the first quarter of 2022. Its non-GAAP operating profit increased 24.4% compared to the value of the previous year to reach $112.10 million. The company’s non-GAAP earnings from continuing operations attributable to BCO increased 38.9% from the prior year period to $55.70 million, while its non-GAAP EPS stood at $1.15, up 45.6% from the prior year period.
Analysts expect revenue growth of 5.4% year-over-year to $1.11 billion for the second quarter (ending June 2022).
The stock gained 1.4% intraday to close its last trading session at $55.51.
BCO’s overall A rating translates to Strong Buy in our POWR rating system. The stock has a B rating for Growth, Value, Stability and Sentiment. It is ranked #4 in the Outsourcing Industry – Business Services.
Beyond what we stated above, we also gave BCO ratings for Momentum and Quality. Get all the BCO ratings here.
CVEO shares were trading at $27.15 per share on Tuesday afternoon, up $0.53 (+1.99%). Year-to-date, the CVEO has gained 41.63%, compared to a -17.15% rise in the benchmark S&P 500 over the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. After…