Inflation eased for the sixth consecutive month in December, as the Consumer Price Index (CPI) showed a 6.5% year-over-year rise in prices and declined 0.1% sequentially. Although inflation is showing signs of easing, minutes from the Fed’s December policy meeting indicate that interest rate hikes will continue until more progress is made on bringing inflation down.
Moreover, the U.S. jobless claims for the week ended January 14, 2023, dropped to their lowest in 15 weeks, indicating continued tightness in the labor market. This is expected to push the economy into a recession, piling further misery on the stock market.
However, the Gross Domestic Product (GDP) grew by 2.9% in the fourth quarter, beating analysts' expectations. According to Goldman Sachs analyst Jan Hatzius, there is only a 35% chance of a recession this year.
Amid this backdrop, it could be wise for investors to buy fundamentally strong stocks Rimini Street, Inc. (RMNI), Gaia, Inc. (GAIA), and LifeVantage Corporation (LFVN), currently trading under $5.
Rimini Street, Inc. (RMNI)
RMNI provides enterprise software products, services, and support for various industries. The company offers software support services for Oracle and SAP enterprise software products.
In terms of the trailing-12-month gross profit margin, RMNI’s 62.91% is 27.4% higher than the 49.37% industry average. Likewise, its 11.33% trailing-12-month EBITDA margin is 1% higher than the industry average of 11.22%.
On December 6, 2022, RMNI launched Rimini Connect™, a new integration and interoperability solution suite. This new product is expected to offer straightforward solutions for continuously changing integration and interoperability requirements, thereby contributing to the company’s growth.
For the fiscal third quarter that ended September 30, 2022, RMNI’s revenue increased 6.6% year-over-year to $101.93 million. The company’s gross profit increased marginally year-over-year to $62.66 million. Also, its long-term debt came in at $62.66 million for the quarter that ended September 30, 2022, compared to $79.66 million for the fiscal year that ended December 31, 2021.
Analysts expect RMNI’s EPS for the quarter ending June 30, 2023, to increase 49.6% year-over-year to $0.11. Its revenue for the quarter that ended December 31, 2022, is expected to increase 4.7% year-over-year to $103.93 million. The stock has gained 27.2% over the past month to close the last trading session at $4.91.
RMNI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the Software - Application industry, it is ranked #33 out of 138 stocks. It has a B grade for Value and Quality. We have also given RMNI grades for Growth, Momentum, Stability, and Sentiment. Get all RMNI ratings here.
Gaia, Inc. (GAIA)
GAIA operates a digital video subscription service and online community for underserved member bases worldwide. It has a digital content library of approximately 10,000 titles in Spanish, German, and French languages available to its subscribers on internet-connected devices.
In terms of the trailing-12-month gross profit margin, GAIA’s 86.47% is 71.9% higher than the 50.32% industry average. Its 19.65% trailing-12-month EBITDA margin is 3.7% higher than the industry average of 18.95%. Likewise, its 21.66% trailing-12-month CAPEX/Sales is 443.1% higher than the industry average of 3.99%.
GAIA’s net revenues increased 6.3% year-over-year to $62.46 million for the nine months that ended September 30, 2022. Its gross profit increased 5.8% year-over-year to $54.15 million. The company’s adjusted EBITDA increased 7.1% year-over-year to $13.63 million.
GAIA’s revenue for the quarter ending June 30, 2023, is expected to increase 5.1% year-over-year to $21.78 million. Over the past month, the stock has gained 62.4% to close the last trading session at $3.67.
GAIA’s POWR Ratings reflect its solid prospects. The stock has an overall rating of B, equating to Buy in our proprietary rating system. It is ranked #5 out of 39 stocks within the Athletics & Recreation industry. The company has a B grade for Value, Stability, and Sentiment.
Click here to see the additional POWR Ratings of GAIA for Growth, Momentum, and Quality.
LifeVantage Corporation (LFVN)
LFVN engages in the identification, research, development, formulation, sale, and distribution of nutrigenomic activators, dietary supplements, nootropics, pre and pro-biotics, weight management, skin and hair care, bath and body, and targeted relief products.
In terms of the trailing-12-month gross profit margin, LFVN’s 81.16% is 158.7% higher than the 31.37% industry average. Its 2.86x trailing-12-month asset turnover ratio is 245.3% higher than the 0.83x industry average. Likewise, its 3.61% trailing-12-month leveraged FCF margin is 27.6% higher than the industry average of 2.83%.
Analysts expect its revenue for the fiscal year 2023 to increase 0.4% year-over-year to $207.11 million. The stock has gained 6.7% over the past month to close the last trading session at $3.97.
LFVN’s POWR Ratings reflect this positive outlook. LFVN has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. It is ranked first out of 10 stocks in the A-rated Medical - Consumer Goods industry. It has an A grade for Value and Quality and a B for Stability.
Click here for LFVN’s ratings for Growth, Momentum, and Sentiment.
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RMNI shares were trading at $4.73 per share on Monday afternoon, down $0.18 (-3.67%). Year-to-date, RMNI has gained 24.15%, versus a 5.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
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