The equity market remains volatile due to the resurgence of COVID-19 cases in Europe and the historically high inflation in the United States. Austria recently announced that it would reimpose a national lockdown due to rising COVID-19 cases. And U.S. consumer confidence plunged to a 10-year low in November, reflecting heightened inflation concerns. However, S&P 500 and Nasdaq have been hovering near their all-time highs lately thanks to strong corporate earnings and investors’ optimism about retail sales.

According to the U.S. Commerce Department, retail sales rose a seasonally adjusted 1.7% in October. In addition, the national unemployment rate fell to 4.6% in October, the lowest level since the economic recovery began in May 2020. Furthermore, Goldman Sachs (GS) expects the economic recovery to reaccelerate in the coming quarters, driving the unemployment rate back to a 50-year low by the end of next year.

Against this favorable backdrop, we think it could be wise to bet on fundamentally strong stocks Safe Bulkers, Inc. (SB) and Cumulus Media Inc. (CMLS). These stocks are rated A (Strong Buy) in our proprietary rating system, and Wall Street analysts expect them to rally more than 80% in the near term.

Safe Bulkers, Inc. (SB)

Based in Monaco, SB provides marine dry bulk transportation services. It owns and operates dry bulk vessels for transporting bulk cargoes, primarily coal, grain, and iron ore. The company has a fleet of 43 dry bulk ships with an average age of 10.3 years, and an aggregate carrying capacity of 3,937,000 deadweight tons.

On October 7, 2021, SB announced that it had entered a new long-term period time charter for its 2014-built Japanese Capesize class vessel MV Lake Despina. Dr. Loukas Barmparis, President of SB, said, “While we remain a strong spot charter market player, we decided to lock this second three-years period time charter that further enhances the visibility of our future cash flows and supports our long-term earning capability."

SB’s revenues increased 78.2% year-over-year to $92.50 million in the third quarter, which ended September 30, 2021. The company’s adjusted EBITDA grew 203.6% year-over-year to $67.70 million, while its adjusted net income came in at $50.70 million, representing a 1,348.6% year-over-year increase. Also, its adjusted EPS was $0.40, up 29% sequentially.

Analysts expect SB’s EPS and revenue to increase 925% and 77.2%, respectively, year-over-year to $0.41 and $92.53 million. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 245.1% in price to close yesterday’s trading session at $3.52. Wall Street analysts expect the stock to hit $6.50 in the near term, which indicates a potential 84.7% upside.

SB’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

The stock has an A grade for Growth and a B grade for Value, Momentum, and Quality. Within the Shipping industry, SB is ranked #3 of 46 stocks. To see SB’s ratings for Sentiment and Stability as well, click here.

Cumulus Media Inc. (CMLS)

An audio-first media and entertainment company CMLS owns and operates 415 radio stations in 86 markets and approximately 7,300 affiliated stations through Westwood One. The Atlanta, Ga., company's content portfolio includes sports, news, talk, and entertainment programming. It also provides digital marketing services.

On September 15, 2021, CMLS and Audacy announced a content distribution partnership that brings Cumulus’ 413 radio stations and a portfolio of podcasts to the Audacy digital platform. Larry Linietsky, Senior Vice President of Digital Operations and Business Development, CMLS, said, "This partnership is in sync with our strategy of distributing our content through multiple platforms to make it available anywhere and anytime people want to enjoy it."

CMLS’ net revenues increased 21% year-over-year to $237.72 million in the third quarter, which ended September 30, 2021. The company’s adjusted EBITDA grew 125.4% year-over-year to $45.83 million, while its net income came in at $27.45 million, versus a $15.80 million net loss in the prior-year period. Also, its EPS came in at $1.32 compared to a  $0.78 loss per share in the year-ago period.

For the quarter ending December 31, 2021, analysts expect CMLS’ EPS to increase 300% year-over-year to $0.64. In addition, it surpassed the Street’s EPS estimates in three of the trailing four quarters. Also, the company’s revenue is expected to increase 16.2% year-over-year to $223.33 million for the quarter ending March 31, 2022. The stock has rallied 110.8% in price over the past year to close yesterday’s trading session at $12.94. Wall Street analysts expect the stock to hit $27 in the near term, which indicates a potential 108.7% upside.

CMLS’ strong fundamentals are reflected in its POWR Ratings. The company has an overall rating of A, which equates to Strong Buy in our proprietary rating system. The stock has an A grade for Sentiment, and a B grade for Growth and Momentum.

We have also graded CMLS for Stability, Quality, and Value. Click here to access all CMLS’ ratings. CMLS is ranked #2 of 6 stocks in the A-rated Entertainment - Radio industry.

SB shares were trading at $3.47 per share on Friday afternoon, down $0.05 (-1.42%). Year-to-date, SB has gained 166.92%, versus a 26.73% rise in the benchmark S&P 500 index during the same period.

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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