In the stock market, you rarely find a stock that hits as many high marks as the one I’m about to tell you about.
Most of the time, there’s something “wrong” with just about any stock:
- It’s too big of a company to produce strong gains.
- It’s overpriced.
- It’s not trending up.
- The stock is too volatile.
Any of those can be reasons we decide to pass on buying a stock.
But this company is a great value, it provides strong quality — plus, it has great momentum and solid growth potential.
You’ve heard us talk about Adam O’Dell’s Green Zone Ratings system and how it works. (Pro tip: For a quick primer on the system, read here).
I’ve scoured the Green Zone universe and found a stock that knocks it out of the park with Adam’s system.
This company provides essential products in the health care industry.
I’ll share it with you shortly. But first, I want explain why this health care stock will continue to go up — even after the coronavirus pandemic is behind us.
PPE Sales Won’t Stop When COVID-19 Goes Away
It’s easy to think that the demand for face masks and other personal protective equipment (PPE) will fade when we finally move on from the coronavirus.
A study by Zion Market Research suggests just the opposite.
Face Mask Sales to Jump 37% by 2025
The company I’m sharing with you today does much more than just manufacture and sell face masks.
It’s a global leader that supplies essential products to the health care industry.
This Health Care Stock Is a Global PPE Leader
One of the biggest players in the PPE sales market is Superior Group of Cos. Inc. (Nasdaq: SGC).
It manufactures and sells health care apparel and accessories in the U.S. and internationally.
The company’s products include scrubs, goggles, hand sanitizer and face masks. Through its Office Gurus business, it offers call center and customer service support to the health care industry.
That diversification has led to a 198% growth in revenue since 2013.
SGC Gross Profit Skyrocket
What’s more is SGC’s returns blow away the S&P 500.
SGC Returns Are 41.3%
As for its share price, SGC has been on a steady upward trajectory since hitting a low in May 2020.
This health care stock has climbed more than 217% since that low.
SGC Shares Climb to New Heights
If we take a closer look at Adam’s six-factor Green Zone Ranking model, here’s what we find out about Superior Group:
- Value — SGC ranks a 97 on value, meaning that only 3% of all other rated stock are higher. We know that low-valuation stocks tend to outperform high-valuation ones.
- Quality — The company also ranked a 97 on quality. Its returns on assets, equity and investment are all better than the rest of the apparel and accessories industry.
- Size — Superior Group ranks a 97 on size. Smaller company stocks often provide bigger returns than larger companies.
- Momentum — We like companies that are already on an upward trajectory. SGC ranks a 95 on momentum as that upward movement has been consistent since May 2020.
In July 2020, the company released its second-quarter earnings report, and they were huge. Here are some of the highlights:
- Consolidated net sales of $159.5 million — a 7% increase from the same quarter a year ago.
- Earnings per share of $1 — a 456% jump from the same quarter a year ago.
- In just two years, the company paid down its original debt of $128.8 million to just $85 million — a 34% reduction in overall debt load.
- An operating margin of 12.3% — up from 5.9% in the second quarter of 2019.
In short, technically and fundamentally, everything is going in the right direction for Superior Group.
What to Do With Superior Group Stock
With an overall ranking of 100 on Adam’s Green Zone Ranking system, we are “strong bullish” on the stock.
The overall market is experiencing a pullback from previous highs.
This could provide a great opportunity to buy Superior Group of Cos. Inc. at a discount.
Because we are “strong bullish” on this health care stock, we expect it to outperform the overall market by 3x in the next 12 months.
The bottom line: Superior Group of Cos. Inc. has everything we are looking for in a strong performing stock.
It’s increased its sales in each of the last several years — even before the coronavirus pandemic — and there’s nothing to suggest that those sales will slow down.
This is one of the highest-ranking stocks on Adam’s Green Zone Rating system — and it’s one you need to jump into to realize 3x profits above the market.
Until next time …
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.