A solid start to the third-quarter earnings season has made investors bullish, as evidenced by the impressive performances of the major stock market indexes. According to FactSet, through October 15, 8% of the companies in the S&P 500 had reported results for Q3 2021, and 80% of them have surpassed consensus EPS estimates, which surpasses the 76% five-year average. This, along with a low-interest-rate environment and decline in initial jobless claims, should keep the stock market upbeat in the near term.

While high inflation and supply chain constraints remain concerns, initial jobless claims fell below 300,000 for the week ended October 9, for the first time since the initial days of the COVID-19 pandemic.

Given this backdrop, we think it  could be wise to bet on quality stocks Ultralife Corporation (ULBI), FONAR Corporation (FONR), and Good Times Restaurants Inc. (GTIM). They each look undervalued at their current price levels.

Ultralife Corporation (ULBI)

ULBI offers products and services ranging from power solutions to communications and electronics systems to customers worldwide. The Newark, N.Y.-based company caters primarily to the government and defense, medical, safety and security, energy, industrial, and robotics sectors. The company operates through two segments—Battery & Energy Products: and Communications Systems.

ULBI’s total revenues came in at $26.77 million in the second quarter, ended June 30. The company’s cash grew 48.6% for the six months ended June 30, 2021, to $15.83 million. Its gross profit amounted to $7.27 million, and its net income came in at $822,000 during the period.

Analysts expect ULBI’s revenue for its fiscal year 2022 to be $129.5 million, representing17% growth year-over-year. Its EPS is expected to grow 47.1% next year.

In terms of forward EV/Sales, ULBI is currently trading at 0.91x, which is 54.1% lower than the 1.98x industry average. Also, in terms of its forward non-GAAP P/E, the stock is currently trading at 17.30x, which is 13.9% lower than the 20.09x industry average. ULBI’s stock price has surged 12.8% over the past year.

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

Also, the stock has an A grade for Value, and a B for Quality and Momentum. We’ve also graded ULBI for Sentiment, Growth, and Stability. Click here to access all ULBI’s ratings.

ULBI is ranked #11 of 93 stocks in the B-rated Industrial - Equipment industry.

Click here to check out our Industrial Sector Report for 2021

FONAR Corporation (FONR)

FONR in Melville, N.Y., develops, produces, and markets magnetic resonance imaging (MRI) scanners to detect and diagnose human diseases. The company operates through two segments: Medical Equipment; and Physician Management and Diagnostic services. Its products and services include Upright MRI, FONAR 360°, and the OPEN SKY MRI.

In March, FONR acquired a Stand-Up MRI facility in Yonkers. Its management subsidiary, Health Management Company of America (HMCA), will be offering services. Through this acquisition, the company intends to provide quality services to patients and the physicians and further strengthen its market position, thereby boosting its revenue.

During its fiscal year 2021, ended June 30, 2021, FONR’s total revenues increased 4.9% year-over-year to $89.93 million. The company’s operating income grew 25.2% from its year-ago value to $17.1 million. Its net income rose 16.8% from the prior-year quarter to $13.67 million, and its cash and cash equivalents grew 20.8% for the six months ended June 30, 2021, to $44.46 million.

In terms of trailing-12-months EV/EBITDA, FONR is currently trading at 4.19x, which is 77.2% lower than the 18.37 industry average. In addition, its 5.19x trailing-12-months EV/EBIT is 78.4% lower than the 24x industry average.

FONR’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 Stability, and a B for Quality and Value.

In addition to the POWR Rating grades I’ve just highlighted, one can see FONR’s ratings for Growth, Momentum, and Sentiment here. The stock is ranked #1 of 181 stocks in the Medical – Devices & Equipment industry.

Click here to checkout our Healthcare Sector Report for 2021

Good Times Restaurants Inc. (GTIM)

GTIM, a Golden, Colo.-based restaurant chain that provides a wide range of food products, from burgers, chicken, frozen custard to sides and drinks. The company operates through Good Times Burgers and Frozen Custard restaurants, and Bad Daddy's Burger Bar restaurants. It operated and franchised 37 Bad Daddy's Burger Bar restaurants and 25 Good Times Burgers & Frozen Custard restaurants as of December 11, 2020.

GTIM’s total net revenues increased 39.4% year-over-year to $33.95 million for its fiscal third quarter, ended June 29, 2021. The company’s operating income grew 190.2% from its year-ago value to $2.45 million. Its net income rose significantly from its year-ago value to $14.16 million. Also, the company’s EPS increased 5100% year-over-year to $1.04.

For its fiscal year 2021, analysts expect GTIM’s revenue to be $135.3 million, representing 23.2% year-over-year growth. In addition, its EPS is expected to increase at the rate of 30% per annum over the next five years.

In terms of trailing-12-months EV/Sales, GTIM is currently trading at 0.92x, which is 39.8% lower than the 1.53x industry average. Also, in terms of its trailing-12-months Price/Sales, the stock is currently trading at 0.53x, which is 58.1% lower than the 1.27x industry average. GTIM’s stock price has surged 203.7% over the past year.

It’s no surprise that GTIM has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has an A grade for Value, and a B grade for Sentiment and Quality.

Click here to see the additional POWR Ratings for GTIM (Momentum, Stability, and Growth). The stock is ranked #1 of 48 stocks in the A-rated Restaurants industry.

ULBI shares were trading at $7.04 per share on Wednesday morning, up $0.12 (+1.73%). Year-to-date, ULBI has gained 8.81%, versus a 21.88% rise in the benchmark S&P 500 index during the same period.

Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.

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