Listing stocks with good growth potential and sound fundamentals may result in a strong portfolio in a tumultuous market like the one we are now in. Selecting the right quality stocks to buy is essential since market circumstances change quickly and many unknowns exist. In this case, three exceptional businesses are highlighted as top stocks to buy and hold for long-term gains.
These companies distinguish themselves through their impressive financial performance, strategic growth initiatives and solid market positions. To begin with, the first company is a leader in the mortgage insurance industry. This shows considerable revenue and earnings growth driven by expanding insurance-in-force. Meanwhile, the second one enhances its lead advisory services through strategic acquisitions and maintains constant profitability. Finally, the third company excels in cost efficiency and exhibits solid financial health, demonstrating its strength in the regional banking sector.
Understanding these companies’ fundamental strengths may lead to sharp investment choices that diversify portfolios or secure stable growth.
National MI (NMIH)
National MI (NASDAQ:NMIH) leads in U.S. private mortgage insurance. The company’s top-line for Q1 was $156.3 million, up 3.2% sequentially and 14.2% from Q1 2023. This growth reflects strong top-line performance, which is driven by increased business volumes and premium earnings.
Moreover, In Q1 2024, the company’s net income was $89 million (+7% sequentially and +20% annually). The increase in the bottom line points to the NMIH’s sharp operational strategies. As a result, National MI’s EPS is at $1.08 per diluted share. The EPS had a 24% annual boost from Q1 2023 and an 8% increase from Q4 2023.
The company ended the first quarter with a record $199.4 billion of high-quality primary insurance in force (IIF), reflecting a 1.2% increase from the previous quarter and a 6.8% increase annually. Further, the growth in IIF reflects National MI’s fundamental ability to expand its market lead. It manages risk while increasing its exposure in the mortgage insurance market.
Overall, National MI’s boosted bottom-line, growth in insurance-in-force and sharp risk management make it a high mark among top quality stocks.
Heidrick & Struggles International (HSII)
Heidrick & Struggles International (NASDAQ:HSII) provides executive search and advisory services and maintains a solid bottom line. The company attained a stable adjusted EBITDA of $25.9 million in Q1 2024, demonstrating a constant operational edge despite increased acquisitions and business development costs. Although there was a slight decrease from 10.7% in Q1 2023 to 9.8% in Q1 2024, the company managed to control margins sharply amid operational expansions.
Moreover, Heidrick & Struggles strategically acquired Atreus and B4Z. These acquisitions contributed significantly to top-line growth across different segments, expanded their service offerings and enhanced their market presence and client base. Despite challenges in certain regions, like Asia Pacific, the company’s strong performance in the Americas and Europe highlights sharp geographic diversification strategies. The company maintains a pristine balance sheet with no debt, with $252.8 million in cash, reflecting solid liquidity, up from $204.7 million in Q1 2023.
To sum up, Heidrick & Struggles’ solid bottom line, sharp acquisitions and financial standing solidify its presence among the top quality stocks.
Columbia Banking System (COLB)
Columbia Banking System (NASDAQ:COLB) has undertaken significant cost-cutting initiatives as a regional bank through staff reductions and improved operational edge. With more cuts anticipated, they lowered their full-time equivalent (FTE) personnel by 91 in the first quarter to achieve annualized savings of $18 million in the first quarter and an additional $25 million in the second. This demonstrates a proactive approach to reducing operating expenses.
By optimizing the expense profile, Columbia Banking reduced non-interest expenses by $50 million annually in Q1 2024. Excluding one-time and merger-related expenses, they attained a solid decrease in discretionary spending, reflecting disciplined cost management. Further, the company derived an EPS of 65 cents per share and an operating return on average tangible equity of 16%, indicating a sharp use of equity capital. Columbia Banking attained $200 million in loan growth and $100 million in deposit growth during Q1. Hence, this demonstrates the company’s fundamental ability to expand its core business operations.
To conclude, Columbia Banking’s focus on cost efficiency, solid financial performance and stable loan and deposit growth points to its appeal as a stable investment in the banking industry.
As of this writing, Yiannis Zourmpanos held long positions in HSII and COLB. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.