For Immediate Release
Chicago, IL – November 11, 2013 – Zacks Equity Research highlights Ford Motor Company (F- Free Report ) as the Bull of the Day and American Campus Communities (ACC- Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Tesla Motors, Inc. (Nasdaq: TSLA- Free Report), General Motors ( GM- Free Report) and Nissan Motor Co. Ltd. ( NSANY- Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
2013 has been a year of resurgence for the automotive industry, as sales have trended higher for much of the time frame. In fact, the latest monthly report showed that total vehicle sales stayed at an annual pace above 15 million for the sixth month in a row, suggesting a robust level of demand.
Foreign markets are also coming back strong—especially China and Europe—which is adding even more to the bull case for the automotive market. Thanks to this environment, a look to some of the top auto manufacturers might be a good idea, such as with Ford Motor Company (F- Free Report ) .
Ford really needs no introduction, as it is easily one of the most famous carmakers in the world. Yet, what many might not know about the company is that its shares have been burning rubber as of late, with a YTD gain hitting 25%.
This is largely due to some of the positive trends outlined above, and strong demand for Ford cars and trucks. Although some might wonder if a run like this can continue in such a ‘traditional’ company, if investors look to analysts and their perception of F, there is plenty of reason to believe that Ford can drive even higher.
Ford just released their earnings for the most recent quarter and crushed estimates. The company reported 45 cents a share in earnings, easily beating the consensus of 38 cents a share. This actually continues a pretty robust stream for F, as the automaker has beaten in all of the last four quarters, with an average beat of nearly 17%.
Bear of the Day:
It has been a very rough year for real estate investment trusts (REITs) across the board. The threat of a taper and a focus on higher growth stocks has beaten this industry down for much of 2013. And with the latest jobs report coming in well above expectations, speculation could build again that a bond taper is coming soon.
In this environment, many REITs have faced trouble, but a few have stood out for their poor performances, and their especially sluggish outlooks. In particular, investors may want to avoid American Campus Communities (ACC- Free Report ) .
American Campus Communities owns and operates a variety of student housing options across the U.S. The company has properties in a number of states and when including total owned and third party managed locations, has a portfolio of 193 properties.
One might think—and rightfully so—that the student housing business is pretty recession proof. However, thanks to a high debt load and rising rates, interest expenses have surged for ACC, calling into question how the company will do if rates continue to move higher.
This is best evidenced by the most recent earnings report from ACC, as the company missed once again. In fact, the firm missed by over 9%, marking three straight misses for ACC, and pushing the average surprise over the past four quarters into the negatives.
Tesla Shares Fall, Another Model S Fire
Tesla Motors, Inc.’s (Nasdaq: TSLA- Free Report) troubles with its Model S electric car catching fire seems to be intensifying. For the third time now in five weeks, the Model S vehicle was reported to have caught fire on Wednesday. Shares of Tesla dropped 7.5% to $139.77 on Thursday, reflecting investors’ concerns over such repeated incidents that seriously dent the brand image.
The incident occurred on Wednesday afternoon near Smyrna, TN, after a Model S car hit road debris. The collision led to fire in the front portion of the vehicle. However, the passenger compartment was secured. Model S is equipped with a relatively new technology in the auto industry, i.e. lithium-ion batteries, which is more powerful than the lead-acid batteries, though more risk prone.
The battery pack of Model S is placed under the passenger compartment. A quarter-inch-thick metal shield safeguards the battery. The debris pierced that shield and damaged the battery.
In early October, Model S electric vehicle caught fire near Seattle, U.S. Tesla said that the incident took place after the vehicle collided with a “large metallic object,” which damaged the front end of the car. After the collision, the vehicle’s alert system alarmed the driver and thus there was no causality.
It was soon followed by a fire in another Model S in Merida, Mexico. The fire was ignited after the vehicle crashed through a concrete wall and hit a tree.
The National Highway Traffic Safety Administration (:NHTSA) will contact Tennessee authorities to investigate any possible safety issues related to the fire. NHTSA had not investigated the Seattle fire incident due to lack of any evidence.
Incidentally, Tesla’s Model S has won the top vehicle safety rating from the NHTSA. The car obtained a five-star rating overall and also for each of its subcategories. This was a coveted award for Tesla as only 1% of cars tested receive the 5-star rating from NHTSA.
This rating means that Tesla’s Model S sedan offers exceptional safety to the passengers as it has the lowest possibility of injury to passengers among all major cars sold in the U.S. The safety score of this sedan exceeded the score of most sports utility vehicles and minivans.
The recent drop in share price comes close on the heels of a 14.5% decline to $151.46 on Nov 6. The decline in Tesla’s stock was due to disappointing third quarter results, arising from production shortfall. The company is facing a shortage of lithium-ion battery cells, which is limiting its production capacity. Thus, Tesla is unable to meet the rising demand for its Model S.
Different automakers including General Motors' ( GM- Free Report) and Nissan Motor Co. Ltd. ( NSANY- Free Report) are focusing on development of electric vehicles owing to their increasing demand. However, this incident raises concern about the safety of electrics cars.
Tesla currently retains a Zacks Rank #3 (Hold).
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