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Alcoa, Anheueser-Busch InBev, Rent-A-Center, Target and Walmart highlighted as Zacks Bull and Bear of the Day

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·7 min read
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For Immediate Release

Chicago, IL – April 7, 2021 – Zacks Equity Research Shares of Alcoa Corporation AA as the Bull of the Day, Anheueser-Busch InBev SA/NV BUD as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Rent-A-Center, Inc. RCII, Target Corporation TGT and Walmart Inc. WMT.

Here is a synopsis of all five stocks:

Bull of the Day:

It is easy for folks to forget that earnings season is right around the corner. We have had so much attention put on infrastructure bills and the small caps selling off, that it's tough to remember the Dow is at all-time highs and the rest of the market is rocking and rolling. Today's Bull of the Day is a stock that I feel will stand the test of time. It's a stock with a strong earnings history which has a great chance of hanging in there even when things go south.

Today's Bull of the Day is Zacks Rank #1 (Strong Buy) Alcoa. Alcoa, together with its subsidiaries, produces and sells bauxite, alumina, and aluminum products in the United States, Spain, Australia, Brazil, Canada, and internationally. The company operates through three segments: Bauxite, Alumina, and Aluminum.  In addition, it owns hydro power plants that produce and sell electricity to the wholesale market to traders, large industrial consumers, distribution companies, and other generation companies. 

In addition to the favorable Zacks Rank, Alcoa has a Zacks Value Style Score of A, Growth of C, and Momentum of B to help it round out with a VGM Composite Score of A. The Metal Products – Distribution industry ranks in the Top 32% of our Zacks Industry Rank. There is good reason for the favorable rank. Over the last 30 days, four analysts have increased their earnings estimates for the current year as well as next year. The bullish consensus has pushed up our Zacks Consensus Estimate from $1.47 to $3.33 for the current year while next year's number is up from 76 cents to $2.92.

Bear of the Day:

There is no question that the market is screaming higher. Even the amateurs can make money in a market like this. Pick a four-letter ticker, load the boat and rejoice. It happens every day. It could be frustrating to see for some. When you have a stock that's not rocking and rolling in this market, it can be confusing. Why not my stock? Is there something I'm missing?

Today's Bear of the Day is a stock that has seen earnings move to the downside, which could spoil a rally. It's Zacks Rank #5 (Strong Sell) Anheueser-Busch InBev. Anheuser-Busch InBev engages in the production, distribution, and sale of beer, alcoholic beverages, and soft drinks worldwide. It offers a portfolio of approximately 500 beer brands, which primarily include Budweiser, Corona, and Stella Artois; Beck's, Hoegaarden, Leffe, and Michelob Ultra; and Aguila, Antarctica, Bud Light, Brahma, Cass, Castle, Castle Lite, Cristal, Harbin, Jupiler, Modelo Especial, Quilmes, Victoria, Sedrin, and Skol brands. 

The reason for the unfavorable rank stems from recent earnings estimate revisions coming from analysts. Over the last 60 days, four analysts have cut their earnings estimates for the current year while three have followed suit for next year. The bearish moves have cut the Zacks Consensus Estimates for the current year from $3.27 to $3.02 while next year's number is off from $3.85 to $3.61.

The Beverages – Alcohol industry ranks in the Bottom 21% of our Zacks Industry Rank.

Additional content:

Why RCII Is a Strong Retail Buy Stock

Rent-A-Center stock has soared over the last 12 months and crushed Target, Walmart and many others during the past three years. The lease-to-own retailer also purchased a firm in February that sets it up to grow within the booming e-commerce LTO space.

More than a Rental...

Rent-A-Center is a lease-to-own retailer that sells furniture, appliances, TVs, and more. RCII's sales jumped 5.4% in 2020, driven by stronger growth in the second half of the year.

On top of that, the company announced in February it closed its purchase of Acima Holdings to help boost its e-commerce offerings, as the lease-to-own space becomes more popular in the digital commerce age.

Rent-A-Center's management has made a strong strategic move that Wall Street has loved so far. "The acquisition dramatically increases our growth profile, and we believe we can achieve $6 billion in consolidated total revenue with mid-teens consolidated EBITDA margins in 2023 as we benefit from scale, profitability, and free cash flow generation," CEO Mitch Fadel said in prepared remarks.

Looking ahead, Zacks estimates call for RCII's revenue to soar 55% to reach $4.4 billion in fiscal 2021 and climb another 14% in FY22. Both of these would represent the company's strongest top-line expansion in almost 15 years.

Meanwhile, its adjusted earnings are projected to climb by 50% and 17%, respectively over this stretch. And the nearby chart shows how much stronger the company's earnings outlook has turned since its report and acquisition announcement.

Bottom Line

RCII's strong positive EPS revisions help it land a Zacks Rank #1 (Strong Buy) right now. The stock also holds a "B" grade for Value and five of the seven brokerage recommendations Zacks has are "Strong Buys." Plus, RCII shares have soared 270% in the past year to outpace Shopify (SHOP) and it has skyrocketed 500% in the last three years.

The stock currently rests at around $59 a share to put it about 10% below its mid-March highs. And it sits near neutral RSI levels, which could give Rent-A-Center plenty of more room to run. On top of that, RCII's 2.1% dividend yield beats the 10-year U.S. Treasury's 1.7%, Walmart's 1.6%, and Target's 1.3%.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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Target Corporation (TGT) : Free Stock Analysis Report
 
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