Alibaba and Titan International have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 23, 2023 – Zacks Equity Research shares Alibaba BABA as the Bull of the Day and Titan International TWI as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Evolution Petroleum Corp. EPM, Profire Energy, Inc. PFIE and Granite Ridge Resources, Inc. GRNT.
Here is a synopsis of all five stocks.
Bull of the Day:
Somewhere along the way, Chinese stocks fell out of favor. I suppose that whole “Trade War” thing had a little to do with it. Even now, the occasional headline hits the wires about US-Chinese relations having some strain. That doesn’t mean that you should ignore the stocks. To the contrary, some of these stocks are showing signs of serious growth.
I lean on the Zacks Rank to help me find ideas. Stocks which are in the good graces of our Zacks Rank have the most consistent earnings trends. One such stock is today’s Bull of the Day, the well known Chinese e-commerce giant Alibaba.
Alibaba Group Holding Limited, through its subsidiaries, provides technology infrastructure and marketing reach to help merchants, brands, retailers, and other businesses to engage with their users and customers in the People's Republic of China and internationally. The company operates through seven segments: China Commerce, International Commerce, Local Consumer Services, Cainiao, Cloud, Digital Media and Entertainment, and Innovation Initiatives and Others.
Alibaba is currently a Zacks Rank #1 (Strong Buy) in the Internet – Commerce industry which ranks in the Top 25% of our Zacks Industry Rank. The reason for the favorable rank is the series of positive earnings estimate revisions coming from analysts over Wall Street. Over the last 30 days, two analysts have increased their earnings estimates for the current year and next year. The bullish moves have pushed up our Zacks Consensus Estimates from $7.81 to $9.16 for the current year and $8.61 to $9.96 for next year.
That means that analysts are forecasting 15.37% EPS growth for this year and 8.73% for next year. That’s on revenue growth of 4.97% for this year and 8.95% for next year. With that sort of growth, you’d expect to see some rich valuations. However, that is not the case here with Alibaba. Forward PE on Alibaba is only 9.67x earnings. Compare that to the industry average of 18.6x earnings and the broad market’s 20.5x.
Bear of the Day:
With inflation hitting all around the world, several industries got a boost. Among them was the farming industry. Higher prices meant higher profits for many farms, but that was partially offset by higher input costs. Ancillary industries did well as a result, including manufacturing for farm equipment. However, just because a company is within a certain industry doesn’t guarantee its success.
Today’s Bear of the Day is a stock in the Manufacturing – Farm Equipment industry. It’s the Bear of the Day because of weakness in earnings estimate revisions coming from analysts on Wall Street. It is Titan International.
Titan International, Inc., together with its subsidiaries, manufactures and sells wheels, tires, and undercarriage systems and components for off-highway vehicles in North America, Latin America, Europe, the Commonwealth of Independent States region, the Middle East, Africa, Russia, and internationally. The company operates in Agricultural, Earthmoving/Construction, and Consumer segments.
The reason for the unfavorable rank is that two analysts have cut estimates for the current quarter, next quarter, current year and next year over the last thirty days. The bearish moves have dropped our Zacks Consensus Estimates for the current year down from $1.83 to $1.50 while next year’s number is off from $1.89 to $1.73.
That means that current year EPS is set to contract by 31.82% for the year, but next year marks a return to growth. Next year’s 15% growth number is a step in the right direction, yet not enough to make up for this year’s contraction. Tough for the company to provide EPS growth when revenue forecasts call for a 13.36% contraction in revenue within a year.
The Manufacturing – Farm Equipment industry ranks In the Bottom 29% of our Zacks Industry Rank.
Additional content:
Combat Volatility with These 3 Low-Beta Energy Stocks
Oil prices have witnessed wild swings since the onset of the coronavirus pandemic, reflecting that notorious volatility is an integral part of the energy sector. Hence, creating a portfolio of low-beta energy stocks is of utmost importance since the securities will deliver healthy returns and shield against choppy market conditions.
In this regard, stocks like Evolution Petroleum Corp., Profire Energy, Inc. and Granite Ridge Resources, Inc. are worth betting on.
Extremely Volatile Energy Market
We should not forget how oil prices have behaved since the initial coronavirus outbreak. The early pandemic period, when there were no vaccines, saw an environment of heightened uncertainties. The commodity’s price plunged to a negative $36.98 per barrel on Apr 20, 2020.
However, with the rapid developments of vaccines by scientists, which led to the gradual reopening of the economies, the pricing scenario of West Texas Intermediate crude improved drastically over time to reach $123.64 per barrel on Mar 8, 2022. Oil price data were provided by the U.S. Energy Information Administration. Oil is currently trading higher than the $80-per-barrel mark.
Low-Beta Energy Stocks to the Rescue
While the energy market is highly volatile, it will be better to consider stocks belonging to the sector that are less volatile than the market. For analyzing a stock’s risk profile, it is better to employ a statistical measure called beta — one of the popular indicators. Beta measures the volatility or risk of a particular asset compared to the market. In other words, beta measures the extent of a security’s price movement relative to the market. In this article, we are considering the S&P 500 as the market.
If a stock has a beta of 1, its price will move with the market. Therefore, the stock is more volatile than the market if its beta is more than 1. In the same way, the stock is not as volatile as the market if its beta is less than 1.
For example, if the market offers a return of 20%, a stock with a beta of 3 will return 60%, which is overwhelming. Similarly, when the market slips 20%, the stock will sink 60%, which is devastating.
While employing our proprietary stock screener, we have zeroed in on three low-beta energy stocks that investors should bet on. The three companies currently carry a Zacks Rank #2 (Buy), and all have a beta lower than 1, which is our prime criterion for screening stocks. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Evolution Petroleum is a well-known name in the upstream space, with investments in onshore oil and natural gas properties in the United States. The company’s production outlook seems bright since it has a long life and low decline asset bases with low-risk development inventories. Thanks to the low-risk assets and conservative acquisitions, EPM has the capability of returning capital back to shareholders through growing dividends.
Profire Energy is a leading provider of powerful and safe burner and combustion management solutions. PFIE’s business is mainly focused on the energy sector’s upstream, midstream and downstream areas. Profire Energy is highly focused on expanding its product solutions in oil and gas operations that have new opportunities.
As a non-operated oil and gas exploration and production company,Granite Ridge has top-tier acreage across the Permian — the most prolific basin in the United States.Granite Ridge also has a strong portfolio of wells. Apart from the Permian, GRNT has exposure to another four key unconventional basins in the United States.
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Titan International, Inc. (TWI) : Free Stock Analysis Report
Evolution Petroleum Corporation, Inc. (EPM) : Free Stock Analysis Report
Profire Energy, Inc. (PFIE) : Free Stock Analysis Report
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
Granite Ridge Resources, Inc. (GRNT) : Free Stock Analysis Report
