For Immediate Release
Chicago, IL – March 16, 2017 –Zacks Equity Research highlights AU Optronics (NYSE: AUO – Free Report ) as the Bull of the Day, Chicago Bridge & Iron (NYSE: CBI – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Amazon.com, Inc. (NASDAQ: AMZN – Free Report ), United Parcel Service, Inc. (NYSE: UPS – Free Report ) and FedEx Corporation (NYSE: FDX – Free Report ).
Here is a synopsis of all five stocks:
AU Optronics (NYSE: AUO – Free Report ) is a Zacks Rank #1 (Strong Buy) and has a clean slate of “A” for Value, Growth and Momentum Style Scores. That alone should make you interested in this stock, but since it is now the Bull of the Day, I KNOW you are interested!
AUO makes LCD displays, as well as organic light emitting display (AMOLED) units.
Have You Heard Of AUO?
I know a lot of people have been looking at the growth of OLED, but how many have heard that this sub $5 stock is playing in the same space? I can tell you that Wall Street has heard of this company as there are more than 15 brokers covering the stock. That tells me that pros on Wall Street have heard of this story so now would be a great time for the amateurs on Main Street to learn as well.
Bad News First
I don’t have access to the report, but I see that Bernstein downgraded the stock to Underperform from market perform on March 3. Since that time, it has traded as low as $3.70 and as high as $3.96. The stock closed at $3.83 on March 3, 2017.
On February 13, JP Morgan downgraded the stock to Underweight from Neutral. This is another report that I haven’t seen but I am sure the analyst had a good reason for the rating change.
Finally on the bad news front we have KGI securities also moving the stock to Underperform from Neutral on February 6.
Unlike most domestic stocks, AU Optronics reports monthly sales numbers. This keeps investors a little closer to the story but there is still ample room for an earnings surprise. The monthly updates also tell the analysts if they should be moving their numbers, so this stock tends to have frequent earnings estimate updates.
On March 7, the company announced February sales data that showed a 2.7% sequential increase from the January level. On a year over year basis January 2017 saw an increase of 16.8% and February saw an increase of 41.6%.
Let me write that one down again. On a year over year basis, February sales were an increase of 41.6%. That is huge and pretty much the tell you have been waiting for.
Chicago Bridge & Iron (NYSE: CBI – Free Report ) posted a disappointing quarter and since then estimate has dropped. The stock is currently a Zacks Rank #5 (Strong Sell) and the question becomes if this is still a “Trump Stock” or not.
The first thing that jumps out at me on the quote overview page is that while this is a Zacks Rank #5 (Strong Sell) it also has an “A” for the value style score and a “B” in growth. The 7x forward earnings multiple is something most value investors can get their head around, so maybe this might still be a good play after all.
Most Recent Report
The most recent quarter was a huge miss. EPS of $0.85 were 42% below the $1.48 expectation. Revenues came in lower than expected by about 7%. Normally, a big miss like this would send the stock tumbling lower, but this stock only fell 3.7% in the session following the release.
Chicago Bridge & Iron Company provides conceptual design, technology, engineering, procurement, fabrication, modularization, construction, commissioning, maintenance, program management, and environmental services worldwide. The company was founded in 1889 and is headquartered in The Hague, the Netherlands.
This was certainly a Trump Stock before this report. The stock was about $28 before the election and the idea of a lot of infrastructure spending sent this stock to $36. Now we have given back a lot of that move.
Company guidance was mostly inline with what Wall Street was looking for, so there is no help there. One thing that does concern me is the 7% short interest. That number looks pretty low right here, but for a move like this I would think that the shorts would have been all over this story and running that number to at least 10% or more.
With the market soaring higher, going short a name like this probably isn’t your best bet. The idea here is that it is a Zacks Rank #5 (Strong Sell) because earnings estimates have moved lower.
Amazon Is Enormous, and This Could Make It Even Bigger
Amazon.com, Inc. (NASDAQ: AMZN – Free Report ) is poised to start handling all of its own shipments by heavily expanding both its third-party logistics and freight forwarder businesses going forward. The move comes along with a bevy of other plans to grow the multibillion-dollar e-commerce company into much more.
Amazon has made a concerted effort over the last few years to increase its own delivery business. The company has focused heavily on the Christmas and holiday season when demand ramps up. Amazon is growing so quickly that it has set its sights on creating its own international cargo and shipment business.
The Seattle-based online retail giant plans to grow its own shipping and cargo capabilities to compete directly with some of the largest delivery and logistics companies like United Parcel Service, Inc. (NYSE: UPS – Free Report ) and FedEx Corporation (NYSE: FDX – Free Report ).
The company has already been handling the shipment of its goods from China to the U.S. via cargo ships. Amazon, via its Amazon Logistics sector, will offer end-to-end one-stop ocean freight services specifically from Chinese merchants. Amazon has posted rates for its new logistics services. But plans for its Chinese air shipment center are still unknown.
Amazon is also planning to build a U.S. air cargo center. The company plans to lease 40 cargo jets. The air hub is expected to be located at the Cincinnati/Northern Kentucky International Airport, nearby new rivals UPS and FedEx. The new air cargo hub hopes to create over 2,000 jobs. The company also added 4,000 semi trailers to bolster its trucking fleet across the U.S.
According to Amazon Logistics , customers can “leverage our volume, grow your business and make more money.” The company will deliver mainly to the U.S., Europe and Japan. Amazon’s push into logistics will likely focus more on digital and online-heavy services than some of its competitors that operate in less efficient ways .
How is Amazon Doing?
Amazon’s stock is down 0.23% to $850.62 per share and is currently a Zacks Rank #3 (HOLD).
The company reported $6.4 billion in sales in 2016 from Amazon Prime alone , up 43% year-over-year. According to Morgan Stanley analyst Brian Nowak the massive number means that Prime had about 65 million members in 2016
Amazon’s third-party service revenue was $23 billion, also up 43%. Amazon Web Services, its cloud computing business, revenue was $12 billion, up 55%. Amazon’s retail services revenue, its primary business, was $91 billion in 2016, up 19% year-over-year.
Amazon’s total 2016 revenue was $136 billion, up 27% from 2015. But Amazon still has room to expand its business. Worldwide e-commerce sales were $1.9 trillion in 2016.
Amazon went public in 1997 at $18 per share. An initial $1,000 investment, accounting for stock splits, would have been worth $350,803 by 2015. Since Dec. 2015, Amazon’s stock price skyrocketed from $689 per share to its current $850 per share price.
Amazon announced on Wednesday it would begin delivering beer, wine and champagne within a one or two-hour window as part of Prime Now. The initial trial run will take place in Cincinnati and Columbus, Ohio.
Prime Now offers free two-hour delivery for thousands of household items and other Amazon products. Now services are part of Amazon Prime. A Prime membership costs $99 a year. Prime services include free two-day shipping for over 50 million items, Prime Video, free Kindle e-books, unlimited photo storage and more.
According to GeekWire , Amazon is close to introducing its new concept grocery store called AmazonFresh Pickup in Seattle.
Amazon’s Fire TV service offers a great deal of original programming. Amazon Studios purchased the movie Manchester By The Sea for $10 million last year. It won Oscars for Lead Actor and Original Screenplay in 2017. The company says it will release 15 films in 2017 , matching its 2016 output.
Amazon Echo, the company’s smart speakers that are supported by Amazon’s voice controlled intelligent personal assistant Alexa, sold 5.2 million units in 2016 , up from 2.4 million in 2015. Amazon Prime customers can order items directly through Echo using voice commands.
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About the Bull and Bear of the Day
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AU Optronics Corp (AUO): Free Stock Analysis Report
Chicago Bridge & Iron Company N.V. (CBI): Free Stock Analysis Report
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
United Parcel Service, Inc. (UPS): Free Stock Analysis Report
FedEx Corporation (FDX): Free Stock Analysis Report
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