BJ's Wholesale Club, Arco Platform, Matador Resources, CimarexEnergy and PDC Energy highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – September 17, 2021 – Zacks Equity Research Shares of BJ’s Wholesale Club Holdings, Inc. BJ as the Bull of the Day, Arco Platform Limited ARCE as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Matador Resources Company MTDR, CimarexEnergy Co. XEC and PDC Energy, Inc. PDCE.
Here is a synopsis of all five stocks:
Bull of the Day:
Any day now, this market is going to get itself together and give us the sort of wide breadth, full out rally we deserve. Even with broad market averages hovering near their all-time highs, not many stocks have participated in the rally. Only 49% of stocks are trading above their 200-day moving averages. That means that plenty are being left behind.
Stocks with the highest chance of staying in bullish trends are those with strong earnings trends. Stocks which have consistently delivered on earnings reports and keep pushing those numbers higher are the ones that stand the test of time. One way to uncover stocks like these is to lean on the Zacks Rank. Stocks with favorable Zacks Ranks have the strongest earnings trends.
One such stock is today's Bull of the Day, BJs Wholesale Club. BJ's Wholesale Club operates warehouse clubs on the east coast of the United States. It offers perishable, edible grocery, general merchandise, and non-edible grocery products, as well as gasoline and other ancillary services. The company also sells its products through its website and mobile app. As of June 30, 2021, it operated 221 warehouse clubs and 151 gas locations in 17 states.
Currently, BJs is a Zacks Rank #1 (Strong Buy). The reason for the favorable rank is the series of earnings estimate revisions coming from analysts following its last earnings report. The company delivered EPS of 82 cents versus expectations calling for 65 cents. That spurred a flurry of earnings estimate revisions. Over the last thirty days, seven analysts have come out and increased their estimates for the current year and next year. The bullish sentiment has increased the Zacks Consensus Estimate for the current year from $2.63 to $2.86 while next year's number is up from $2.90 to $3.09.
Bear of the Day:
The pandemic made a lasting impact on several industries around the world. Further, it changed the way we travel, educate, work, and interact with the world around us. Basically, it was a total game-changer. Heading out of it, there were some stocks and industries which really shined and others that continued to struggle mightily. One way to avoid potential pitfalls in the investing world is to avoid stocks that have seen their earnings contract. Stocks which are not in the good graces of the Zacks Rank typically fall into this category.
One such stock is today's Bear of the Day, Arco Platform. Arco Platform Limited, a technology company in the education sector, provides a pedagogical system with technology-enabled features to deliver educational content to private schools in Brazil. The company's curriculum solutions provide educational content from basic to secondary education K-12 curriculum in printed and digital formats delivered through its platform. As of March 31, 2021, it had a network consisting of 6,119 partner schools and 1,785,576 enrolled students.
The stock is currently a Zacks Rank #5 (Strong Sell) in the Internet – Software industry which ranks in the Bottom 19% of our Zacks Industry Rank. The reason for the unfavorable rank is negative revisions for the current year and next year coming from analysts. To be fair, the drop was not that dramatic. Our Zacks Consensus Estimate for the current year and next year have each dropped by a penny. The problem is, the most recent earnings estimate revisions have been the most dramatic. A 35-cent estimate for this year is the latest revision.
The story is not all gloom and doom here. The company still enjoys solid sales growth for this year and next year. Current year sales growth is 25.7% while next year is 20.98%. Unfortunately, that number did not coincide with growth on the EPS side. Earnings are expected to contract 45.45% this year. The good news for investors is that next year's earnings growth is estimated to come back at 30.95%, helping to claw back a good chunk of that contraction.
Additional content:
Boost Your Portfolio with These 3 Promising Permian Stocks
Since the beginning of this year, West Texas Intermediate crude price has surged almost 50%. This is bringing in big gains for exploration and production businesses again, with the energy sector gradually springing back to life.
Oil Price Surges
The price of West Texas Intermediate crude is steadily approaching the $75-per-barrel mark again, highlighting a substantial improvement from the negative territory hit last April.
The recent prediction from the Organization of the Petroleum Exporting Countries (OPEC) that the global demand for oil will cross the pre-pandemic mark next year is strongly backing the crude price recovery. The rapid and widespread rollout of coronavirus vaccines is providing incentive to people to travel more, which will naturally increase the usage of oil and fuel.
A couple of weeks back, Hurricane Ida battered the Gulf of Mexico, with a significant portion of production from the region still shut down. Thus, with demand for oil continuing to improve, fears of a shortfall in crude production are acting as a catalyst for commodity price recovery.
EIA Expects Rise in US Shale Oil Production
In October, total production of oil from shale resources in the United States will likely increase by 66,000 barrels per day to 8,135 thousand barrels per day (MBbl/D), per the U.S. Energy Information Administration (EIA). The shale resources comprise Anadarko, Appalachia, Bakken, Eagle Ford, Haynesville, Niobrara and Permian.
Of all the resources, Permian will witness the highest increase in daily oil production next month, according to EIA's drilling productivity report. In the Permian, EIA projects oil production to rise by 53,000 barrels per day to 4,826 MBbls/D in October.
Time to Bet on Permian Explorers
The increasing production in Permian is being backed by higher drilling activities. In its weekly release, Baker Hughes reported that from 179 oil rigs in the Permian for the week ended Jan 8, 2021, the tally has increased massively to 253 for the week ended Sep 10, 2021.
Thus, improving production in the Permian amid a favorable crude pricing environment have raised the incentive for adding stocks of companies operating in the most prolific basin.
3 Stocks in the Spotlight
Since selecting the right companies with a footprint in the Permian from the stock universe is not an easy task, we are employing our proprietary Stock Screener to zero down on three prospective stocks. Two of the stocks carry a Zacks Rank #2 (Buy), while one sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Headquartered in Dallas, TX, Matador Resources Co. has a strong footprint in the liquid-rich Delaware Basin's Wolfcamp and Bone Spring plays. The Zacks #1 Ranked company has been ramping up production in the basin and has produced record daily barrels of oil equivalent volumes from Delaware in the recently concluded June quarter. By this year's end, the company is expected to have 34 gross operated wells in progress in the Delaware basin.
Shares of this leading upstream energy player have gained 155.6% so far this year, backed by investors' excitement about its strong second-quarter results. In the June quarter, the company's average daily oil equivalent total production rose 26% sequentially, beating the guidance of an increment of 19-22%. For 2021, the company has witnessed upward earnings per share estimate revisions over the past 30 days.
CimarexEnergy is a leading upstream energy company with a strong footprint in the Permian Basin. Cimarex's drilling efficiencies in the basin have been improving at a fast pace with the company's average feet drilled per day metric surging to 1,513 in the June quarter of this year from 1,252 in the third quarter of last year. The company now expects its total well cost per lateral foot in 2021 in the band of $800 to $850, suggesting a significant decline from $1,479 in 2018.
So far this year, the #2 Ranked stock has gained 113.6%, owing to the company's increasing operating efficiencies. The consensus earnings per share estimate for 2021 has moved up 14.3% over the past 60 days. So, the stock should keep soaring.
PDC Energy is focusing on significant value creation with a strong presence in the Delaware basin – a sub-basin of Permian – where the company's operations spread across roughly 25,000 net acres. PDC Energy's operating efficiencies in the basin improved drastically, with the company finishing its completion activities for 2021 in the June quarter this year.
So far this year, the company has gained 116.7% since the company has again expanded its outlook for free cash flow and increased the pace of its debt reduction.
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BJs Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report
Cimarex Energy Co (XEC) : Free Stock Analysis Report
PDC Energy, Inc. (PDCE) : Free Stock Analysis Report
Matador Resources Company (MTDR) : Free Stock Analysis Report
Arco Platform Limited (ARCE) : Free Stock Analysis Report
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