Boston Beer and Huntsman have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – January 26, 2024 – Zacks Equity Research shares The Boston Beer Company SAM as the Bull of the Day and Huntsman Corporation HUN as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Sunoco LP SUN, Oceaneering International, Inc. OII and Helix Energy Solutions Group, Inc. HLX.
Here is a synopsis of all five stocks.
Bull of the Day:
The Boston Beer Company looks back to being on the path of lucrative profitability and rewarding gains for investors landing its stock a Zacks Rank #1 (Strong Buy) and the Bull of the Day.
As one of the nation's premier brewing companies, Boston Beer’s market dominance through famous branded beers like Samuel Adams Lager is compelling with the company having a lengthy international presence as well. Investments into malt beverages through its branded BoDeans’s Twisted Tea are expected to support the iconic brewer which also produces alcoholic ciders.
Fiscal 2024 EPS Rebound
Boston Beer will be reporting its Q4 results in late February and is expected to round out fiscal 2023 with earnings up a modest 4% to $7.33 a share. However, it is the anticipation of EPS soaring another 53% this year to $11.21 per share that should start to excite investors.
More importantly, FY24 earnings estimates have continued to trend higher over the last quarter and are slightly up over the last 60 days. Notably, The Boston Beer Company has an “A” Zacks Style Scores grade for Growth in addition to its strong buy rating.
Points of a More Reasonable Valuation
Magnifying Boston Beer’s stronger earnings outlook is that SAM shares trade at their most reasonable valuation in over a decade in terms of price to earnings. Currently at a 32X forward earnings multiple this is far more attractive than decade highs of 114.6X and a slight discount to the median of 35X.
Furthermore, Boston Beer’s price-to-sales ratio is now near the optimum level of less than 2X compared to extreme decade highs of 7.9X and beneath the median of 2.8X.
Bottom Line
Starting to eliminate some of the premium fears that may have curved investors in the past it's noteworthy that Boston Beer’s stock has an overall “A” VGM Zacks Style Scores Grade for the combination of Value, Growth, and Momentum. Now looks like a good time to buy as the alcoholic beverage conglomerate has the potential to be a very sound investment given its fiscal 2024 outlook.
Bear of the Day:
Unfortunately, with the Zacks Chemical-Diversified Industry at the bottom 9% of over 250 Zacks industries, Huntsman Corporation’s stock lands a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
Although Huntsman is among the world’s largest manufacturers of differentiated and commodity chemical products, short-term weakness is still on the horizon and investors will want to be cautious at the moment.
Weaker Industry Outlook
One of the first signs of ensuing weakness for an industry or stock is declining earnings estimates and Huntsman has joined 12 other companies in the Zacks Chemical-Diversified Industry that have seen negative estimate revisions over the last quarter with only one seeing positive estimate revisions.
For Huntsman, annual earnings estimates have dropped -13% over the last 30 days as the company wraps up its fiscal 2023 with Q4 results expected in late February. More disheartening is that FY24 EPS estimates are down -9% over the last month.
The souring FY24 earnings outlook comes as investors are hoping Huntsman can get its post-pandemic growth and recovery back on track.
Diluted Valuation
Declining earnings estimates are also taking away from Huntsman's appeal as a potential value stock with the company being a chemical products leader. This factor looks less appealing with Huntsman's stock trading at 22.3X forward earnings and 59% above the industry average of 14X.
Final Thoughts
With Huntsman's stock now down a grizzly -23% over the last year it's still too soon to bite on the dip as the frustrating start to 2024 may continue. The weaker earnings outlook for the Zacks Chemical-Diversified Industry paints a cautionary tale for these stocks with Huntsman’s being a prime example.
Additional content:
3 Mid-Cap Energy Stocks Investors Can Buy Right Now
The year 2023 witnessed a substantial surge in Wall Street, driven by declining inflation and reduced interest rate hikes by the Federal Reserve. The S&P 500 was up about 24% last year, nearing its all-time highs. Despite the positive market outlook, the Oil/Energy sector experienced a negative total return in 2023, down 3.3% as measured by the Energy Select Sector SPDR Fund.
However, the picture looks somewhat better in 2024. While weak global economic growth is predicted to limit fuel consumption, geopolitical tensions could provide support to the commodity. We believe that investing in mid-cap energy stocks could turn out to be the right choice at this juncture. Our choices include Sunoco LP, Oceaneering International, Inc. and Helix Energy Solutions Group, Inc.
Looking Back at the 2023 Oil/Energy Scenario
WTI crude prices ended the year at around $72 per barrel, approximately 20% lower than the 2023 highs in September. The decline was attributed to global economic uncertainties, increased production outside OPEC and abundant inventories. Even Brent prices, the global benchmark, ended 2023 at just above $77 per barrel. That’s a far cry from predictions of oil prices reaching $100. However, the price did reach a peak of $94.36 per barrel in September, which was influenced by increased supplies from the United States and Iran, coupled with slower-than-expected demand growth from China.
Natural gas, too, fared badly in 2023. For the most part, it traded below $3 due to high production and weak weather-related demand predictions.
What to Expect in 2024?
OPEC remains optimistic about the oil market's future, emphasizing strong demand for crude oil despite recent price drops. The organization cites overall global economic growth, accommodative monetary policies and improved geopolitical conditions as factors supporting positive market fundamentals. While the cartel recognizes growth in non-OPEC oil production, with the United States playing a significant role in this increase, it remains cautiously optimistic for the market in 2024. Some investors view the current crude slump as temporary, leading them to build or increase positions in oil-related companies.
Focus on Mid-Cap Stocks
Given this moderately bullish sentiment, it will be wise for investors to apportion their funds in mid-cap oil stocks. These companies often present a balanced profile, offering more growth potential than large caps while being less volatile than small caps. They have room for expansion and can capitalize on market opportunities without the constraints of larger, more established companies. Companies with market capitalization between $1 billion and $10 billion are generally considered mid-cap firms.
To make life simpler for investors, we have identified three mid-cap energy companies with a good value score to put your money on. These are Sunoco, Oceaneering International and Helix Energy.
The Zacks Rank is a reliable tool that helps you trade with confidence regardless of your trading style and risk tolerance. To learn more about how you can use this proven system for market-beating gains, visit Zacks Rank Education.
Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best opportunities in the value investing space.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Sunoco: It is a significant player in the U.S. wholesale motor fuel distribution market, operating as a master limited partnership. The company's primary business involves distributing motor fuel to a diverse customer base of approximately 10,000, including independent dealers, commercial clients, convenience stores and distributors.
SUN stands out as one of the largest motor fuel distributors in terms of volume. The partnership's strategy involves distributing more than 10 fuel brands through long-term contracts with over 10,000 convenience stores, boasting a remarkable retention rate exceeding 90%. The distribution networks are a key strength, contributing to the company's sustainable and predictable cash flow.
Sunoco’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed in the other two, delivering an average surprise of 28.33%. The company is valued at around $5.61 billion. Sunoco carries a Zacks Rank#1 and has a Value score of B at present. Its shares have risen 18.8% in a year.
Oceaneering International: It stands out as a prominent supplier of offshore equipment and technology solutions within the energy industry. As a key player, the company is deeply involved in all phases of the offshore oilfield lifecycle, offering integrated technology solutions.
Oceaneering International's strength lies in its geographically diversified asset base, spanning across the United States and other global regions. Notably, the company maintains a balanced revenue distribution, with an even split between international and domestic operations that serves to mitigate its risk profile.
The Zacks Consensus Estimate for 2024 earnings per share indicates 76.36% growth over 2023. OII carries a Zacks Rank #1 and a Value Score of A at present. Its current market cap is roughly $2.08 billion. The company’s shares have risen 5.4% in a year.
Helix Energy: It is an international offshore energy company, specializing in providing services to the offshore energy industry. The company focuses on well intervention and robotics operations within its Contracting Services, aiming to play a critical role in the development of offshore reservoirs and maximizing production economics. Helix emphasizes on delivering cost-effective services with a commitment to zero incidents.
A distinctive aspect of Helix's strategy involves aligning the interests of producers and contractors by investing in mature offshore oil and gas properties, hub production facilities and proven undeveloped reserve plays. The company utilizes its diverse contracting fleet of vessels to add value to these ventures. This integration of marine contracting and oil and gas operations is designed to bring stability to revenues and earnings, mitigating the cyclical nature of the energy industry.
The Zacks Consensus Estimate for 2024 earnings per share indicates 238.10% growth over 2023. HLX carries a Zacks Rank #2 and a Value score of B at present. The company’s current market cap is roughly $1.48 billion. Its shares have risen 23.4% in a year.
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Sunoco LP (SUN) : Free Stock Analysis Report
Oceaneering International, Inc. (OII) : Free Stock Analysis Report
Huntsman Corporation (HUN) : Free Stock Analysis Report
The Boston Beer Company, Inc. (SAM) : Free Stock Analysis Report
Helix Energy Solutions Group, Inc. (HLX) : Free Stock Analysis Report
