For Immediate Release
Chicago, IL – February 19, 2018 – Zacks Equity Research Casey’s General Stores CASY as the Bull of the Day, Polaris Industries PII as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Zix Corporation ZIXI, The Meet Group, Inc. MEET and Identiv, Inc. INVE.
Here is a synopsis of all five stocks:
Bull of the Day:
Today’s Bull of the Day will offer a glimpse into the practices of professional money managers. We’re not talking about hedge funds, but rather the huge institutions that manage billions or even hundreds of billions of dollars for pensions, municipalities, foundations, university endowments and other giant entities.
This is the investment realm where the managers don’t care much about a flashy name or an exciting story. They care about returns; consistent, market-beating returns. Although the objectives vary from fund to fund, they tend to have a relatively long-time horizon and also to be fairly risk-averse.
Because of their sheer size, small increases in returns over time translates to huge amounts of money – but of course, losses mean huge amounts of money gone, putting the fortunes of retirees, students and charities at risk. “Conservative” investing is the name of the game.
Casey’s General Stores operates roughly 2,100 convenience stores in 16 midwestern states. Though it’s far from a glamorous, high-tech story, 87% of Casey’s shares are held by institutions because the company consistently produces quality results, even as it expands.
While gasoline sales are the most visible part of the operation, it’s the groceries, snacks and drinks that really drive profits. In the most recent quarter, fuel sales accounted for 64% of total gross revenues, but because of razor thin margins of just 20 cents/gallon (7.3%), fuels only contributed 23% of net revenues – after the cost of goods sold.
In comparison, Groceries sold at gross margins of 32% and Prepared Food and Fountain Drinks enjoyed gross margins of 64%. With clean and inviting locations and its own lines of high-margin food items, Casey’s has become a go-to spot for its customers to pick up their favorite beverage as well as breakfasts, lunches, and more.
Bear of the Day:
Today’s Bear of the Day is an example of how even apparently well-positioned US companies have suffered from the impact of the trade wars.
In the summer of 2018, Polaris Industries looked to be a winner in the tit-for-tat tariff battle between the US and international trading partners including Canada, Mexico, the EU and China. Polaris enjoyed a lower reliance than most of its competitors on imports for the source of raw materials as well as on exports for sales of finished goods.
When President Trump singled out US motorcycle manufacturer Harley Davidson for the decision to shift some manufacturing overseas to avoid tariffs, Polaris and its Indian brand of American made cruiser cycles looked poised to benefit from the resulting Harley boycotts.
Record low unemployment and rising average hourly wages also promised to support sales of Polaris’ entire line of motorcycles, ATVs, snowmobiles and watercraft.
Unfortunately, the increase in sales never materialized and Polaris instead saw a sales slump in the second half of 2018.
Motorcycle sales were especially disappointing. Harley Davidson did in fact lose significant revenues and ceded market share to Indian, but a decline in the industry as a whole still took a bite out of sales. Big motorcycles look to be falling out of favor with consumers as baby-boomers age out of riding – flooding the market with lightly used bikes – and younger riders shift towards smaller lighter cycles, leaving cruiser manufacturers licking their wounds.
An ill-advised investment in a three-wheeled motorcycle called the Slingshot has likewise been a big disappointment for Polaris.
In fact, sales of all kinds of powersports equipment have been below expectations of just a year ago. Though it’s difficult to hang the blame on a single factor, the continuing trade war with China is definitely playing a part. This is one of the vicious realities of trade disputes – even the companies who appear at first to be largely immune from the direct impact of tariffs and restrictive trade practices end up suffering eventually in indirect ways.
In the case of Polaris, the general slowdown caused by the trade war and the prospect of a global recession have had a chilling effect on customer’s willingness to make large purchases, especially for leisure activities.
Though Polaris hasn’t missed an earnings estimate in three tears, those estimates have been sliding lately as analysts revise downward, earning Polaris a Zacks rank #5 (Strong Sell).
3 Tech Stocks Under $10 to Buy Now
At Zacks, we try to avoid labeling stocks as “cheap” or “expensive.” Instead, we opt to look beyond a stock’s face value, and our system puts an emphasis on earnings estimate revisions to find stocks that will hopefully be winners for investors.
With that said, low-priced stocks can still be attractive to investors as they present the chance to take a larger position in a company, which they might not be able to in higher-priced stocks.
When searching for these low-priced stocks, we still look for similar trends in growth, value, and momentum. Then we apply the Zacks Rank to properly analyze the potential that these companies have. We are also aware of the latest sector trends and make sure to cover all of the hottest industries.
Today we’ve highlighted three stocks that fall into the broad “technology” sector. Each of these three stocks is currently trading for less than $10 a share and holds a Zacks Rank #1 (Strong Buy) or #2 (Buy) at the moment.
1. Zix Corporation
Prior Close: $8.31 USD
Zix is an email security firm that specializes in data loss prevention, threat protection, email encryption, and more. The company, which is currently a Zacks Rank #2 (Buy) that sports an “A” grade for Growth in our Style Scores system, has seen its stock price soar over 41% in a month.
Looking ahead, Zix is expected to see its soon-to-be-reported earnings pop 12.5% to reach $0.09 a share on the back of roughly 9% revenue growth. The email security firm’s outlook appears far more positive in the following quarter, with our estimates calling for 150% top-line and 25% bottom-line expansion. Zix is also part of the Zacks “Security” industry, which ranks 13th at the moment out of our 255 industries.
2. The Meet Group, Inc.
Prior Close: $5.58
The Meet Group is a social media company offering several different social entertainment apps, including MeetMe, Skout, and Lovoo. These apps are primarily focused on streaming video, mobile chat, gifting, and photo sharing. MEET, which is coming off a third quarter that saw its revenue soar over 40%, has put together an impressive year in terms of earnings beats, and shares are starting to behave as one might expect from a growth and momentum pick.
On top of that, MEET still looks pretty cheap at the moment, especially considering that it is profitable and is trading at 19.7X forward 12-month Zacks Consensus EPS estimates, which marks a discount compared to its industry’s 30X average. The Meet Group has also experienced strong upward earnings estimate revision activity recently that helps it earn a Zacks Rank #1 (Strong Buy).
3. Identiv, Inc.
Prior Close: $4.60
INVE is a security technology provider that caters to governments, healthcare providers, and an array of other industries, offering everything from secure corporate IDs and other RFID-enabled applications to more effective video and data analytics. Identiv’s Q3 revenues climbed 30% and it completed its acquisition of Thursby Software Solutions, which will help it bolster the firm’s core business and add to its list of more than 5,000 customers.
Looking ahead to the fourth quarter, the company is projected to swing from a loss of $0.14 a share to post adjusted earnings of $0.02, on the back of roughly 24% top-line expansion. Identiv is also currently as Zacks Rank #1 (Strong Buy) that rocks “A” grades for both Growth and Momentum in our Style Scores system. Identiv’s business might also expand simply because security has become more complex in our digital world.
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