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Cree, Casella Waste, IAC, Match.com and Expedia highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research
Imax (IMAX) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

For Immediate Release

Chicago, IL – February 8, 2018 – Zacks Equity Research Cree CREE as the Bull of the Day, Casella Waste Systems CWST as the Bear of the Day. In addition, Zacks Equity Research provides analysis on IAC/InterActiveCorp IAC, Match.com MTCH and Expedia EXPE.

Here is a synopsis of all five stocks:

Bull of the Day:

Cree is a Zacks Rank #1 (Strong Buy) and sports the divergence that I love to see in the Zacks Style Scores.  I see an A for Growth and a D for value and that tells me right away that I am on the right path.  My focus is on aggressive growth, and I know that growth investors are looking for the opposite of what value investors are looking for.  When I see that divergence, I know I found what I am looking for.

Today, CREE is the Bull of the Day.  Let's take a look at why I like this stock right here.

First off, I see that it is in the chip space and while I normally say that chips are for dips -- right now they look like a tasty treat.  The chip names are likely to move significantly higher when a China deal is announced due to the relationship that so many names have with that region and country specifically. 

Secondly, a big buyer just put some cards on the table.  Artisian Partners filed a 13G with the SEC stating that they control 8.1M shares.  That was just announced the other day... and it follows an early January filing that saw Vanguard announced a 10.4M share position.

When I see big buyers of size on a stock with a great Zacks Rank, I know it is worth a much deeper look.

Earnings Estimates

When a stock is a Zacks Rank #1 (Strong Buy) then we know the estimates are moving higher.  That is the key part of the Zacks Rank.

I see the current quarter move higher by 2 cents, and the full year (fiscal 2019) has moved from $0.73 to $0.78.

The Zacks Consensus Estimate for fiscal 2020 has remained at $1.27 over the last 90 days.

Valuation

The forward PE of 66x is a little rich, but when you look at the other metrics it doesn't look that bad.  A see a 2.4x price to book multiple, which is pretty pretty good for a stock with a 12% topline growth rate.  I also see a 3.4x price to sales multiple which is a little high but still within an acceptable range.

Bear of the Day:

Casella Waste Systemsis a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day.  I still like this name as I held it in Home Run Investor, a newsletter service that looks for small and mid cap growth stocks.  I recall this name being in the portfolio a few times and may have even started out in Stocks Under $10, another service that I manage here at Zacks.

The stock still sports the growth and value divergence that I love to see.  CWST has an A for Growth and a D for Value, and that tells me right away that I am on the right path.  Growth investors and value investors are looking for different things so when I see a big difference between the style scores I know that I am looking at the right thing.

CWST has a chance to change the story with earnings coming out on 2/21 after the close. 

Earnings History

I see that over the last four quarters there were two misses, a meet and a beat.  That isn't the best I have ever seen but it isn't the worst either.

Earnings Estimates

I see estimates falling and that is what you would expect from a Zacks Rank #5 (Strong Sell) stock.  The current quarter has seen the Zacks Consensus Estimate move from $0.15 to $0.11 over the last 90 days.

I see the 2018 full year number move to $0.62 from $0.68.  That is just a few cents, but the direction is the real issue.

The 2019 numbers have come in just a little, from $0.90 to $0.85... but that could all change with a strong report later this month.

IAC, Expedia Beat Q4 Expectations

 

Internet services conglomerate IAC/InterActiveCorp reported Q4 earnings results after the closing bell Thursday, with earnings of $2.04 per share way outperforming the expected 99 cents per share. Revenues grew 16% year over year to $1.104 billion, better than the $1.07 billion in the Zacks consensus. The majority investor of several online service brands has now beaten earnings estimates in 4 of the last 5 quarters, with a trailing 4-quarter average beat of 58%.

Angie's List grew 25% to $279 million in the quarter, while Match.com was up 17% to $8.2 million. The company cited increases in Average Revenue per User (ARPU) at Match-owned Tinder in the quarter. Yet these numbers were already somewhat baked into the stock's performance, as Match.com reported earnings themselves yesterday afternoon.

Shares are not moving much in late trading, likely because of the Match.com numbers already being out as of Wednesday. Also, the stock had already climbed 18% since the first of the year. Further clarification can be expected on the company's conference call, which is scheduled for tomorrow.

Internet travel site Expedia also topped expectations on both sales and earnings for its Q4 report, bringing $1.18 per share versus $1.07 expected on revenues of $2.56 billion which outpaced the $2.54 billion our analysts were looking for. Revenues grew 10% year over year, and also included sales from the now spun-off Trivago travel site. Gross bookings grew 13% year over year, and the company notably crossed the 1 million mark of properties available through their service.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?

From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.

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See Stocks Today >>

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