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Duluth, Encore Wire, Fortinet, CrowdStrike and Trend Micro highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research
·9 mins read

For Immediate Release

Chicago, IL – June 10, 2020 – Zacks Equity Research Shares of Duluth Holding DLTH as the Bull of the Day, Encore Wire Corp WIRE asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Fortinet FTNT, CrowdStrike CRWD and Trend Micro TMICY.

Here is a synopsis of all five stocks:

Bull of the Day:

Duluth Holding is a Zacks Rank #2 (Buy) and it has solid Zacks Style Scores with an A for Value and Momentum as well as a B for Growth.  The composite Style Score is an A.  What’s not to like about A’s?  Well I can tell you the shorts don't like to see that!

They also didn't like the 22% jolt the stock saw yesterday on volume that was about 7x the normal amount.  Let's see why the shorts are covering in this Bull of the Day article.

Description

Duluth Holdings Inc. provides casual wear, workwear and accessories for men and women. The company markets its products under trademarks, trade names and service marks, including Alaskan Hardgear, Armachillo, Ballroom, Bucket Master, Buck Naked, Cab Commander, Crouch Gusset, Dry on the Fly, Duluth Trading Company, Duluthflex, Fire Hose, Longtail T, No Polo Shirt and Wild Boar Mocs. Duluth Holdings Inc. is headquartered in Belleville, Wisconsin.

Earnings History

Their earnings history is OK, with two beats and two misses in the last four quarters.  Over that time period the beats were bigger and thus the average positive earnings surprise over the last year is 19.3%.  That is good to see.

The most recent quarterly report showed a strong beat on the topline and that is very encouraging given the current COVID conditions.

Estimate Revisions

The current quarter has seen a dramatic move higher in estimates.  Just 7 days ago, the Zacks Consensus Estimate was calling for a loss of 18 cents for this quarter.  Now the number is a gain of 5 cents.  That is a huge move.

The fiscal year is one month off the calendar year and the estimate for this year has moved from a gain of 11 cents to a gain of 30 cents. 

Next year has also seen a move higher, from 42 cents to 48 cents.  Again, that is what we like to see as not only are estimates moving higher but there is also implied earnings growth here.

It is super important to point out, the big increase in estimates has happened in the last week. That tells me that investors could see a big rally in this name.

Valuation

Retail names were on the outs lately and with a low price and good performance the valuation is looking pretty good.  I see a 25x forward PE, which is a little higher, but a 1.3x book multiple which is pretty low. 

The price to sales multiple is 0.4x which will probably start to move a lot higher as the company continues to see sales increase.

Bear of the Day:

Encore Wire Corp is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today.  But the stock looks like it is moving higher.  This article is going to try to explain why a stock can have a low Zacks Rank and still move higher.

Description

Encore Wire Corporation is a low-cost manufacturer of copper electrical building wire and cable. The company is a significant supplier of both residential wire for interior electrical wiring in homes, apartments and manufactured housing, as well as building wire for electrical distribution in commercial and industrial buildings.

Earning History

The Zacks website only has data for three of the last four quarters and over that time horizon I see two misses and one beat.  Not great, but certainly not the worst I have ever seen.

Estimates

The Zacks Rank looks at the movement of earnings estimates and when they fall so does the Zacks Rank.  60 days ago the Zacks Consensus Estimate for WIRE was at $3.00 for the full year, but now it's down to $2.93.  

That isn't what you want to see, but it is even worse for 2021.  I see that number moving from $3.30 to $2.30 over the same time period and that is why the stock is at the lowest Zacks Rank.

Valuation

I see an 18x forward earnings multiple, which isn't that bad.  The price to book multiple of 1.4x is also rather low... but the topline contraction isn't something that excites me either.

Additional content:

3 Cybersecurity Stocks Riding on Remote Working and Learning Wave

With 7,201,477 infection cases and more than 408,788 deaths worldwide, the spread of the coronavirus pandemic doesn’t seem to slow down. In an attempt to contain the spread of, most companies are continuing their work-from-home policies. Moreover, schools and colleges all over the world are coming up with an updated remote learning curriculum to ensure the continuation of courses.

Amid all the outbreak-related disruptions, hackers and cybercriminals are reportedly taking advantage of the pandemic-induced hype and using it to steal passwords and data.

Notably, security analysts from Kaspersky have discovered a new malicious cyber infection, going by the name Wuhan Coronavirus, which is circulating in the digital space. Further, an attack was recently attempted at a popular, interactive COVID-19 tracking map run by Johns Hopkins University.

Low Awareness Increasing Risks

Interestingly, few work-from-home habits are proving to be risky to critical business systems and sensitive data. These habits include using corporate devices for activities unrelated to work, letting other family members use them for entertainment and re-using old passwords.

According to a study by CyberArk, corporate security risks are higher with working parents. The study found that 77% of remote employees are using unmanaged, insecure devices, which might lack the necessary security software to access corporate systems. Also, more than 66% of employees use communication tools like Zoom and MicrosoftTeams, which have recently reported security vulnerabilities.

Moreover, a recent Kaspersky research, reported by Business News Wales, found that employees are unaware and unprepared for cybersecurity issues that may arise while working from home. About 73% of workers say that they never received any IT security awareness training after starting work from home.

Cybersecurity Stocks to Gain

However, amid the confusion regarding cybersecurity at the time of the pandemic, big and small vendors like Absolute Software, Cloudflare, Fortinet, CrowdStrike and Trend Micro are constantly trying to keep pace with the hackers and bolster their offerings against cybercrimes.

Notably, Absolute Software became the first cybersecurity company to offer its clients additional, free of cost VPN application support to protect their remote employees. This was followed by a similar offering by Cloudflare.

Fortinet seems to also benefit from the growing threat landscape, thanks to its suite of efficient offerings. The FortiMail platform can be used to block specific file types containing certain keywords, such as those related to the coronavirus. FortiMail is also capable of sending attachments to the FortiSandbox solution to check whether the file displays any malicious behavior. The stock currently carries a Zacks Rank #2 (Buy), which makes it all the more attractive. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Moreover, last month, Zacks #2 Ranked CrowdStrike strengthened the Falcon platform’s Linux protection capabilities with additional features, including machine learning prevention, custom Indicators of Attack (IoAs) and dynamic IoAs.

Further, Trend Micro develops security solutions that protect against a wide range of insidious threats and combined attacks, including viruses, spam, phishing, spyware, botnets, and other Web attacks, like data-stealing malware. For instance, its tools like RansomwareFileDecryptor and TeslacryptDecryptor can decrypt ransomware like Crypt variants, TeslaCrypt, AutoLocky, BadBlock and more. This stock also carries a Zacks Rank #2.

Bottom Line

With the growing number of employees working from home and students taking up online classes, the use of cloud and virtual meetings is increasing, providing a great opportunity for the new hacking method doing the rounds to extract information and launch an attack. Therefore, the demand for cybersecurity solutions is expected to remain healthy owing to the increasing frequency and the technologically advanced nature of cyberattacks.

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Fortinet, Inc. (FTNT) : Free Stock Analysis Report
 
Encore Wire Corporation (WIRE) : Free Stock Analysis Report
 
Trend Micro Inc. (TMICY) : Free Stock Analysis Report
 
Duluth Holdings Inc. (DLTH) : Free Stock Analysis Report
 
CrowdStrike Holdings Inc. (CRWD) : Free Stock Analysis Report
 
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