For Immediate Release
Chicago, IL – March 5, 2020 – Zacks Equity Research Shares of KB Home KBH as the Bull of the Day, China Petroleum & Chemical Corporation SNP asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on SunPower Corporation SPWR, Tesco PLC TSCDY and Mitek Systems, Inc. MITK.
Here is a synopsis of all five stocks:
Bull of the Day:
In case you haven’t noticed, interest rates are low. Very low. Historical lows, in fact. That makes buying a house a very attractive proposition. You can now guess what industry my Bull of the Day today is going to be in. This Bull of the Day is also a Zacks Rank #1 (Strong Buy). That means over the last few months, analysts all over Wall St. have been increasing their earnings estimates. That bullish behavior could be a sign of good things to come.
I’m talking about Zacks Rank #1 (Strong Buy) KB Home. KB Home operates as a homebuilding company in the United States. It operates through four segments: West Coast, Southwest, Central, and Southeast. The company builds and sells various homes, including attached and detached single-family residential homes, townhomes, and condominiums primarily for first-time, first move-up, second move-up, and active adult homebuyers. It also offers financial services, such as insurance products and title services. It has operations in Arizona, California, Colorado, Florida, Nevada, North Carolina, Texas, and Washington.
The reason for the favorable Zack Rank lies in the series of estimate revisions coming in to the upside recently. Over the last 60 days, six analysts have increased their estimates for the current year, while two have followed suit for next year. The bullish sentiment has pushed up the Zacks Consensus Estimate for the current year from $3.46 to $3.70 while next year’s number is up from $3.81 to $4.04.
What’s more impressive is the EPS growth. Current year EPS growth is slated to come in at 29.82% year-over-year. Next year’s EPS growth is 9.19%. That’s coming on revenue growth of 14.35% this year and 6.96% next year.
Bear of the Day:
If you were going to put together two areas of the market which are complete duds, I bet that China and oil would be on that list. Oil prices have been in free fall since topping out over $64 at the start of the year, tumbling down to $47 during Wednesday’s trade. Then, there’s China. Not only have they taken a hit due to the trade war, but now they are taking a punch because of the coronavirus. Mix these two terrible parts of the market together and you get a stock or two that you should probably avoid. One of these stocks is today’s Bear of the Day.
China Petroleum & Chemical Corporation, an energy and chemical company, engages in oil and gas, and chemical operations in the People's Republic of China. It operates through five segments: Exploration and Production, Refining, Marketing and Distribution, Chemicals, and Corporate and Others. The company explores for and develops oil fields; produces crude oil and natural gas; processes and purifies crude oil; and manufactures and sells petroleum products.
China Petrol is currently a Zacks Rank #5 (Strong Sell). The reason for the negative Zacks Rank is the series of earnings estimates coming in to the down side. Analysts have cut their earnings estimates for the current year and next year recently. Over the last sixty days, the Zacks Consensus Estimate for the current year has come down from $6.92 to $6.75 while next year’s number is off from $6.75 down to $5.53. Given horrendous China PMI numbers, I expect these numbers will continue to get worse.
The Oil and Gas – Integrated Emerging Markets industry ranks in the Bottom 24% of our Zacks Industry Rank. That doesn’t bode well for the industry as a whole, however, there are two stocks within the industry which have favorable Zacks Ranks.
3 Stocks Under $10 to Buy as Coronavirus Fears Linger
The Dow, the S&P 500, and the Nasdaq all quickly plummeted into a correction last week as the coronavirus spreads outside of China. Apple, Microsoft and others have all lowered their guidance based on negative impacts in both supply and demand in the world’s second-largest economy.
The novel coronavirus has continued to spread around the world and more cases are popping up in the U.S. Yet the market surged on Monday and popped again Wednesday, after Joe Biden’s strong performance in Super Tuesday primaries.
Plus, the Fed announced Tuesday that it cut its benchmark interest rate by half a percentage point, to between 1% and 1.25%. The move is aimed to help provide a boost to the U.S. economy amid coronavirus worries. Plus, the 10-year U.S. Treasury note had already slipped to all-time lows below 1.0% and currently rests at 0.96%.
Clearly, market uncertainty will remain, and stocks are likely to stay somewhat volatile until there is some end in sight to the coronavirus and more companies update their outlooks.
With that said, investors should still be on the lookout for stocks to buy, or least add to their watchlists with interest rates so low and stocks down big from their recent highs.
Today, we are focusing on cheap stocks trading under $10 per share. Stocks trading under $10 can be more volatile than their pricier peers, but investors can still grab solid returns with the right low-priced stocks. So, let’s dive into 3 that we found today…
Prior Close: $8.91 USD
SunPower designs, manufactures, and sells solar panels and systems to everyone from homeowners to businesses and utility customers. The San Jose, California-headquartered firm crushed our Q4 earnings estimates last month, with fiscal 2019 sales up 8%. SPWR also announced a proposed spin-off of Maxeon Solar and completed a “successful capital raise and partial convertible bond retirement to further strengthen our balance sheet.”
SPWR shares went on a tear last year, climbing from $7 a share in March to over $14 by July. The stock then fell, but it is up 26% in the last three months. Looking ahead, our Zacks estimates call for SunPower’s fiscal 2020 sales to surge 13%, with 2021 projected to climb another 15% higher to $2.58 billion. Meanwhile, SunPower’s adjusted 2020 earnings are projected to climb from a loss of -$0.29 a share to +$0.04 a share. Then its 2021 EPS figure is set to skyrocket over 800% to $0.37 a share.
SunPower is currently a Zacks Rank #2 (Buy) that sports an “A” grade for Momentum in our Style Scores system. The stock is also part of a highly ranked Zacks industry that includes Enphase Energy and SolarEdge. And Wall Street has been behind renewable energy stocks recently, including Tesla.
More broadly, the traditional oil and gas-heavy Energy space was the worst-performing sector of the S&P 500 over the last decade. And the U.S. Energy Information Administration forecasts that generation from non-hydropower renewable energy sources, such as solar and wind, will grow by 15% in 2020.
Prior Close: $8.94 USD
Tesco is a UK multinational grocery and retail powerhouse. In November, Tesco became the first major British supermarket chain to offer a subscription customer loyalty program. Tesco’s Clubcard Plus is designed to help it fight off discount retail encroachment and management has been pleased with its early results. And the supermarket giant is closing in on a deal to sell its stores in Asia for roughly $10 billion.
Shares of Tesco are up 9% in the last six months to easily top its industry’s 8% decline. This run is part of a 33% climb over the past three years. TSCDY has also consistently traded at a discount compared to its industry over the last two years. And the company’s 2.28% dividend yield tops U.S. giants Kroger, Walmart and Costco.
Tesco’s positive earnings estimate revision activity helps it hold a Zacks Rank #2 (Buy) right now. TSCDY also holds an “A” grade for Value and a “B” for Growth to help it earn an overall “A” VGM grade. Looking ahead, the company’s adjusted fiscal year earnings are projected to jump over 27% to $0.70 a share on the back of 13.5% sales growth.
Mitek Systems, Inc.
Prior Close: $8.64 USD
Mitek Systems utilizes artificial intelligence and machine learning to help financial institutions and other enterprises verify a user’s identity during digital transactions. Mitek’s solutions are embedded into the apps of over 6,500 organizations and used by more than 80 million consumers to perform tasks such as mobile check deposit. Mitek, topped our Q1 FY20 estimates at the end of January, driven by double-digit growth in mobile deposit and identity verification products.
Since the report, Mitek’s fiscal 2020 and 2021 earnings revisions have climbed to help it earn a Zacks Rank #1 (Strong Buy). MITK also sports an “A” grade for Growth and it has crushed our bottom-line estimates in the trailing four quarters by a 32% average. Mitek shares have surged 22% in the last three months and 180% in the last five years from under $4 a share to its current price point. And the stock still has plenty of room to run before it hits its 52-week highs of $13 a share.
Peeking ahead, the San Diego-based company’s adjusted 2020 earnings are projected to surge 21.4% to $0.51 per share on 18.3% higher revenues. Then the company’s sales and earnings are both expected to climb another 15% higher in 2021. And the mobile capture and digital identity verification firm could be poised to grow for years to come in our online and mobile-heavy economy.
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China Petroleum & Chemical Corporation (SNP) : Free Stock Analysis Report
SunPower Corporation (SPWR) : Free Stock Analysis Report
KB Home (KBH) : Free Stock Analysis Report
Tesco PLC (TSCDY) : Free Stock Analysis Report
Mitek Systems, Inc. (MITK) : Free Stock Analysis Report
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