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National Beverage, ASGN, British Petroleum, Chevron and ExxonMobil highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research

For Immediate Release

Chicago, IL – April 21, 2020 – Zacks Equity Research Shares of National Beverage Corp FIZZ as the Bull of the Day, ASGN Inc. ASGN asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on British Petroleum BP, Chevron CVX and ExxonMobil XOM.

Here is a synopsis of all five stocks:

Bull of the Day:

National Beverage Corp is a Zacks Rank #1 (Strong Buy) that develops, manufactures, markets and distributes beverage products throughout the United States. The Florida based company offers beverages to active and healthy conscious consumers, including sparkling waters, energy drinks and juices. Some popular brands the company offers include LaCroix, Shasta, Everfresh, Faygo, and Rip It.

The company is well positioned in the current lockdown environment as consumers rush to clean out store shelves of their favorite beverage. This is helping investors get bullish, pulling the stock out of its year long funk.

Surprise Beat on Q3

National Beverage is valued at around $2.3 Billion and has a Forward PE of 20. On March 5th FIZZ reported a beat on the top line and a 21% surprise beat on EPS. The earnings beat was the third in a row, which is signaling a change in trend from 2018, when the LaCroix brand came under litigation.

CEO Nick Caporella commented on that and future opportunity under the sparking water category:

The numbers reflect the effects of a strategy that generated increased momentum of brand LaCroix. LaCroix has returned to positive growth in a much different sparkling water category that existed prior to October 2018, when litigation slowed the growth of LaCroix, which also affected the growth of the total sparkling water category. Two new LaCroix flavors, LimonCello and Pastèque (Watermelon), are currently being launched nationwide. We are excited about these two new flavors and, according to early indications, so are our consumers.

COIVD-19 Buying

We have all seen the grocery shelves empty out the weeks after the lockdowns. While toilet paper and hand sanitizer got the most noticeable press, beverages were also a spot where there was mass buying. People were scared and wanted as much of their favorite beverage as possible. I personally found it hard to find LaCroix anywhere for about a week. The supply issues were quickly solved, but the initial push should be enough to produce another good quarter.

Nielsen data should that two-week sales trend data through April 4th came in at 4% for National Beverage. This is compared to the 1.5% the company saw in the 12 weeks prior. Obviously, FIZZ hasn’t seen the buying frenzy that alcohol has, but the increase in sales is enough to move the needle. This has the stock up 40% from March lows. 

The Technical Take

The stock sold off in March like everything else, but has bounced back aggressively, moving above all its moving averages.

One notable factor on the potential movement of the stock price is the large short interest. If the company produces results investors will buy the stock, which of course helps the stock higher. However, more buying will come as the shorts are forced to cover their positions, helping the stock up quicker and perhaps more than expected. The last month has showed us that scenario play out as the bullish thesis has materialized, providing nice returns.

With litigation behind the company and the lockdown environment providing demand for the products, the fundamental aspect gives us reasons to look for price targets above current levels.

The stock hit a high of $126.92 in September of 2017. While there is no reason to believe a positive momentum change can take us that high, there is 61.8% Fibonacci level at $91. That could be a target for long-term investors, but I would also expect resistance at $58 and $72.

 In Summary

The fad that was LaCroix in 2016 became a hit for investors in 2017. Since then, litigation and falling sales in sparkling water due to bad press has hurt the stock price for FIZZ. Now that the negative claims have been completely retracted, investors should expect for the trend to come back. Add in the COVID-19 grocery rush by nervous consumers, the stock might be ready to bubble higher again.

Bear of the Day:

ASGN Inc. is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day today.  Let's a take a look at why this stock has the lowest Zacks Rank and if there is any light at the end of the tunnel.

Description

ASGN Incorporated provides IT and professional services primarily in the technology, creative/digital, engineering, life sciences and government sectors. ASGN Incorporated, formerly known as On Assignment Inc., is based California, United States.

Earnings History

The earnings history isn't that bad here with two beats and two misses.  The earnings history really only plays a small role in how the Zacks Rank is determined.  I have seen much worse from stocks that are Zacks Rank #1 (Strong Buy).

Estimate Revisions

The single biggest factor in the Zacks Rank is the movement in earnings estimates. When estimates come down, the Zack Rank is likely to fall as well.  I see the 2020 Zacks Consensus Estimate sliding from $5.05 to $2.91.

Next year shows more of the same with the 2021 Zacks Consensus Estimate dropping from $5.48 to $3.71 over the last 60 days.

This is the major reason the stock is now a Zacks Rank #5 (Strong Sell).

Valuation

With the stock falling so much in the last few months the valuation has really come down as well.  The forward PE of 12x is pretty good considering the company posted growth of 10% on an annual basis in the most recent quarter.  Price to book of 1.4x is pretty good and i would like to see the price to sales at over above 1x and ASGN has a 0.5x multiple.

Additional content:

3 Oil Stocks that Refuse to Give Up Their Dividend

The market has drifted into uncharted waters with the global pandemic creating an unprecedented level of ambiguity. High yielding stocks with the balance sheet health and/or cash-flows to maintain their dividend may be a safe place to put some of your cash to work. Today, I am going to take a look at the oil industry, where maintaining dividends is the highest priority.

The S&P 500 has had a wild 2 months with a 35% market crash followed swiftly by a 25%+ recovery, catalyzed by the unprecedented level of monetary support the Federal Reserve has provided. This support has ‘artificially’ propping up the asset markets. Now the market is bracing itself for a wave of atrocious Q1 earnings reports and more pandemic headlines that will fuel the market.

May crude oil futures plummeted below $10 per barrel today for the first time since the 90s, as inventory spikes and storage becomes a central issue. The oil supply glut is maxing out the capacity of oil storage facilities, and producers are being forced to substantially reduce production.

Crude futures for June and the following months are trading at more than double May’s price as traders’ and hedgers price in the possibility of the economy opening back up resurging oil demand.  

The Oil Dividend

Oil companies are doing everything in their power to maintain their robust dividend yields, which have surged into the high single-digits and even double-digits as share prices plunge. The largest energy companies are liquid enough to maintain their dividend without turning a profit for quite some time.

Below are the financial profiles of my favorite publicly traded oil enterprises. Look for upcoming earnings among these companies for clarity about each firm’s plan to mitigate risk and capitalize on the adverse environment in which they are operating. Bankruptcies and consolidation in this industry is likely over the next 12 months and well-capitalized firms will have the opportunity to expand their operations.

British Petroleum – 11% yield

BP is currently holding $26.8 billion in cash & equivalents combined with a $10 billion line of credit, which gives the firm roughly $37 billion in liquidity. BP is the most liquid of its competitors, with its liquidity more than covering its debts through 2022.

“BP’s cash flow sensitivity to oil price is $340m for $1/bbl,” according to Jefferies Equity Research. BP is the most hedged of its competitors, with crude price changes impacting its cash-flows the least.

Next earnings report: May 5th (after close)

Chevron – 6.1% yield 

Chevron has a $5.75 billion in cash & equivalents combined with a $9.75 billion line of credit, giving the company $15.5 billion in liquidity. CVX’s liquidity covers 80% of its debts through 2022.

“Chevron’s cash flow sensitivity to oil price is $500m for $1/bbl,” according to Jefferies Equity Research.

Next earnings report: May 1st (before the bell)

ExxonMobil – 8.5% yield  

Exxon has $3.1 billion in cash & equivalents but issued $8.5 billion in bonds last week, bringing its cash levels up to $11.6 billion. XOM’s liquidity covers roughly 75% of its debts through 2022.

“Exxon’s cash flow sensitivity to oil price is $600m for $1/bbl,” according to Jefferies Equity Research.

Next earnings report: May 1st (before the bell)

The Opportunity

The stocks discussed above have seen massive declines since the beginning of the year, though they have seen a rebound since their lows in late March. The newfound optimism can be attributed to the Fed’s liquidity, a potential deal with OPEC+, and a perceived bottom in oil demand. This, combined with the massive dividend yields, has pushed my favorite oil stocks off their lows.

For long-term investors not needing to time the market perfectly, I wouldn’t hold back on buying one of these stocks to lock in the juicy dividend yield. I believe that all three of these stocks will recover due to their size & liquidity. These stocks have yielded robust dividends for decades (over a half century for some), and they are not going to let their investors down now. I am confident that the dividend is not at risk for these larger oil players.

I am personally waiting for another leg down before purchasing any of these oil giants. I think the optimism is a bit overplayed, and I believe the supply glut will remain for longer than these stocks have currently priced in. If these

Energy earnings in the first week of May will provide us with more color on the sector’s direction.

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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
 
Chevron Corporation (CVX) : Free Stock Analysis Report
 
BP p.l.c. (BP) : Free Stock Analysis Report
 
National Beverage Corp. (FIZZ) : Free Stock Analysis Report
 
ASGN Incorporated (ASGN) : Free Stock Analysis Report
 
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