NVIDIA, Cirrus, Las Vegas Sands, Melco and Penn National as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – May 24, 2018 – Zacks Equity Research highlights NVIDIA NVDA as the Bull of the Day and Cirrus Logic CRUS as the Bear of the Day. In addition, Zacks Equity Research provides analysis onLas Vegas Sands Corp. LVS, Melco Resorts & Entertainment Ltd. MLCO and Penn National Gaming, Inc. PENN.
Here is a synopsis of all five stocks:
Bull of the Day:
Note: This is an updated and expanded version of my May 14 article Do You Buy NVIDIA at This Valuation? after EPS estimates have risen further, making NVDA a Zacks #1 Rank yet again.
On May 10, NVIDIA delivered a quarterly report and outlook that gave faithful investors enough reasons to stay "long and strong."
And this after a big new competitive threat from Alphabet which I explain in detail (and pretty pictures) in this video and article...
Google Ramps Assault on NVIDIA AI Throne
While NVIDIA remains dominant in many new datacenter applications, including the core AI applications of machine learning (training) and deep learning (inference), we should intuitively know that major tech players like Intel, Microsoft and Amazon are not sitting idly by and letting the industry hardware and software capabilities be dictated to them.
Nonetheless, the king still appears ensconced for now. Following the king's earnings report, the average price target on NVDA shares rose to over $275, even including the bearish view of the Wells Fargo semiconductor analyst David Wong.
What's a Fair--and Safe--Price to Pay?
But with all the new $300 price targets (coming up, I share 20 of the top moves), it's fair to wonder if NVDA is still a safe investment, and over what time period.
I know many investors who are hanging on to gains of double and triple in NVDA and their conviction is strong to stay long because they view the company as a a dominant disrupter, a game-changer for so many industries it has helped create in big data research and monitoring, automation, autonomous vehicles, AI and many other advanced software applications.
They envision the stock above $300 one to three years from now so they don't care about the short-term volatility if it should rally to $275 and fall back below $250.
Meanwhile, I also know many agile traders who prefer to trade the swings from quarter to quarter. They can pick good entries when the crowd is fearful and then ride the next wave of euphoric chasing up to new highs above $275 sometime this year. But as always, they will have to be quick and careful if it's only a trade.
Bear of the Day:
Cirrus Logic is a key Apple supplier that peaked above $70 almost a year ago and has had a rough go of it since as investors have grown concerned about its leverage in the iPhone-maker's product cycles.
My colleague Neena Mishra wrote about CRUS as the Bear of the Day in mid-March when shares were still trading above $43. They went on to new 52-week lows in April. Here's how she described the situation at the time...
Founded in 1984 and headquartered in Austin, Texas, Cirrus Logic is a fabless semiconductor supplier, which develops, manufactures and markets analog, mixed-signal, and audio DSP integrated circuits (ICs).
The company’s product lines include portable audio products and non-portable audio and other products.
Their audio chips are used in the leading smartphone brands, tablets, digital headsets, wearables and many emerging smart home applications.
Apple is CRUS’s largest customer, accounting for ~80% of the revenue though the company develops solutions for many industry leading global brands.
Weak Earnings
The company reported weak results for third-quarter fiscal 2018. Non-GAAP earnings of $1.59 per share missed the Zacks Consensus Estimate of $1.77 and were also down 15% year over year.
Total revenues were down about 7.7% year over year and missed our estimate. They were also short of the guided range well.
“Unanticipated weakness in smartphone demand that materialized in late December drove our Q3 results below expectations and further impacted our Q4 guidance,” said the CEO.
Estimates Plunging
After weak results, analysts have cut their estimates for the company. Zacks Consensus Estimate for the current year and next fiscal year have fallen to $4.36 per share and $3.95 per share respectively, down from $4.82 and $4.87, before the results. Falling estimates sent the stock to a Zacks Rank #5 (Strong Sell).
(end of excerpts from Neena Mishra's March report)
Since then, the EPS estimates have only plunged further as follows...
Fiscal 2019 (end in March): Drops from $3.95 to $2.99, a 24% crater.
Fiscal 2020: Drops from $4.44 to $3.27, over a 26% plunge.
3 Casino Stocks to Buy Now
Perhaps it is because trading stocks can often mirror the thrill of winning big at the blackjack tables, or maybe it is because Las Vegas conjures images of the world’s most flashy brands and businessmen. Regardless of the reason, it is clear that gambling stocks are always among the most popular on Wall Street.
Luckily for investors, now is also a great time to be buying gambling stocks, as continued Vegas strength, a great recovery in Macau, and overall international interest in gaming have led to rising share prices. What’s more, the U.S. Supreme Court just overturned a decades-long ban on sports betting, opening the door for many new legal gambling avenues soon.
According to our Zacks Industry Rank data, the overall “Gaming” industry has gained more than 27.6% in the past year, outpacing the S&P 500’s respectable 15.9% gain. With casino stocks this hot right now, investors are not going to want to miss out.
Luckily, we can use Zacks’ proven stock-picking methods to find solid stocks in any industry. Check out these casino stocks today:
1. Las Vegas Sands Corp.
With properties like the Venetian and the Parisian, Las Vegas Sands is the epitome of luxury and style in the casino industry. LVS is currently sporting a Zacks Rank #1 (Strong Buy) and holds an “B” grade for Growth in our Style Scores system. Our current consensus estimates are calling for EPS growth of nearly 26% on 7% revenue growth in 2018—not bad for an industry leader.
Las Vegas Sands is also generating cash flow growth of 21% right now. The firm is now bringing in about $4.63 in cash per share, more than quadrupling its industry’s average. LVS also boasts a better-than-average net margin of 28% and RoE 36%. Finally, management is currently offering a dividend yield of about 4%.
2. Melco Resorts & Entertainment Ltd.
Melco Crown receives the majority of its revenue from Macau, so the company has benefitted from the continued recovery in the region. Analysts are warming on MLCO, with three positive revisions to its full-year EPS estimates coming in the past month. This has moved the Zacks Consensus Estimate 18 cents higher and earned the stock a Zacks Rank #1 (Strong Buy).
Melco is now expected to witness earnings growth of 45% in 2018. The stock is trading with a slightly-stretched P/E of 23.7, but its PEG of 2.0 implies that investors are still getting a decent price for its growth trajectory. The company’s dividend yield of 1.7% is also worth mentioning, and that could be on the cusp of improving thanks to cash flow growth of 29%.
3. Penn National Gaming, Inc.
Penn National Gaming is an operator of a number of casino and gambling properties in North America, specifically located in smaller markets and non-Vegas gambling hotspots. Recently, analysts at Morgan Stanley called the Supreme Court gambling verdict as a “slight positive for regional gaming stocks” and named PENN as one that could benefit the most.
Penn National is also currently holding a Zacks Rank #1 (Strong Buy). The stock has also been one of the hottest gaming picks on Wall Street recently, surging more than 30% in the past month and nearly 80% in the last year. Still, with new growth catalysts ahead, PENN could very well break higher.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
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Las Vegas Sands Corp. (LVS) : Free Stock Analysis Report
Penn National Gaming, Inc. (PENN) : Free Stock Analysis Report
Cirrus Logic, Inc. (CRUS) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Melco Resorts & Entertainment Limited (MLCO) : Free Stock Analysis Report
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