Playa Hotels & Resorts and Capri Holdings have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – March 17, 2023 – Zacks Equity Research shares Playa Hotels & Resorts PLYA as the Bull of the Day and Capri Holdings CPRI as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Enterprise Products Partners LP EPD, Kinder Morgan, Inc. KMI and MPLX LP MPLX.
Here is a synopsis of all five stocks:
Bull of the Day:
Playa Hotels & Resorts is a leading owner, operator, and developer of all-inclusive resorts in prime beachfront locations throughout Mexico and the Caribbean. With a diverse portfolio of luxury resorts and a dedication to providing guests with memorable experiences, Playa Hotels & Resorts has positioned itself as a top player in the hospitality industry. In this article, we will explore the key reasons why investors should consider adding Playa Hotels & Resorts to their portfolios.
Strong Portfolio of Brands and Destinations
Playa Hotels & Resorts operates a diverse and impressive collection of brands, including Hyatt Zilara, Hyatt Ziva, Hilton, Jewel Resorts, and Sanctuary Cap Cana, among others. This strategic partnership with globally recognized brands enhances the company's reputation and attracts a wider audience of potential guests. Moreover, Playa's resorts are situated in prime beachfront locations across popular tourist destinations, such as Mexico, Jamaica, and the Dominican Republic, ensuring strong demand from leisure travelers.
Growing Demand for All-Inclusive Resorts
The all-inclusive resort segment has grown in popularity over the past few years, as more travelers opt for stress-free, pre-paid vacations where they can enjoy a range of amenities and services at a fixed price. This trend is expected to continue, positioning Playa Hotels & Resorts to capitalize on the increasing demand. By offering a diverse range of all-inclusive experiences tailored to different traveler preferences, Playa ensures a steady influx of guests and a strong revenue stream.
Solid Financial Performance
Playa Hotels & Resorts has demonstrated consistent financial performance, with a proven track record of revenue growth and improved profitability. The company has managed to maintain a healthy balance sheet with a low debt-to-equity ratio, providing ample financial flexibility for future expansions and investments. Playa's commitment to operational excellence and cost management has allowed the company to generate strong cash flows, which can be reinvested in new projects or returned to shareholders via dividends and stock buybacks.
Strategic Growth Initiatives
Playa Hotels & Resorts has a well-defined growth strategy, which includes expanding its portfolio through acquisitions, brand conversions, and new developments. The company has a robust pipeline of projects and is focused on increasing its presence in key markets to drive revenue growth. Additionally, Playa invests in regular property renovations and enhancements, ensuring that its resorts continue to meet the evolving needs and preferences of its guests.
Resilience Amid Industry Challenges
The hospitality industry has faced significant challenges due to the COVID-19 pandemic. However, Playa Hotels & Resorts has demonstrated remarkable resilience and adaptability, swiftly implementing enhanced safety protocols and adjusting its operations to cater to changing market conditions. As the global travel industry recovers, Playa is well-positioned to benefit from pent-up demand for leisure travel, particularly in the all-inclusive segment.
Despite its strong growth prospects, Playa Hotels & Resorts' stock trades at an attractive valuation relative to its peers in the hospitality industry. This presents a compelling investment opportunity for long-term investors seeking to capitalize on the company's growth potential and the broader recovery in the travel sector.
Playa Hotels & Resorts offers a unique investment opportunity, combining the benefits of a strong portfolio of luxury all-inclusive resorts, strategic growth initiatives, and solid financial performance. As the demand for all-inclusive vacations continues to grow, Playa is poised to benefit from the sector's expansion and its own competitive advantages. Investors seeking to diversify their portfolios with exposure to the hospitality industry should strongly consider adding Playa Hotels & Resorts to their investment mix.
Bear of the Day:
Capri Holdings is a global fashion luxury group that operates several well-known brands, including Michael Kors, Versace, and Jimmy Choo. While the company boasts a strong portfolio and potential for growth, there are several factors that investors should consider before taking the plunge. n this article, we will discuss some of the key reasons why investors should be cautious when investing in Capri Holdings
Vulnerability to Economic Cycles
Luxury brands like those under the Capri Holdings umbrella are often more sensitive to economic cycles and fluctuations in consumer spending. During economic downturns, consumer demand for luxury goods may decline as people prioritize their spending on essential items. Consequently, this could lead to reduced revenues and profitability for Capri Holdings, making it a potentially riskier investment during times of economic uncertainty.
Intense Competition in the Luxury Market
The luxury fashion industry is highly competitive, with numerous established players and emerging brands vying for market share. Capri Holdings faces competition from renowned brands such as LVMH, Kering, Richemont, and Tapestry, as well as smaller boutique luxury brands. This competitive landscape may put pressure on Capri Holdings to continuously innovate and invest in marketing to maintain its brand appeal, which could negatively impact the company's profit margins.
Dependence on International Markets
Capri Holdings generates a significant portion of its revenues from international markets, making it vulnerable to fluctuations in foreign currency exchange rates and potential economic or political instability in key markets. Additionally, the company's exposure to international markets may also result in increased risks related to tariffs, trade restrictions, and other regulatory challenges. These factors may adversely affect Capri Holdings' financial performance and make it a more volatile investment option.
Dependence on a Few Key Brands
While Capri Holdings operates multiple luxury brands, the majority of its revenue comes from Michael Kors. This over-reliance on a single brand may present risks if the brand's popularity declines or if it faces challenges related to fashion trends, quality, or other factors. To mitigate this risk, Capri Holdings needs to ensure that its other brands, such as Versace and Jimmy Choo, continue to grow and contribute to the company's overall performance.
Supply Chain Risks
Capri Holdings' supply chain is exposed to various risks, including disruptions due to natural disasters, geopolitical tensions, and labor disputes. The company sources materials from multiple countries and relies on third-party manufacturers for production. Any disruption in the supply chain could result in delayed shipments, increased costs, and damage to the company's reputation, which may ultimately impact its financial performance.
Impact of the COVID-19 Pandemic
The COVID-19 pandemic has had a significant impact on the luxury goods industry, with store closures, reduced foot traffic, and changes in consumer spending habits. While Capri Holdings has adapted to the changing environment by focusing on e-commerce and digital strategies, the ongoing uncertainties and potential for future disruptions caused by the pandemic or its variants may continue to affect the company's performance.
While Capri Holdings has an appealing portfolio of luxury brands and the potential for growth, there are several factors that investors should consider before investing in the company. The luxury fashion industry's sensitivity to economic cycles, intense competition, dependence on international markets, reliance on key brands, supply chain risks, and the impact of the COVID-19 pandemic all contribute to the potential risks associated with investing in Capri Holdings. Investors should weigh these factors carefully and consider their individual risk tolerance before making a decision to invest in the company.
3 Midstream Energy Stocks to Gain Despite Prevailing Uncertainty
Uncertainties are prevailing in the broader market, making the overall energy sector turbulent. Companies belonging to the sector have witnessed a choppy business environment since the onset of the coronavirus pandemic.
The initial pandemic period, when there were no vaccines, saw an environment of heightened uncertainties. The commodity's price plunged to a negative $36.98 per barrel on Apr 20, 2020. However, with the rapid developments of vaccines by scientists, which in turn led to the gradual opening of the economies, the pricing scenario of West Texas Intermediate (WTI) crude improved drastically over time to reach $123.64 per barrel on Mar 8, 2022.
Oil price data are per the U.S. Energy Information Administration. WTI crude price is trading below the $70 per barrel mark presently, stemming from concerns over a fresh financial crisis that could hurt future oil demand.
Considering the backdrop, it would be wise for investors to keep an eye on midstream stocks like Enterprise Products Partners LP, Kinder Morgan, Inc. and MPLX LP.
Midstream Energy Players to the Rescue
Although the fate of energy players is highly dependent on oil and gas prices, stocks belonging to midstream space have lower exposure to volatility in commodity prices. This is because midstream players generate stable fee-based revenues since the transportation and storage assets are being booked by shippers for the long term. Thus, their business model is relatively low-risk, signifying considerably less exposure to both oil and gas price and volume risks.
We have employed our Stock Screener to zero in on three stocks belonging to the midstream energy space. All the stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
3 Stocks in the Spotlight
Enterprise Products Partners: Enterprise Products generates stable fee-based revenues from its extensive pipeline network across more than 50,000 miles, transporting natural gas, natural gas liquids (NGLs), crude oil petrochemicals and refined products.
The midstream infrastructure provider also has storage assets that can hold more than 260 million barrels of NGL, petrochemical, refined products and crude oil. These assets can also store 14 billion cubic feet of natural gas. Moreover, Enterprise Products has $5.8 billion of major capital projects under construction that are likely to provide incremental fee-based revenues.
MPLX LP: MPLX has ownership and operating interests in midstream energy infrastructure and logistics assets, thereby generating stable cashflows. With a strong focus on returning capital to unit holders, MPLX has roughly $846 million remaining available under its authorization for unit repurchases.
Kinder Morgan: With its operating interests in oil and gas pipeline networks spread across 83,000 miles, Kinder Morgan is a leading energy infrastructure company in North America. It derives most of its earnings from take-or-pay contracts, generating stable fee-based revenues.
Kinder Morgan is poised to grow on the back of its business model, which is relatively resilient to volume and commodity price risks.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report
MPLX LP (MPLX) : Free Stock Analysis Report
Playa Hotels & Resorts N.V. (PLYA) : Free Stock Analysis Report
Capri Holdings Limited (CPRI) : Free Stock Analysis Report
To read this article on Zacks.com click here.