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Top Stock Reports for Tesla, Home Depot & Netflix

Sheraz Mian
·6 min read

Friday, December 18, 2020

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Tesla (TSLA), The Home Depot (HD) and Netflix (NFLX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Tesla shares have vastly outperformed the Zacks Domestic Automotive industry in the year to date period (+683.9% vs. +244.6%). The Zacks analyst believes that the company has a first-mover advantage in the e-mobility space with high range vehicles, superior technology, and software edge.

Robust Model 3 demand, ramp up of Model Y production, Shanghai Gigafactory prospects, amazing line-up of upcoming products and aggressive expansion efforts bode well for the firm. However, high R&D, SG&A costs and massive capex may clip the margins.

Tesla is investing heavily to boost production capacity and build gigafactories in Berlin and Austin, which are likely to strain its near-term prospects. Waning margins for Model S/X and lofty valuation of the firm are other concerns. Thus, investors are recommended to wait for a better entry point. 

(You can read the full research report on Tesla here >>>)

Shares of Home Depot have gained +24.4% over the past year against the Zacks Retail Building Products industry’s gain of +27.9%. The Zacks analyst believes that it is effectively adapting to the high-demand environment, driven by investments in its business over the years.

The company’s interconnected retail strategy and underlying technology infrastructure have helped boost web traffic in the past six months. During the third-quarter fiscal 2020, the company witnessed continued strong demand for home improvement projects as customers spent more time at home during the coronavirus pandemic.

It also gained from strong growth in its Pro and DIY customer categories. Notably, DIY sales outpaced Pro sales growth in the fiscal third quarter owing to rise in home improvement projects. However, it incurred additional costs related to the coronavirus pandemic. Also, soft margins partly hurt results.

(You can read the full research report on Home Depot here >>>)

Netflix’s shares have gained +17.4% over the past six months against the Zacks Broadcast Radio and Television industry’s rise of +23%. The Zacks analyst believes that the absence of new season of popular show Stranger Things is likely to affect subscriber growth in the fourth quarter of 2020.

Additionally, rising competition from Apple, Amazon prime video, HBO Max, Disney+, Peacock and TikTok is a headwind. Netflix’s leveraged balance sheet and higher streaming obligation is a concern. However, Netflix is dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized, foreign-language content.

Higher number of originals is expected to aid user base growth in 2021. Moreover, the launch of low-priced mobile plans in India, Indonesia, Malaysia, Philippines and Thailand is expanding Netflix’s subscriber base in Asia Pacific.

(You can read the full research report on Netflix here >>>)

Other noteworthy reports we are featuring today include PepsiCo (PEP), McDonald's (MCD) and Bristol-Myers Squibb (BMY).

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Sheraz Mian

Director of Research                                                             

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>

Today's Must Read

Tesla (TSLA) Banks on Model 3 & Y Popularity Amid High Costs

Home Depot (HD) Gains from Digital Business Amid Pandemic

Robust Content Aids Netflix (NFLX) Amid Stiff Competition

Featured Reports

PepsiCo (PEP) Snacking Business Remains Robust Amid Pandemic

Per the Zacks analyst, penetration for PepsiCo's Frito and Quaker Food businesses has improved due to increased snacking habits amid the pandemic.

Digitalization to Aid McDonald's (MCD), Dismal Comps a Worry

Per the Zacks analyst, McDonald's focus on drive-thru, delivery & take-away bode well. Drive-thru now accounts for approximately 90% of sales.

Revlimid, Eliquis Fuel Bristol-Myers (BMY) As Opdivo Weakens

Per the Zacks analyst, Eliquis and Revlimid fuel Bristol-Myers as Opdivo faces competitive pressure. Nevertheless, the label expansion of Opdivo for first-line NSCLC should boost prospects.

Game & Network Services Arm Drives Sony (SNE) Amid Headwinds

Per the Zacks analyst, Sony's Game & Network Services segment is benefiting from an increase in game software sales amid challenges in the Pictures segment.

Strategic Buyouts Aid, High Debt Levels Ail Fidelity (FIS)

Per the Zacks analyst, Fidelity's strategic acquisition activities bode well for long term growth. However, high debt levels remain a concern for the company.

Core MedSurg Unit Aids Stryker (SYK), Pricing Pressure Ails

Per the Zacks analyst, Stryker continues to gain from solid prospects of its core MedSurg arm. However, pricing pressure continues to remain a woe.

Rising Demand Aids General Dynamics (GD), Competition Hurts

Per the Zacks analyst, a strong rise in demand for the company's varied defense products leads to organic growth. However, it faces stiff market competition due to peer price pressure.

New Upgrades

Cooper Tire (CTB) Rides on Collaborations & New Retail Entry

Cooper Tire's joint venture with Sailun to make TBR tires and continued retail penetration with Wal-Mart, Monro and Tire Rack are likely to aid the firm's bottom line in future, per the Zacks analyst.

Dillard's (DDS) Inventory Management Efforts Aid Margins

Per the Zacks analyst, Dillard's aggressive measures to reduce excess inventory due to the pandemic-led decline in demand, which resulted in lower markdowns. This boosted gross margin in Q3.

American Public (APEI) Rides on Competency Based Programs

Per the Zacks analyst, American Public is poised to benefit from programs under the APUS Momentum initiative. Also, factors like affordable tuition and online programs are adding to the positives.

New Downgrades

Fortive (FTV) Battered by FX Volatility & Higher Expenses

The Zacks analyst believes that increasing fluctuations in foreign currency rates will continue to hurt Fortive. Also, higher expenses and end market cyclicality issues remain concerns.

High Expenses, Low Interest Rate Ail Principal Financial (PFG)

Per the Zacks analyst, Principal Financial has been experiencing a slowdown in its pension risk transfer pipeline given the low interest rate environment. Also, high expenses drag margin expansion.

Lower Refining Margin Ails PBF Energy (PBF), High Debt Hurts

The Zacks analyst is concerned as PBF Energy's declining gross refining margin is affecting its bottom line. Moreover, its levered balance sheet will reduce financial flexibility.

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
Tesla, Inc. (TSLA) : Free Stock Analysis Report
PepsiCo, Inc. (PEP) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
McDonalds Corporation (MCD) : Free Stock Analysis Report
The Home Depot, Inc. (HD) : Free Stock Analysis Report
Bristol Myers Squibb Company (BMY) : Free Stock Analysis Report
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