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The Zacks Analyst Blog Highlights: Amazon.com, Expedia, Genesco, AZZ and John Bean Technologies

Zacks Equity Research

 

For Immediate Release

Chicago, IL – July 18, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Amazon.com Inc. AMZN, Expedia Group Inc. EXPE, Genesco Inc. GCO, AZZ Inc. AZZ and John Bean Technologies Corp. JBT.

Here are highlights from Wednesday’s Analyst Blog:

Retail & Manufacturing to Boost U.S. Q2 GDP: 5 Picks

The U.S. economy, despite being in its historical 11-year bull market, still has ample room for growth. Strong retail sales data and a rebound in manufacturing output in June clearly indicate that a near-term recession is uncalled for in spite of the lingering trade conflict with China and a slowing global economy.

Several strong economic data such as retail sales, manufacturing output and nonfarm payroll are likely to boost U.S. GDP in the second quarter of 2019.   

Strong Retail Sales Data in June

On Jul 16, the Department of Commerce reported that U.S. retail sales in June increased 0.4%, surpassing the consensus estimate of 0.2%. June marked the fourth consecutive month of retail sales growth. Year over year, retail sales grew 3.4% in June.

Moreover, core retail sales (excluding automobiles, gasoline, building materials and food service) jumped 0.7% in June. May’s core retail sales were also revised upward to 0.6% from 0.4% reported previously. Core retail sales increased for the third consecutive month. Notably, this is a key economic metric as it corresponds most closely with the consumer spending component of U.S. GDP.

Strong core retail sales growth in April, May and June indicates an impressive rebound in consumer spending in the second quarter of 2019 after it grew the a slowest pace in any first quarter. Notably, consumer spending constitutes more than 70% of U.S. GDP.

Manufacturing Output Rebounds in June

On Jul 16, the Federal Reserve reported that U.S. industrial production in June was unchanged from the previous month compared with consensus estimate of growth of 0.1%. However, manufacturing output grew 0.4% in June, recording the biggest monthly growth in 2019 and posting the second successive positive growth after 0.2% growth in May.

Within the manufacturing sector, business equipment and construction grew by 0.5% while the consumer goods segment remained unchanged. Despite strong performance in June, year over year, manufacturing output declined 2.2% owing to imposition of tariff and retaliatory tariff, and a rising U.S. dollar. Notably, the manufacturing sector constitutes nearly 12% of U.S. GDP.

Robust Labor Market

On Jul 5, the Department of Labor reported that the U.S. economy added 224,000 jobs in June better-than the consensus estimate of 161,000. The U.S. economy added 172,000 jobs per month on average in the first half of 2019. The unemployment rate edged up to 3.7% from 3.6%. However, the rise is mainly due to a 0.1% increase in labor force participation rate to 62.9%, the highest since March.

What to Expect from the Fed?

On Jul 10, in a testimony to the House Financial Services Committee, Fed chair Jerome Powell said that the United States is suffering from a bout of uncertainty caused by trade tensions and weak global growth. Powell reiterated Fed’s commitment to act as appropriate to sustain U.S. economic expansion, providing a clear message for a rate cut possibly in the upcoming FOMC meeting scheduled on Jul 30 - 31.

Market participants are expecting 100% probability of a 25 basis-point rate cut in July while 20% probability of a 50 basis-point rate cut. However, after Powell’s testimony, a series of U.S. economic data like consumer price index, retail sales, manufacturing output in addition to job data raised questions on whether the central bank will reduce benchmark interest rate at all in July.

Meanwhile, on Jul 16, Powell again repeated his pledge to “act as appropriate” to keep the U.S. economic expansion going in a speech delivered in Paris. Per the Fed chair, business investment, housing investment and manufacturing output weakened considerably. Although second-quarter GDP estimate has been raised to 1.4–1.8%, it is still below the 3.1% growth rate of the first quarter. The Fed is likely to cut rate in July but more than a quarter basis point cut is unlikely.

Our Top Picks

At this stage, it will be prudent to invest in stocks from the retail and manufacturing sectors, especially from those segments which performed well in June.

We have narrowed down our search to five such stocks a favorable Zacks Rank and strong growth potential. Each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Amazon.com Inc. engages in the retail sale of consumer products and subscriptions in North America and internationally. It operates through the North America, International, and Amazon Web Services segments. The company has expected earnings growth of 31.8% for the current year and 43.9% for the next year.

Expedia Group Inc. is an online travel company, empowering business and leisure travelers through technology with the tools and information they need to efficiently research, plan, book and experience travel. The company has expected earnings growth of 19.4% for the current year and 17.3% for the next year.

Genesco Inc. operates as a retailer and wholesaler of footwear, apparel, and accessories. The company operates through four segments: Journeys Group, Schuh Group, Johnston & Murphy Group, and Licensed Brands. The company has expected earnings growth of 11.9% for the current year and 12.1% for the next year.

AZZ Inc. provides galvanizing and metal coating services, welding solutions, specialty electrical equipment, and highly engineered services to the power generation, transmission, distribution, refining, and industrial markets. The company has expected earnings growth of 32.1% for the current year and 21.2% for the next year.

John Bean Technologies Corp. provides technology solutions to food and beverage industry and equipment and services to air transportation industries. The company operates through JBT FoodTech and JBT AeroTech segments. The company has expected earnings growth of 5.8% for the current year and 11.6% for the next year.

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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/performance for information about the performance numbers displayed in this press release.


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Expedia Group, Inc. (EXPE) : Free Stock Analysis Report
 
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Genesco Inc. (GCO) : Free Stock Analysis Report
 
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