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The Zacks Analyst Blog Highlights: Apple, Ford, Citizens Financial Group, Ally Financial and Capital One Financial

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Zacks Equity Research
·8 min read
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For Immediate Release

Chicago, IL – February 2, 2021 – 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: Apple Inc. AAPL, Ford Motor Company F, Citizens Financial Group, Inc. CFG, Ally Financial Inc. ALLY and Capital One Financial Corporation COF.

Here are highlights from Monday’s Analyst Blog:

Top Momentum Stocks for February Despite Recent Turmoil

Wall Street halted in the first month of this year after rallying in the last two months of the previous year. In January, the Dow and the S&P 500 lost 2% and 1.1%, respectively, while the Nasdaq Composite gained 1.7%. For the week ended Jan 29, the Dow, the S&P 500 and the Nasdaq Composite tumbled 3.2%, 3.3% and 3.5%, respectively, posting their worst weekly performance since October 2020.  

However, a closer look at last week's trading pattern clearly revealed that it was not any major economic, financial or political factor that led to a meltdown. A typical trading practice in which a few key heavily shorted stocks by hedge fund giants were favored by a group of individual investors organized via Reddit's wallstreetbets forum.

Market's volatility may persist for a few more days as a section of market participants have already raised concerns regarding a bubble in the market. Nevertheless, the fundamentals of the U.S. economy remain stable and the northbound journey of Wall Street is likely to resume soon.

Momentum Likely to Continue

Momentum investing calls for continued appraisal of stocks, ensuring that an investor does not pick a beaten-down name or overlook a thriving one. Momentum investors buy high on the anticipation that a stock will only ascend in the short to intermediate term. Although coronavirus-induced woes are persisting in the United States, causing occasional market fluctuations, the overall movement of Wall Street is likely to remain northbound due to the five main drivers.

First, President Joe Biden and his administration has decided to meet the Trump administration's goal of immunizing 100 million people in 100 days despite a slower-than-expected rollout of COVID-19 vaccines. This means that the economy should reopen and gradually operate at the pre-pandemic level. Since the lockdowns imposed in March, the U.S. economy is operating at a significant sub-optimal level.

Second, President Joe Biden proposed a new $1.9 trillion coronavirus-aid package called "American Rescue Plan." The proposed plan will include increasing direct payments to $2,000 from the existing $600 and supplemental unemployment benefits to $400 per week through September.  It will provide support to small businesses and aid to state and local governments.

Third, on Jan 26, the IMF raised its global growth forecast for 2021 to 5.5% from 5.2% projected in October 2020. The agency reduced its projected global GDP contraction rate for 2020 to 3.5% from 4.4% in October. On Jan 5, the World Bank reported that the global economy is likely to grow 4% after an estimated 4.3% contraction in 2020.

Both agencies have said that the developed countries will be less affected owing to unprecedented fiscal support and major central banks' decision to pursue ultra-dovish monetary policies.

Fourth, the fourth-quarter earnings season has started with better-than-expected results. Strong overall earnings results and future guidance will support the current stock market valuation.

As of Jan 29, the fourth-quarter earnings for the S&P 500 Index were projected to be down 2.6% year over year on 1.5% higher revenues. This is a notable improvement over the projection of a 7.8% decline in earnings on 0.3% higher revenues at the beginning of the reporting cycle.

Fifth, the Conference Board reported that its Consumer Confidence Index for the month of January improved moderately and came in at 89.3 compared to 87.1 in December which was revised downward from 88.6 reported earlier. The metric surpassed the consensus estimate of 87.5. Notably, the Expectations Index, which is a measure of consumers' short-term (for the next six months) outlook for income, business and labor market conditions, increased from 87.0 in December to 92.5 in January.

Our Top Picks

We have narrowed down our search to six large-cap (market capital > $10 billion) momentum stocks that have witnessed robust earnings estimate revisions in the last 7 days and have strong upside left for 2021. Each of our picks carries a Zacks Rank #1 (Strong Buy) and has a Momentum Score of A.  You can see the complete list of today's Zacks #1 Rank stocks here.

Apple's Services and Wearables businesses are expected to drive top-line growth in fiscal 2021 and beyond. Although its business primarily runs around its flagship iPhone, the Services portfolio has emerged as the new cash cow. Its focus on autonomous vehicles and augmented reality/virtual reality technologies presents growth opportunities in the long haul.

The company has an expected earnings growth rate of 36.3% for the current year (ending September 2021). The Zacks Consensus Estimate for the current year has improved 10.9% over the last 7 days.

Ford Motor designs, manufactures, markets, and services a range of Ford cars, trucks, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles worldwide. It operates through three segments: Automotive, Mobility, and Ford Credit.

The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.2% over the last 7 days.

Citizens Financial Group operates as the bank holding company for Citizens Bank, National Association that provides retail and commercial banking products and services in the United States. It operates in two segments, Consumer Banking and Commercial Banking.

The company has an expected earnings growth rate of 46.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 6.9% over the last 7 days.

Ally Financial provides various financial products and services to consumers, businesses, automotive dealers, and corporate customers primarily in the United States and Canada. It operates through the Automotive Finance Operations, Insurance Operations, Mortgage Finance Operations, and Corporate Finance Operations segments.

The company has an expected earnings growth rate of 45.2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 2.8% over the last 7 days.

Capital One Financial is primarily focused on consumer and commercial lending as well as deposit origination. Through the banking and non-banking subsidiaries, it provides various financial products and services to consumers, small businesses and commercial clients in the United States.

The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 18.8% over the last 7 days.

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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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