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The Zacks Analyst Blog Highlights: Arthur J. Gallagher, CME, Credit Acceptance, Life Storage and Euronet

Zacks Equity Research
Is Chemical Financial (CHFC) a great pick from the value investor's perspective right now? Read on to know more.

For Immediate Release

Chicago, IL –December 20, 2018 – 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: Arthur J. Gallagher & Co. AJG, CME Group Inc. CME, Credit Acceptance Corp. CACC, Life Storage, Inc. LSI and Euronet Worldwide, Inc. EEFT.

Here are highlights from Wednesday’s Analyst Blog:

5 Finance Stocks that Crushed Berkshire-Hathaway in 2018

The year, which began on a positive note for the finance sector in the form of rate hikes, eased regulations and lower corporate tax, failed to boost share price of the companies toward the tail end of the year. This was due to investors’ worries over inversion of the yield curve and other persistent global tensions (majorly uncertainty over Brexit and U.S.-China trade war), which overshadowed positive factors.

The stressed conditions led to a year-to-date decline of 1% in share price of Berkshire Hathaway, a company run by the Wall Street’s most renowned investment guru — Warren Buffet.

Buffet displayed his knack for investment by transforming Berkshire Hathaway from a mere textile company into a conglomerate with more than 90 subsidiaries engaged in businesses ranging from ice cream to insurance. The company in itself can serve as a benchmark as it is well diversified.

Factors That Affected Berkshire in 2018

Banks and insurers typically gain from steepening of yield curve, which benefits investment income — which is also an important component of Berkshire Hathaway’s insurance business top line.

However, the yield curve recently inverted, indicating that short-term rates are higher than the long-term rates. This also suggests that the Federal Reserve might alter its aggressive stance to raising short term rates, further impacting interest income.

Notably, the tech giant — Apple Inc — is a considerably large part of Berkshire’s equity holding, which has fallen nearly 2% so far this year, majorly over trade war concerns. This might be another reason that shook investors’ confidence in the mega stock.

Factors That Affected the Overall Finance Sector

At the global level, fears of slowdown in the global economy, raised by a series of weak economic reports released in the United States, China and several countries of the European Union, contributed to the stocks losing steam.

Also, lingering trade-related conflicts with the United States, and the U.K.’s scheduled exit from EU in March 2019, with or without a deal, might have an adverse impact on the global economic growth.

These concerns have led to a decline in major indices as well. The S&P 500 Financials (Sector) Index has decreased 14.9% so far this year. Also, the Zacks Finance Sector has witnessed a decline of 14% in the same time period.

5 Stocks That Outperformed Berkshire in 2018

While the above factors affect all the financial stocks, there are still some companies that have been able to brave these challenges and sustained an upswing in prices. Strong fundamentals and strategic moves might have helped these companies enhance investor confidence.

In order to save investors from the time-taking process of identifying the key winners that crushed Buffett’s Berkshire and are likely to gain further, we have created a three-faceted screen using the Zacks Stock Screener.

At first, we looked for stocks that have gained more than 10% so far this year and have projected annualized earnings per share growth rate (for the next three to five years) of at least 5%.

Next, we considered companies that have market capitalization of more than $3 billion, as they are safer to invest in.

Finally, we have picked stocks that carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Here are stocks that made it through the screen:

Arthur J. Gallagher & Co.: Based in Rolling Meadows, IL the company provides insurance brokerage, consulting and third-party claims settlement and administration services to entities all over the world.

Shares of Arthur J. Gallagher have gained 15.1% year to date, outpacing Berkshire Hathaway.

Zacks Rank: 2
Market Cap: $13.3 billion
Projected EPS Growth (three to five years): 11%

CME Group Inc.: CME Group operates contract markets for the trading of futures and options on futures contracts worldwide. It offers a range of products across various asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The company is headquartered in Chicago, IL.

Shares of the company have gained 25.1% so far this year.

Zacks Rank: 2
Market Cap: $63.1 billion
Projected EPS Growth (three to five years): 11%

Credit Acceptance Corp.: Southfield, MI-based company provides financing programs, and related products and services to independent and franchised automobile dealers in the United States.

Shares of the company have gained 18.9% so far this year.

Zacks Rank: 1
Market Cap: $7.1 billion
Projected EPS Growth (three to five years): 17%

Life Storage, Inc.: Located in Buffalo, NY, the company is a self-administered and self-managed equity REIT that is in the business of acquiring and managing self-storage facilities. It serves both residential and commercial storage customers with storage units rented by month.

Shares of the company have gained 11.9% so far this year.

Zacks Rank: 2
Market Cap: $4.6 billion
Projected EPS Growth (three to five years): 5%

Euronet Worldwide, Inc.: The company provides payment and transaction processing and distribution solutions to financial institutions, retailers, service providers and individual consumers worldwide. It is headquartered in Leawood, KS.

Shares of the company have gained 22.1% so far this year.

Zacks Rank: 2
Market Cap: $5.2 billion
Projected EPS Growth (three to five years): 13%

In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?

These 10 are painstakingly handpicked from over 4,000 companies covered by the Zacks Rank. They are our primary picks poised to outperform in the year ahead. Be among the first to see the new Zacks Top 10 Stocks >>

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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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Life Storage, Inc. (LSI) : Free Stock Analysis Report
 
Credit Acceptance Corporation (CACC) : Free Stock Analysis Report
 
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