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The Zacks Analyst Blog Highlights Asbury Automotive Group, ON Semiconductor, WESCO International, SM Energy Company and Denbury

·9 min read

For Immediate Release

Chicago, IL – February 25, 2022 – 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: Asbury Automotive Group ABG, ON Semiconductor Corp. ON, WESCO International Inc. WCC, SM Energy Company SM and Denbury Inc. DEN.

Here are highlights from Thursday’s Analyst Blog:

5 Top-Ranked Growth Stocks at Attractive Valuations

There’s a sale going on right now.

Some of us may not be aware of it. Some of us may be scared of it. Can this really be true? Can so many great stocks be trading at a fraction of their intrinsic values? Isn’t it a fact that interest rate hikes are around the corner? And isn’t that supposed to be bad for the stock market? And what about the geopolitical tensions? Oil? What about inflation?

Don’t be afraid. There has never been a market that hasn’t bounced back. Really!

And again, some of us may be waiting for the right moment. This may not be the bottom after all.

Well guess what? If you wait too long, you could miss the boat.

So don’t waste time worrying about whether you timed it right. There’s still a lot of money to be made. Even at these levels. All you need to do is a bit of homework and go with a tried and tested method. And you’re all set.

Since a ton of stuff seems to be oversold right now, this looks like the right time to go long on growth. In good times you’d have to really pay up for this group. But when there’s this fear of hanging on gripping the market, it’s time to dare.

I decided to take a look at growth stocks today. And see what I found-

The first one is an auto retailer, one of those guys that have had a really great pandemic, making the most of short supplies and dwindling inventories to ratchet up prices and fleece the consumer. Turns out that with pandemic fears receding and things getting closer to normal, people want their cars more than ever. So its good fortunes are all set to continue-

Asbury Automotive Group

One of the nation’s largest auto retailers, Asbury Automotive sells both new and used vehicles and related maintenance, repair (including collision repair) and replacement services through a large network of dealership locations and collision centers across the U.S.

Asbury belongs to the Automotive - Retail and Wholesale industry (top 3% of 250+ Zacks-classified industries). Since historically, the top 50% have outperformed the bottom by a factor of 2 to 1, this position indicates strong prospects for the industry. And in addition, the shares have been allotted a Zacks Growth Score of A. Taken together, that means a strong company in a strong industry. Add the stock’s Zacks #1 (Strong Buy) Rank and you have a sure winner.

Asbury’s revenue and earnings growth are respectively 68.0% and 21.7%. What’s more, the last 30 days have seen analysts raising their estimates for the current year by an average $4.10 (14.0%).

Despite all this excitement, the shares remain ridiculously cheap. At 5.57X earnings, they’re way below the 19.18X for the S&P 500 and 16X for our universe.

Next up are the usual suspects, a semiconductor stock and a tech retailer. Who doesn’t know that the pandemic has opened up new avenues for tech companies, and semis in particular?

For a while, we were talking about how tech stocks (growth stocks) were taking it on the chin, with rate hikes around the corner and a correction that gets deeper by the day. But most people realize that these growth stocks aren’t really that risky. They sell the things that make the whole world more efficient. And it’s hard to think of innovation without them-

ON Semiconductor Corp.

ON Semiconductor makes a broad range of power management, intelligent sensing and signal processing chips. Auto (including EV) and industrial (including military, aerospace and medical) are its two largest segments, accounting for nearly two-thirds of its revenue. Since both these markets are currently on fire,

On Semiconductor has been reporting solid results and providing strong outlooks quarter upon quarter (which accounts for its #1 rank). This situation is not expected to change any time soon. Understandably, the Semiconductor - Analog and Mixed industry, to which it belongs is in the top 8% of Zacks-classified industries. Its huge growth potential is captured in the Zacks Growth Score of A. These factors taken together make a strong case for share price appreciation.

Especially when the numbers support as they’re doing now. On Semiconductor’s earnings are expected to increase 41.0% this year on top of revenue growth of 13.6%. And analysts are betting on further growth next year. They’ve certainly taken their estimates up by a mile: 2022 is up 88 cents (26.8%) and 2023 up $1.20 (37.0%).

ON Semiconductor shares trade at 14.05X earnings, which being below the S&P 500 and the average for our coverage universe, looks low.

WESCO International Inc.

WESCO provides business-to-business distribution, logistics and supply chain solutions in the U.S., Canada and other places. It belongs to the Electronics - Parts Distribution industry (top 1% of Zacks-classified industries). Like On Semiconductor, it also has a Growth Score of A, so like On Semiconductor, it is also headed up.

Supporting this thesis are strong numbers and an attractive valuation.

As far as the numbers go, it appears that WESCO’s revenue and earnings are set to rise 6.8% and 13.6%, respectively in 2022 and further increase in 2023. Analysts appear highly optimistic: the 2022 consensus is up 71 cents (nearly 7%) and the 2023 consensus is up 76 cents (6.4%).

What’s more, valuation is cheap (10.85X P/E versus 16X for our universe and 19.18X for the S&P 500).

And finally, we have a couple of energy stocks. With both the WTI and Brent benchmarks hovering around $100, oil is the hottest commodity today. The energy crunch coming into 2022 fueled strength in oil, coal (the dirty fuel is a great support in times like this), and natural gas and wind (the saviors in this piece). Putin is only adding to the heat.

So while the pandemic was a big blow for the sector, they’re getting a windfall now. And we have historically high growth rates and the always on (kind-of) reopening in addition to that. Both SM Energy and Denbury look great as of now. But since they are set to report today, we’ll know more about the situation thereafter.

High prices are particularly beneficial for upstream players and these companies belong to the Oil and Gas - Exploration and Production - United States industry (top 25%). This along with their #1 ranks and Growth Score A are good indications of near-term potential. But the numbers also tell a positive story.

SM Energy Company

SM Energy acquires, explores, develops, and produces oil, natural gas and natural gas liquids in Texas. Its operations are mainly in the attractive Permian Basin and South Texas & Gulf Coast regions. It has substantial future development opportunities in multiple oil-rich locations in the area.

Analysts expect SM Energy to grow revenue and earnings by 32.9% and 338.5%, respectively in 2022. They’ve taken their estimates for the year up 53 cents (9.0%) in the last 30 days.

Valuation is also attractive. At 5.29X earnings, the shares are trading below the 16X average for our universe and the 19.18X for the S&P 500.

Denbury Inc.

Denbury produces oil from mature oil and natural gas properties in the Gulf Coast (located in Mississippi, Texas and Louisiana) and Rocky Mountain (Montana, North Dakota and Wyoming) regions.

nbury’s revenue and earnings are expected to grow a respective 24.7% and 162.9% this year. Estimates for the year have been raised by 62 cents (10.2%) in the last 30 days.

At 9.98X earnings, Denbury stock looks cheap.

Zacks Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.

This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>

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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.

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
WESCO International, Inc. (WCC) : Free Stock Analysis Report
SM Energy Company (SM) : Free Stock Analysis Report
Asbury Automotive Group, Inc. (ABG) : Free Stock Analysis Report
ON Semiconductor Corporation (ON) : Free Stock Analysis Report
Denbury Inc. (DEN) : Free Stock Analysis Report
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