U.S. Markets open in 8 hrs 46 mins

The Zacks Analyst Blog Highlights: Geo Group, Middlesex Water, Atlantic Power and City Office REIT

Zacks Equity Research
Currently, ONE Gas (OGS) is a better stock than National Fuel Gas (NFG).

For Immediate Release

Chicago, IL – May 24, 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: Geo Group Inc. GEO, Middlesex Water Co. MSEX, Atlantic Power Corp. AT and City Office REIT, Inc. CIO.

Here are highlights from Thursday’s Analyst Blog:

4 Safe Stocks Amid U.S.-China Trade Spat

The raging U.S.-China trade war and growing ban on Chinese technology companies and Brexit uncertainty have been creating a lot of noise in the markets, with major U.S. indices down in red in yesterday’s trading.

The global equity markets have been under pressure on premise that U.S.-China trade spat, if not settled amicably, would weigh on global economic growth. Now with U.S. administration’s attention on Chinese surveillance companies, fears are of the situation turning worse before getting any better.
Another source of global economic uncertainty is no clear path to Brexit and Theresa May being forced to step down from her role.  

At the domestic level, the Fed’s recent minutes disclosed a no-change to interest rate for some time now.

Thus given a low-interest-rate environment along with volatility from geopolitical tension, investing in stocks from defensive sectors such as real estate and utilities would be a wise move.

Year to date, the Utilities SPDR (XLU) a fund that only invests in utilities that are included on the S&P 500 has gained 14.2%, while the  Vanguard Real Estate ETF, which reflects the performance of publicly traded equity REITs and other real estate-related investments, is up 20%. The S&P 500 Index is up 13.7% in the same time frame.

Tariffs Tit for Tat

After imposing a tariff of 10% on $50 billion worth on Chinese exports last year, the Trump administration has expanded its tariff to 25% on $200 billion of Chinese exports in May. There remains the possibility of imposition of 25% tariff on another $325 billion of Chinese goods.

In retaliation to U.S. charges, China had imposed $110 billion tariffs on U.S. exports in 2018. Following the most recent hike of U.S. tariff, the Chinese authority has imposed 25% tariff on an additional $60 billion U.S. goods, effective Jun 1, 2019.

American businesses in China are already wounded by tariffs that have pushed up manufacturing costs and dampened demand for its goods and services.

Action Against Chinese Technology Companies

Last week, the Trump administration barred Huawei Technologies and entered it to the Entities List, and later offered a 90-day reprieve, thereby prohibiting it to access American technology without a special license.

The United States is now contemplating a similar call on other five Chinese surveillance companies, two of which are Hikvision and Zhejiang Dahua Technology Co. This move arises from the Trump’s administration concern about their use of American technology for espionage.  

Fed’s Patient Approach to Monetary Policy

The recently released minutes  of the Federal Reserve’s monetary policy meeting (held during Apr 30- May 1), hinted at leaving interest rates unchanged for some time. Though the inflation number came in at 1.6%, which is lower than the Fed’s target range of 2%, it was seen as temporary and not a reason to worry about.

The members highlighted that the country’s expanding economic activity and strength in labor markets fairly accommodates the ‘wait-and-see’ approach for now. The benchmark policy rates stands at 2.25-2.5%.

We note that U.S. GDP  grew  3.2% in the first quarter of 2019, exceeding the consensus estimate of 2.1% by a wide margin.

Defensive Sectors to Gain

Given the current low interest rate environment and volatility in equity markets from the U.S.-Sino trade tussle, investing funds in defensive sectors like utilities and REITs makes sense. These sectors also stand to gain from low interest rates, since they run on huge debt, a low interest rate environment is a positive.

We have narrowed our search to the following stocks based on a good Zacks Rank and other relevant metrics.

Geo Group Inc. has a Zacks Rank #1 (Strong Buy) and is an equity real estate investment trust. It specializes in the design, development, financing and operation of correctional, detention and community reentry facilities.

The company has expected earnings growth of 8.5% for the current year compared with the industry’s decline of 1.4%. The Zacks Consensus Estimate for the current year has improved 14% over the past seven days. You can see the complete list of today's Zacks #1 Rank stocks here.

Middlesex Water Co. owns a Zacks Rank #1. The company treats, stores and distributes water for residential, commercial, industrial and fire prevention purpose.

Middlesex Water's expected earnings growth for the current year is 10.7% compared with its industry’s growth of 3.7% . The Zacks Consensus Estimate for the current year has gone up by 5.9% over the past 30 days.

Atlantic Power Corp. is a Zacks Rank #1 independent electric power producer that owns interests in a diversified portfolio of independent, non-utility power generation projects.

The company has an expected earnings growth of 50% for the current year compared with its industry’s decline of 0.4%. The Zacks Consensus Estimate for current-year earnings has improved 181% over the past seven days.

City Office REIT, Inc. is a real estate investment trust, focused on acquiring, owing and operating offices properties in the United States.
The company has expected earnings growth of 11.11% for the current year compared with the industry’s decline of 1.4%. The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the past 30 days.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com                                   

https://www.zacks.com                                                 

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
 
Atlantic Power Corporation (AT) : Free Stock Analysis Report
 
Middlesex Water Company (MSEX) : Free Stock Analysis Report
 
City Office REIT, Inc. (CIO) : Free Stock Analysis Report
 
Geo Group Inc (The) (GEO) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research