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The Zacks Analyst Blog Highlights: NRG Energy, Middlesex Water, NexPoint Residential Trust, ONE Gas and Outfront Media

Zacks Equity Research
The Zacks Analyst Blog Highlights: Middlesex Water, NorthWestern, The GEO Group, PennyMac Mortgage Investment Trust and NexPoint Residential Trust

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: NRG Energy, Inc. NRG, Middlesex Water Company MSEX, NexPoint Residential Trust, Inc. NXRT, ONE Gas, Inc. OGS and Outfront Media Inc. OUT.

Here are highlights from Thursday’s Analyst Blog:

Great Stocks to Gain from a Patient Fed

According to minutes of the Fed meeting held earlier this month, policymakers of the central bank will continue to adopt a “patient” approach on rates. The Fed expressed greater confidence in the U.S. economy, stressing that the impact of headwinds to the global economy has declined considerably.

The central bank expects rates to remain stable for quite “some time” to come. In fact, some members are apprehensive about sluggish inflation and stopped short of calling for a rate cut.

Rate-sensitive stocks are likely to gain from such a dovish monetary stance. This is why it makes sense to invest in real estate investment trusts (REITs) and utility stocks.

Fed At Ease With Current Stance, Optimistic About Economy

At the end of the Fed meeting on May 1, the central bank kept rates unchanged within the 2.25%-2.5% band. Minutes of the meeting reveal that the central bank is at ease with its patient approach, a stance which could remain unchanged in the near future. Dallas Fed President said he was “agnostic” about whether the central bank’s next move will be a rate hike or cut. 

The minutes also revealed that the central bank’s policymakers’ outlook for the full-year economic growth has improved. Meanwhile, concerns about an economic slowdown have abated. Over the past few meetings, the Fed had expressed concerns about global growth, the impasse over Brexit and trade tensions.

With the central bank adopting a more upbeat tone, these concerns seem to have abated. At the same time, the Fed thinks that such fears remain in the background. This is perhaps why members of the central bank believe it needs to be patient when determining the future course of the federal funds target rate.

Is a Rate Cut Around the Corner?

Until last year, the Fed was expected to raise rates at least twice in 2019. Then early this year, the central bank adopted a markedly softer approach. Currently, policymakers are divided over the long-term course of the target rate.

While “many” agree with the Fed Chair’s assessment that sluggish inflation is “transient”, “several” others are worried about this factor. They believe that the current level of inflation is inconsistent with the current employment rate, which hovers around a near-50 year low.

However, they have stopped short of calling for a rate cut. But market watchers still think at least one rate cut is likely before the end of 2019. President Trump thinks a 1% rate cut is in order and has repeatedly called on the Fed to lower rates. Of course, some economists think that a near-term change in rates remains unlikely.

Our Choices

While freshly released Fed minutes clearly indicate that a near-term change in rates is highly unlikely, market watchers expect at least one rate cut before the end of this year. Currently, policymakers of the central bank remain divided about the near-term course of rates. This depends on whether they agree with the Fed Chair on the “transient” nature of sluggish inflation.

Rate-sensitive investments like utilities and REITs are useful additions to your portfolio under such circumstances. However, picking winning stocks may prove to be difficult. We have narrowed our search to the following stocks based on a good Zacks Rank and other relevant metrics.

NRG Energy, Inc. is engaged in the production, sale and delivery of energy and energy products and services to residential, industrial as well as commercial consumers in major competitive power markets in the United States.

NRG Energy flaunts a Zacks Rank #1 (Strong Buy). The company’s expected earnings growth for the current year is 71%. The Zacks Consensus Estimate for current-year earnings has moved2.2% north over the past 30 days.

Middlesex Water Company is an owner and operator of water utility and wastewater systems.

Middlesex Water flaunts a Zacks Rank #1. The company’s expected earnings growth for the current year is 10.7%. The Zacks Consensus Estimate for current-year earnings has moved 5.9% north over the past 30 days.

NexPoint Residential Trust, Inc. is a publicly traded REIT engaged in acquiring, owning, operating and selectively developing multifamily properties.

NexPoint Residential’s expected earnings growth for the current year is 11.9%. The Zacks Consensus Estimate for current-year earnings has improved 4.5% over the past 30 days. It sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

ONE Gas, Inc. is a 100% regulated natural gas distribution utility.

ONE Gas has a Zacks Rank #2 (Buy). The company’s expected earnings growth for the current year is 6.3%. The Zacks Consensus Estimate for current-year earnings has moved north by 0.2% over the past 30 days.

Outfront Media Inc. is a leading provider of out-of-home advertising space in key markets throughout the United States and Canada.

Outfront Media has a Zacks Rank #2. The company has expected earnings growth of 7.2% for the current year. The Zacks Consensus Estimate for current-year earnings has moved 2.1% north over the past 30 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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NRG Energy, Inc. (NRG) : Free Stock Analysis Report
 
ONE Gas, Inc. (OGS) : Free Stock Analysis Report
 
Middlesex Water Company (MSEX) : Free Stock Analysis Report
 
NexPoint Residential Trust, Inc. (NXRT) : Free Stock Analysis Report
 
OUTFRONT Media Inc. (OUT) : Free Stock Analysis Report
 
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