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The Zacks Analyst Blog Highlights: Turtle Beach, WildHorse Resource Development, CVR Refining, Nine Energy Service and Farmers Capital Bank

Zacks Equity Research
Ranger Energy Services, Inc. (RNGR) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate revisions.

For Immediate Release

Chicago, IL – May 2, 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 Turtle Beach Corp. HEAR, WildHorse Resource Development Corp. WRD, CVR Refining, LP CVRR, Nine Energy Service, Inc. NINE and Farmers Capital Bank Corporation FFKT.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Tuesday’s Analyst Blog:

5 Best-Performing Stocks from April

Markets experienced heightened volatility over most of April, with inflation related fears threatening to upstage gains. As a result, tech stocks suffered over most of the month, before rebounding after a strong earnings performance. Strong economic data and encouraging earnings were the redeeming factors during a month checkered by tensions related to trade and geopolitics. However, trade war fears seemed to subside, particularly later in the month, following encouraging comments from China’s president.

April’s Performance

For the month of April, all three major stock market indexes witnessed marginal gains reversing the overall negative trend witnessed over the last two months. The Dow and S&P 500 each increased by 0.3%, while the Nasdaq gained 0.1% over this period. Year to date, the Nasdaq Composite is trading in the green while both Dow 30 and S&P 500 are in the red.

Strong earnings results by most of the large U.S. corporates failed to enthuse investors whose expectations often exceeded company projections. Tech stocks suffered until the staged a rebound on strong earnings. However, rising bond yields dented investors’ confidence.

Consumer Confidence Nears 17-Year High, Retail Sales Rebound

The Consumer Confidence Index increased from 127 in March to 128.7 in April. This was also better than the consensus estimate that the metric would decline to 126.2 this month. With this increase, the index is only marginally below the level of 130 achieved in February, a level last witnessed in late 2000. (Read: Consumer Confidence Rebounds: 5 Profitable Picks)

Meanwhile, retail sales increased 0.6% in March. This was in sharp contrast to a decline of 1% and 2% in February and January, respectively. Moreover, retail sales jumped 4.5% year over year. Core retail sales increased 0.4% in March. Auto dealers posted a 2% increase in sales, the biggest gain since September 2017. (Read: Retail Sales Return to Positive Zone in March: 5 Top Picks)

Q1 GDP Slips, Consumption Expenditure Falls

According to the first estimate of the Bureau of Economic Analysis, U.S. GDP expanded at 2.3% in the first quarter, higher than the consensus estimate of 2%. However, the figure was lower than fourth quarter 2017 GDP growth of 2.9%.

Consumer spending, which constitutes 70% of the U.S. economy, grew at 1.1% in the first-quarter 2018. It was the slowest pace of growth in nearly 5 years and significantly below the last reported quarter’s growth of a massive 4%.

Job Additions the Lowest In Six Months

Per the U.S. nonfarm payrolls report released early last month, there has been an addition of only 103,000 jobs in March, which came in below the consensus estimate of 193,000. This is also below the previous month figure of 326,000.

In fact, the U.S economy created the fewest jobs in the last six months. However, March saw a 0.3% increase in monthly wage growth, pushing the annual wage growth rate from 2.6% to 2.7%

Q1 Earnings Creates New Milestones, FANG Rebounds

The picture emerging from the Q1 earnings season, which has now crossed the halfway mark, is one of all-around strength, with Q1 earnings and revenue growth on track to reach its highest level in 7 years.

Total earnings for the 267 S&P 500 members that had reported results as of Apr 27 are up +25.1% from the same period last year on +10% higher revenues, with 76.8% beating EPS estimates and 73.8% beating revenue estimates. The proportion of companies beating both EPS and revenue estimates is 61.4%. (Read: Q1 Earnings Season Good, But Not Great)

A slew of upbeat earnings from tech stocks helped the Nasdaq reverse a five-day losing streak on Apr 26. Particularly notable were earnings for FANG stocks. Facebook pulled off an impressive earnings show that allayed recent privacy-related fears. The social media giant added 70 million users in the same period despite numerous public calls against the social media app.

Amazon, Netflix and Google, whose parent company is Alphabet, also posted bullish earnings numbers. In fact, Alphabet saw its earnings jump more than 70% in the first quarter even though capital outlays tripled from the year before. (Read: Tech's Blowout Earnings Drive Nasdaq Gains: 5 Top Picks)

Benchmark Bond Yield Hits Record Levels

On Apr 24, the 10-year government bond yield increased 0.9 basis points (bps) to 2.983%, after touching a four-year intraday high of 3.001%, according to Tradeweb data. The benchmark bond yield had exceeded the 3% mark briefly in 2013 and January 2014, which was toward the end of the bond market wipeout, better known as the “taper tantrum.”

Rising inflationary pressures and speculations that the Fed will take aggressive steps in hiking rates kept the yield at elevated levels for the entire month. Higher bond yields affected the buying appetite for stocks as it increased the opportunity cost of investing in equities. (Read: Resurgence of 10-Year Bond Yield: Winners & Losers)

PCE Inflation Rises

In keeping with lingering investor fears, PCE Inflation increased from 1.7% in February to hit a yearly pace of 2% in March. This was the first time in a year that the gauge hit the Fed’s targeted level, likely indicating that a faster pace of rate hikes was forthcoming.

Further, the core rate of inflation increased year-over-year from 1.6% in February to 1.9% in March. This is the largest yearly gain experienced by the core rate since April 2012. PCE inflation remained unchanged on a monthly basis, however, though the core rate increased by 0.2%.

Volatility Returns to Bourses

Quite like the first few months of the year, markets experienced heightened volatility levels during April. The Cboe Volatility Index (VIX), the so-called Wall Street’s fear index, has seen a jump of no less than 20% in at least six trading sessions this year, according to the WSJ Market Data Group.

The volatility index has experienced 19 sessions so far this year where it ended up at least 5%, the highest since 1994. In fact, volatility doubled on Feb 5 as inflation concerns dragged the broader market down. (Read: Will Midterms Throw Markets Helter-Skelter? 5 Top Picks)

Trade War Fears Subside

During March, markets were gripped by fears of an ensuing trade war between the United States and China after President Donald Trump imposed tariffs of as much as $60 billion of Chinese imports. Consequently, China too announced plans for reciprocal tariffs on about 130 U.S. goods worth of $3 billion of imports from the United States.

Early in April, China has announced fresh tariffs on 106 U.S. products. Subsequently, key White House officials attempted to allay concerns about a possible trade war with China. Instead, they chose to characterize proposed tariffs as a “threat”, designed to aid the U.S. economy.

Ultimately on Apr 10, China’s President Xi Jinping said that his government was committed to opening up its economy to foreign investors. Among his many promises, Xi promised to provide better protection for intellectual property rights and reduce tariffs on imported cars. (Read: 5 Auto Stocks to Buy as Xi Promises to Lower Tariffs)

5 Star Performers for April

I ran a screen on Research Wizard for companies with the following parameters:

(Click here to sign up for a free trial to the Research Wizard today):

  1. Percentage price change over the last 4 weeks greater than or equal to 20%
  2. Forward price-to-earnings ratio (P/E) for the current financial year (F1) less than or equal to 20. This picks out stocks that are good value choices
  3. Expected earnings growth for the current financial year greater than or equal to 20%
  4. Zacks Rank less than or equal to 2: This ascertains stocks that have shown above-average returns over the last 26 years.

(See the performance of Zacks’ portfolios and strategies here: About Zacks Performance).

Here are the top 5 stocks that made it through this screen:

Turtle Beach Corp. is an audio technology company.

Price gain over the last 4 weeks = 113.7%

Turtle Beach has a Zacks Rank #2 (Buy) and its expected earnings growth for the current year is more than 100%. The stock’s forward price-to-earnings ratio (P/E) for the current financial year (F1) is 13.08x.

WildHorse Resource Development Corp. is an oil and natural gas company.

Price gain over the last 4 weeks = 43.8%

WildHorse Resource Development has a Zacks Rank #1 (Strong Buy) and its expected earnings growth for the current year is more than 100%. The stock has a P/E (F1) of 15.31x.

CVR Refining, LP is engaged in the refining of petroleum primarily in the United States.

Price gain over the last 4 weeks = 34.4%

CVR Refining has a P/E (F1) of 2.23x and its expected earnings growth for the current year is more than 100%. The stock holds a Zacks Rank #1.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Nine Energy Service, Inc. provides onshore completion and production services to unconventional oil and gas resource development.

Price gain over the last 4 weeks = 27.9%

Nine Energy Service holds a Zacks Rank 1 and its expected earnings growth for the current year is more than 100%. The stock has a P/E (F1) of 18.10x.

Farmers Capital Bank Corporation is a bank holding company engaged in general banking business.

Price gain over the last 4 weeks = 26.8%

Expected earnings growth for current year = 21.9%

Farmers Capital Bank holds a Zacks Rank #1. The stock has a P/E (F1) of 17.40x.

Will Benchmarks Hold onto Gains in May?

Despite the heightened level of volatility witnessed in April, benchmarks managed to end the month marginally higher. Bullish economic data and a strong earnings performance were the primary triggers for these gains. Meanwhile, by tensions related to trade and geopolitics have subsided somewhat.

The only real downside investors will likely have to contend with in the days ahead are fears related to inflation and consequently a tougher rate environment. If investors can ignore this one specific downside and focus on the positives, markets could register stronger gains in the month ahead.

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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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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CVR Refining, LP (CVRR) : Free Stock Analysis Report
 
Turtle Beach Corporation (HEAR) : Free Stock Analysis Report
 
Farmers Capital Bank Corporation (FFKT) : Free Stock Analysis Report
 
Wildhorse Resource Development Corporation (WRD) : Free Stock Analysis Report
 
Nine Energy Service, Inc. (NINE) : Free Stock Analysis Report
 
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