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The Zacks Analyst Blog Highlights: Ulta Beauty, Burlington Stores and Dicks Sporting Goods

·7 min read
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For Immediate Release

Chicago, IL – June 15, 2021 – 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: Ulta Beauty, Inc. ULTA, Burlington Stores, Inc. BURL and DICK'S Sporting Goods, Inc. DKS.

Here are highlights from Monday’s Analyst Blog:

The Fed or Earnings? Global Week Ahead

In the Global Week Ahead, the Wednesday Fed meeting should be the focal point.

Their money printing supports the U.S. stock market more than any other factor.

However, earnings fundamentals behind U.S. large-cap U.S. stocks are quite good.

According to Zacks Research Director Sheraz Mian, the U.S. has strong earnings growth on the way for the components of the S&P 500.

This is shown by the latest Zacks earnings estimates for the second quarter (Q2-2021):

· - We expect Q2-2021 S&P 500 earnings to be up +60.1% from Covid-hit Q2-2020

· - Even relative to pre-Covid Q2-2019, we expect Q2-2021 earnings up +8.5%

In fact, we expect 9 of 16 Zacks sectors to earn more in Q2-2021 than in pre-Covid Q2-2019.

These S&P 500 sectors include:

· - Basic Materials (+70.7% higher earnings relative to the 2019 period)

· - Construction (+52.2%)

· - Technology (+30.6%)

· - Retail (+24.5%) and

· - Medical (+20.6%)

Zacks expects even the Finance sector to have 5.4% higher earnings in Q2-2021 relative to Q2-2019.

Next are Reuters’ five world market themes, reordered for equity traders.

(1) A Fed Meeting Ends on Wednesday

Markets will listen closely to what the Federal Reserve will have to say on inflation at the end of their two-day meeting on Wednesday, amid concerns that trillions in fiscal stimulus will fuel a rise in consumer prices.

After years of very low inflation, a range of metrics, including the Fed’s preferred core personal consumption expenditures (PCE) price index, are on the rise. The PCE rose 3.8% in the 12-months to May, its largest jump in three decades.

The Fed insists consumer price gains will be temporary and that it has the tools to combat an inflationary surge.

Signs that policy makers may be digging in for a more sustained rise in consumer prices could spark fears of a sooner-than-expected unwind of easy money policies, and hurt stocks.

(2) Biden Meets Putin on Wednesday

Top level meetings over the days to come will keep geopolitical issues on the boil, and Turkish and Russian markets on edge.

On Monday, the NATO summit will kick off in Brussels, including a first face-to-face meeting between U.S. President Joe Biden and his Turkish counterpart Tayyip Erdogan. On the agenda are Syria, Afghanistan and “significant differences,” according to a senior U.S. official, with Ankara and Washington at odds over a host of issues.

On Wednesday, Biden will face Russian President Vladimir Putin in Geneva for what promises to be heated talks with bitter disputes over election interference, cyberattacks, human rights and Ukraine.

(3) China Reports May Industrial Production and Retail Sales on Wednesday

China reports May industrial production and retail sales data on Wednesday. Both are expected to come in below April numbers though will provide a fresh glimpse on the economic outlook for the world’s number two economy.

So far, domestic consumption remains subdued. Exports were overcompensating this year, but that’s beginning to change as the rest of the world opens up and spends less on Chinese manufactured goods.

Recent data shows Beijing is back on the deleveraging drive it abandoned last year when the pandemic hit — meaning subtle measures to rein in a rising yuan, limited and targeted fiscal spending, heavy scrutiny on property and local government sectors and measures to cool runaway commodity prices.

(4) The European Union (EU) Issues its First “Recovery” Bond

The EU will issue its first bond under the 800 billion euro post-pandemic recovery fund, possibly within days.

Joint bond issuance may not do for Europe what Treasury Secretary Alexander Hamilton did in 1790 for the newly formed United States — create a fiscal union. There are no plans to make the fund permanent.

Yet, don’t underestimate the significance: The EU is set to become one of the world’s biggest issuers with 80 billion euros’ worth of bonds for the recovery fund sold this year. And the arrival of big, liquid bonds won’t be lost on investors or the ECB, which can buy the debt for hefty stimulus.

(5) New Zealand GDP Growth Lands on Thursday. Will It Be Negative?

Is the newly-hawkish Reserve Bank of New Zealand about to get its first-quarter growth forecast beaten?

Kiwi GDP lands on Thursday, and the central bank thinks it’s going to be negative, putting the country back in technical recession.

Partial indicators, however, say it may not be so. While the absence of foreign tourists will be keenly felt, domestic consumption has been robust and commodity prices — especially milk and lumber — have shifted favorably.

A beat may not mean sustainable strength, but a headline surprise would suggest an economy on firmer footing than the RBNZ appreciates, adding pressure to normalize policy even faster than the aggressive schedule flagged last month.

Zacks #1 Rank (STRONG BUY) Stocks

Let’s look into the 3 strongest in-store retailers in our system now:

Ulta Beauty: At $334 a share, the market cap sums to $18.2B here. I see a Zacks Value score of D, a Zacks Growth score of A and a Zacks Momentum score of A. Women’s Cosmetics is the on-site retail play here.

Burlington Stores: At $304 a share, the market cap sums to $20.3B here. I see a Zacks Value score of F, a Zacks Growth score of B and a Zacks Momentum score of A. Kind of amazing for a discount store merchant.

Dicks Sporting Goods: At $98 a share, the market cap is $8.7B. I see a Zacks Value score of B, a Zacks Growth score of D and a Zacks Momentum score of A.

The two retailers with a Zacks Growth score of A or B have shares that trade at over $300. The sporting goods retailer has a Zacks Growth score of D. It is $98.

The brief insight? This market will pay up for growth, wherever it is found. However, all 3 retailers have Zacks Momentum scores of A.

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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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DICKS Sporting Goods, Inc. (DKS) : Free Stock Analysis Report

Ulta Beauty Inc. (ULTA) : Free Stock Analysis Report

Burlington Stores, Inc. (BURL) : Free Stock Analysis Report

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