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The Zacks Analyst Blog Highlights: XPO Logistics, Mosaic Company and Newell Brands

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Zacks Equity Research
·7 min read
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For Immediate Release

Chicago, IL – January 26, 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: XPO Logistics, Inc. XPO, The Mosaic Company MOS and Newell Brands Inc. NWL.

Here are highlights from Monday’s Analyst Blog:

The Heart of Earnings Season: Global Week Ahead

In the Global Week Ahead, we add substantially to our stack of Q4 earnings reports.

Zacks Research Director Sheraz Mian wrote--

We now have Q4 results from 66 S&P 500 members, or 13.2% of the index’s total membership.

Total earnings (or aggregate net income) for these 66 companies are up +0.3% from the same period last year on +0.6% higher revenues, with 87.9% beating EPS estimates and 78.8% beating revenue estimates.

We expect this favorable trend to strengthen and accelerate as we get into the heart of the Q4 earnings season this week, with more than 350 companies on deck to report results, including 113 S&P members.

By the end of this week, we will have seen Q4 results from more than 35% of S&P 500 members.

By the end of this week, we will have a lot more confidence in our initial positive view of Q4 earnings season.

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

(1) FAANG Stocks Report

Outpaced by a late-2020 surge in so-called value stocks, tech shares have roared back amid the pandemic’s unrelenting march. That is reflected in recent hefty gains for Russell’s 1000 “growth” index versus its value counterpart.

The gains could extend when Apple, Microsoft and Facebook report earnings. Also on deck is Tesla, which recently joined the S&P 500.

The results could push the combined market capitalization of the FAANGs — FacebookAmazonAAPLNetflix and Google-parent Alphabet — back above their all-time peak of $6.16 trillion.

Netflix has done its part; robust subscription numbers reported on Jan. 19 have boosted its shares 17%. Now there are high expectations for the rest. Morgan Stanley has boosted the price target for Apple, declaring themselves “buyers ahead of what we expect to be a record December quarter print.” Microsoft reports on Jan. 26, followed by Apple, Facebook and Tesla a day later.

(2) European Earnings Season Gets Busier

Europe’s STOXX 600 firms are expected to report a 26% earnings drop during the Q4 season which has just got under way. But that is history — let’s look instead at the January-March 2021 season when a 44% profit jump is predicted.

Such a surge seems intriguing given new continent-wide lockdowns. The explanation lies in consumer cyclicals, which Refinitiv I/B/E/S predicts will post an eye-popping 3,118% profit gain, versus the pandemic doldrums of Q1 2020.

Drilling down to single stocks, Daimler (1,471%), Fiat Chrysler, now Stellantis (177%) and Volkswagen (602%) turn out to be the largest contributors. Carmakers have seen their biggest earnings revisions in a decade and it is boosting their shares to 14-month highs.

(3) Money Flowing into Hong Kong Stocks

Record amounts of Chinese money are flowing into Hong Kong stocks, pushing the Hang Seng index above the 30,000 mark, making it a global top performer and putting a floor under Chinese companies blacklisted by Washington.

The inflows have also pushed Hong Kong interbank rates to multi-year lows, meaning authorities may not even need to inject cash, as they usually do in the run-up to February’s Lunar New Year holiday.

An upcoming $5 billion IPO from Chinese online video company Kuaishou may draw in even more mainland money.

For a city rocked by pro-democracy unrest since 2019, this endorsement of its markets is a positive. Unless, that is, one views this as another sign of China’s growing political and financial stranglehold on the special administrative region.

(4) Virtual Davos World Economic Forum (WEF) Happens

It is the end of January, so time for the Davos World Economic Forum (WEF), and Chinese President Xi Jinping, German Chancellor Angela Merkel, Japanese Prime Minister Yoshihide Suga and European Central Bank chief Christine Lagarde are among this year’s big-name speakers.

But Davos was not spared the pandemic hit; instead of gathering at the Swiss ski resort, the world’s great and good will do so virtually.

With the global economy deep in crisis, there is no shortage of topics: soaring unemployment and debt levels, growing income inequality and climate change.

And, like everyone else, the WEF is pinning hopes on normality returning: it plans a face-to-face meeting in Singapore in May.

(5) GDP Data Comes in for Europe

The coming week brings preliminary Q4 GDP data from France, Spain and Germany. Okay, the data is outdated and we already know the first quarter will show an activity dip from lockdown extensions. But let’s not be too hasty in dismissing the end-2020 numbers.

If economies fared better than expected, this would provide a cushion for the blow coming this quarter — that is the conclusion some reached after 2020 growth in powerhouse Germany turned out less bad than feared.

Also pay attention to Germany’s January inflation numbers, out Thursday. Those could show that a reversal in VAT cuts is easing the downward pressure on prices. In short, amid the pain inflicted by lockdowns, some positives might well lurk.

Top Zacks #1 Rank (STRONG BUY) Stocks

I pulled together a potpourri of interesting large-cap stocks this week.

(1) XPO Logistics: This is in the Transportation – Services industry, and is much like a small FedEx or UPS. But for critical and service-sensitive shipments.

I see a $120 share price tag, and a market cap of $11.0B. There is a Zacks Value score of B, a Zacks Growth score of C and a Zacks Momentum score of D.

(2) The Mosaic Company: Is it finally time for the fertilizer players to shine?

I see a $238 share price and a $10.8B market cap. There is a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of C.

(3) Newell Brands: This is a lesser-known $25 Consumer Staples stock. Think about Paper Mate, Sharpie, Dymo, EXPO, Parker, Elmer’s, Marmot, Oster, Rubbermaid, Sunbeam, FoodSaver, Graco, Baby Jogger and others.

This stock gets to a $10.4 market cap. I see a Zacks Value score of C, a Zacks Growth score of A, and a Zacks Momentum score of D.

As large-cap stocks, these ‘hot’ ones demonstrate a few sources of building demand strength, both for the U.S. and global economy.

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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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