The Zacks Analyst Blog Highlights Zscaler, DocuSign and Caesars Entertainment
For Immediate Release
Chicago, IL – December 19, 2022 – 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: Zscaler, Inc. ZS, DocuSign, Inc. DOCU and Caesars Entertainment, Inc. CZR.
Here are highlights from Friday’s Analyst Blog:
5 Lucrative Growth Stocks Down More Than 30% to Buy Now
The U.S. stock market witnessed its fair share of disappointment in 2022 due to high inflation rates, Fed's monetary tightening measures with stern interest rate hikes, recessions fears, supply chain hiccups and geopolitical turmoil due to the Ukraine war. The resultant volatility has led to price fall for numerous stocks, creating lucrative investment opportunities.
The S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite have declined 17.5%, 2.9% and 26.1%, respectively, in the year-to-date period. While severe macroeconomic challenges affected the markets, pent-up demand, higher savings during the pandemic and growing consumer spending have partially offset the negatives. Spending on travel and entertainment has significantly jumped with reduced COVID restrictions.
Right Time to Buy?
The market volatility has created the perfect window to buy growth stocks that fell significantly this year but has tremendous growth opportunities ahead. The market is expected to improve soon and early markers of recovery have already surfaced. Prudently choosing the stocks at a cheaper rate will generate above market average growth.
Here are three such stocks – Zscaler, Inc., DocuSign, Inc. and Caesars Entertainment, Inc..
The Department of Labor showed that the consumer price index (CPI) data for November was encouraging. Although CPI and core CPI (excluding food and energy items) increased month over month and year over year, they were lower than the respective consensus estimates. The core CPI inflation came below the consensus marks for the last two months. Even though the decline is marginal, the peak inflation might be over, opines several analysts.
With a cooling inflation level on the horizon, the magnitude of the interest rate hikes is likely to decrease. Analysts expect the interest rate to be at 5.1% by the end of 2023, up from the current range of 4.25-4.5%. Also, Fed's acts to bring down inflation have managed to not swell the unemployment rate. Instead, the unemployment rate remained stable over the past two months and lower than the year-ago period. This should boost market participants' confidence going ahead.
The current interest rate environment is particularly nourishing for investment yields. Companies with robust interest rate-sensitive investment portfolios are bound to continue gaining.
Picking the Right Stocks
Growth stocks are fundamentally strong businesses that ensure solid portfolio returns. The Zacks Growth Score comes in handy while picking such stocks. Our research shows that stocks with a Growth Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer good investment opportunities. You can see the complete list of today's Zacks #1 Rank stocks here.
We have taken the help of the Zacks Stock Screener to zero in on stocks that lost more than 30% in the year-to-date period, making them cheaper to own now and having a favorable Zacks Rank and Growth Score. Here are three solid bets for the coming year, each with a Zacks Rank #2 and a Growth Score A.
Zscaler: Based in San Jose, CA, Zscaler is one of the world's leading providers of cloud-based security solutions. Rising demand for security and networking products are buoying its results. Strategic acquisitions and alliances are boosting its capabilities and supporting product expansion. Zscaler boasts a strong balance sheet with ample liquidity and fewer debt obligations.
Shares of the company, with a $17.8-billion market cap, declined 63.5% in the year-to-date period compared with the industry's decline of 36.4%. The company's strong fundamentals are likely to help shares bounce back in the days ahead. The Zacks Consensus Estimate for ZS' current year earnings per share indicates 78.3% year-over-year growth.
Zscaler beat the Zacks Consensus Estimate for earnings in each of the last four quarters with an average surprise of 27.3%.
DocuSign: Headquartered in San Francisco, CA, DocuSign is a global provider of cloud-based software. Continued customer demand for eSignature keeps supporting its operations. International expansions, improving product offerings and client acquisitions are aiding its business. Higher subscriptions and professional services revenues will benefit its results.
Shares of the company, with a $12-billion market cap, declined 63.1% in the year-to-date period compared with the industry's decline of 48.1%. However, things are bound to improve going forward. The Zacks Consensus Estimate for DOCU's current year earnings has improved 18.4% in the past 30 days. During this time, it witnessed seven upward estimate revisions against none in the opposite direction.
DocuSign beat the Zacks Consensus Estimate for earnings in two of the last four quarters, met once and missed on the other occasion, with an average surprise of 6.6%.
Caesars Entertainment: It is a diversified gaming and hospitality company based in Reno, NV. Pent-up demand and solid booking trends are aiding its business. Strong focus on partnerships, sports betting expansion and property development are expected to drive its long-term growth. Occupancy rate is expected to go up in the future as spending on travel and entertainment keeps rising.
Shares of the company, with a $10.7-billion market cap, declined 48.4% in the year-to-date period compared with the industry's decline of 35.8%. This made the stock cheaper to buy now. The Zacks Consensus Estimate for CZR's current year earnings has improved 6.4% in the past 60 days. During this time, it witnessed five upward estimate revisions against none in the opposite direction.
Caesars Entertainment beat the Zacks Consensus Estimate for earnings twice in the last four quarters and missed on the other two occasions.
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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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