Chicago, IL – November 27, 2023 – Zacks Equity Research shares Copart CPRT as the Bull of the Day and Best Buy BBY as the Bear of the Day. In addition, Zacks Equity Research provides analysis on TotalEnergies SE TTE, Weatherford International plc WFRD and Transportadora de Gas del Sur SA TGS.
Here is a synopsis of all five stocks.
The market has been rallying over the few weeks. It’s been a welcome sight for investors that had been beaten down for a solid three months. With everything going up so quickly, it can feel like any stock you add to your portfolio is going to be a winner. When the broad market is green every day, it doesn’t take much to find these winners. The stocks with the best chance to remain winners are the stocks with the strongest earnings trends. Earnings are the single most important factor for the long-term success of a company. If it doesn’t make dollars, then it doesn’t make sense.
One way to uncover these stocks is by using our Zacks Rank. Zacks Rank #1 (Strong Buy) stocks have the best earnings trends and therefore, the greatest chance of long-term success. One such stock is today’s Bull of the Day, Copart. Copart, Inc. provides online auctions and vehicle remarketing services in the United States, Canada, the United Kingdom, Brazil, the Republic of Ireland, Germany, Finland, the United Arab Emirates, Oman, Bahrain, and Spain. It offers a range of services for processing and selling vehicles over the internet through its virtual bidding third generation internet auction-style sales technology to vehicle sellers, insurance companies, banks and finance companies, charities, fleet operators, dealers, vehicle rental companies, and individuals.
The reason for the favorable Zacks Rank is five analysts have increased their earnings estimates for the current year while four have followed suit for next year. The bullish moves have pushed up our Zacks Consensus Estimates for the current year from $1.35 to $1.44 while next year’s number is up from $1.25 to $1.56.
A quick look at the Price, Consensus and EPS Surprise Chart shows how the business has grown consistently over the years. A steady bottom-left to top-right move in earnings helped underpin the move higher in the stock’s price. This solid progression could just be getting started. Interestingly, the Auction and Valuation Services industry is the top industry out of the 251 industries we rank at Zacks.com.
Black Friday isn’t what it used to be. Long gone are the videos of shoppers beating the doors down at 7am, sprinting in to grab the great deals that officially kickoff the holiday season and put companies into the “black” on the year. The paradigm shift of online shopping and pushed a lot of that money online, not at the brick and mortar spots we are used to seeing. For those traditional stores that open up their omnichannel presence, profits come. For those still struggling to keep up with online and in-store, the challenge can hit the bottom line.
That’s the case with today’s Bear of the Day, Best Buy. Best Buy is the electronics retailer with over 1,000 stores and 90,000 employees in the US and Canada.
The company just reported Q3 EPS of $1.29 on revenues of $9.76 billion. That beat expectations for EPS but fell short on the topline. The company also cut its FY24 outlook, citing sales trends so far in November, guiding Q4 same store sales contracting 3 to 7%. The company’s CEO said, “In the more recent macro environment, consumer demand has been even more uneven and difficult to predict.”
This report led to seven analysts cutting current year EPS estimates and eight dropping their numbers for next year. The negative impact to our Zacks Consensus Estimate for the current year dropped the number from $6.22 to $6.17 while next year’s number is off from $6.86 to $6.41. That’s forecast to come on revenue contractions of 6% this year and nearly 2% next year. That’s why the stock is rated as a Zacks Rank #5 (Strong Sell) due to its weakening earnings trend.
The Retail – Consumer Electronics industry sits in the Bottom 6% of our Zacks Industry Rank.
Notorious volatility is an integral part of the energy sector, as evidenced by wild swings in oil prices since the onset of the coronavirus pandemic. Hence, creating a portfolio of low-beta energy stocks is of utmost importance since the securities will deliver healthy returns and shield against choppy market conditions.
In this regard, stocks like TotalEnergies SE, Weatherford International plc and Transportadora de Gas del Sur SA are worth betting on.
We should not forget how oil prices have behaved since the initial coronavirus outbreak. The early pandemic period, when there were no vaccines, saw an environment of heightened uncertainties. The commodity’s price plunged to a negative $36.98 per barrel on Apr 20, 2020.
However, with the rapid developments of vaccines by scientists, which, in turn, led to the gradual reopening of the economies, the pricing scenario of West Texas Intermediate crude improved drastically over time to reach $123.64 per barrel on Mar 8, 2022. Oil price data are per the U.S. Energy Information Administration. Oil is currently trading higher than the $75-per-barrel mark.
While the energy market is highly volatile, it will be better to consider stocks belonging to the sector that are less volatile than the market. For analyzing a stock’s risk profile, it is better to employ a statistical measure called beta — one of the popular indicators. Beta measures the volatility or risk of a particular asset compared to the market. In other words, beta measures the extent of a security’s price movement relative to the market. In this article, we are considering the S&P 500 as the market.
If a stock has a beta of 1, then the price of the stock will move with the market. Therefore, the stock is more volatile than the market if its beta is more than 1. In the same way, the stock is not as volatile as the market if its beta is less than 1.
For example, if the market offers a return of 20%, a stock with a beta of 3 will return 60%, which is overwhelming. Similarly, when the market slips 20%, the stock will sink 60%, which is devastating.
While employing our proprietary stock screener, we have zeroed in on three low-beta energy stocks that investors should bet on. All the companies carry a Zacks Rank #2 (Buy) and have a beta lower than 1, which is our prime criterion for screening stocks.You can see the complete list of today’s Zacks #1 Rank stocks here.
To fight climate change, TotalEnergies continues to have a strong focus on natural gas. These initiatives have made the company the second-largest global player in the LNG space. The integrated energy major also has a strong footprint in renewable energy, ensuring a positive outlook for long-term growth.
Weatherford is a key energy player and is engaged in offering exclusive drilling technologies that will maximize clients’ reservoir exposure. Weatherford is also involved in well construction and completion activities in an efficient manner.
Transportadora’s midstream asset portfolio has the most extensive natural gas pipeline network in Latin America. It generates stable fee-based revenues since its pipeline assets transport more than 60% of the gas consumed in Argentina.
Transportadora has witnessed upward estimate revisions for its 2024 bottom line in the past 30 days. The upward revisions are backed by the company’s stable business model and a strong focus on creating differential value for shareholders. Also, TGS has lower debt exposure than the composite stocks belonging to the industry.
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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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Best Buy Co., Inc. (BBY) : Free Stock Analysis Report
Copart, Inc. (CPRT) : Free Stock Analysis Report
Transportadora De Gas Sa Ord B (TGS) : Free Stock Analysis Report
Weatherford International PLC (WFRD) : Free Stock Analysis Report
TotalEnergies SE Sponsored ADR (TTE) : Free Stock Analysis Report
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