For Immediate Release
Chicago, IL – April 07, 2016– Zacks Equity Research highlightsAlign Technology (ALGN) as the Bull of the Day and EOG Resources (EOG) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Goodyear Tire & Rubber Company (GT), Thor Industries Inc. (THO) and Tyson Foods, Inc. (TSN).
Here is a synopsis of all five stocks:
Bull of the Day :
Medical equipment and supply stocks aren’t very sexy to most investors. Many in the health care space seem to prefer the high risk/high reward track of the pharmaceutical and biotechnology worlds, leaving equipment stocks by the wayside.
However, there are actually plenty of great opportunities in this market if you are willing to look. And with such a shaky market lately, this more defensive—or at least less volatile—segment of the health care world might be the place to go right now. That is why a company like Align Technology (ALGN) might be a very intriguing choice for investors in this current market environment.
ALGN in Focus
Align Technology focuses in on the dental market, operating in two segments. Its first is the scanner/services division, and then its more famous ‘clear aligner’ segment which includes its well-known Invisalign brand.
This has proven to be a lucrative area of the market and a winning approach for investors. ALGN stock has gained about 38% in the past year, easily beating out both the broad health care sector and the S&P 500 over the same time period, as both of those benchmarks were in the red from a one year look.
Clearly, ALGN is on a nice run and the Invisalign market is one with great potential and a top brand, but investors have to be wondering, can this run continue? Well, if we look to recent earnings estimates then there is definitely some momentum building which bodes well for this stock in the near term.
Recent Estimates & Outlook
ALGN has seen full year earnings estimates rise in the past few weeks, including a fresh update in just the past seven days. We are seeing a similar trend when it comes to the next year figures, and now ALGN has a Zacks Earnings ESP in positive territory—which can signal an earnings beat is on the horizon—thanks to these revisions.
It is also worth noting that ALGN has a pretty great track record at earnings season, including beats for each of its reports over the last year. In fact, ALGN has seen an average beat of about 8% for the last four quarters, so it has clearly shown an ability to live up to, and surpass, earnings estimates. No wonder ALGN has been able to earn itself a Zacks Rank #1 (Strong Buy) and is looking good this earnings season.
Bear of the Day:
It has been a wild ride for the energy sector so far in 2016. The space started the year with losses in excess of 10%, but came roaring back to breakeven to close out the quarter.
But now with oil prices sliding back again to start April, more questions are starting to appear for stocks in the space. A great example of the building worries as of late is EOG Resources (EOG), a stock that has followed the overall sector trend in the energy sector lately, but may be primed for pain in the month ahead.
EOG in Focus
EOG operates in the volatile exploration and production segment of the energy world. This area is among the biggest gainers when prices are rising, but if oil prices fall, these often feel the brunt of the pain.
Oil prices are sliding back as of late, and they definitely aren’t where many exploration and production companies need them to be in order to generate fat profits. This is especially important for EOG because the company is now operating at a loss, and it is seeing huge declines in year-over-year comparisons.
EOG actually posted EPS of six cents last year, and it is now projected to see a loss of $2.15/share thanks to sliding estimates and a sluggish industry outlook. In fact, the vast majority of the most recent estimates have been sharply lower and the trend has been downright awful. Just ninety days ago, the analyst consensus called for a loss of 10 cents per share, but now we are at that $2.15/share level, representing a massive decline in expectations as of late.
As you may or may not know, this kind of drastic decline is exactly what we look to avoid here at Zacks. No wonder the stock currently has a Zacks Rank #5 (Strong Sell) and we are looking to avoid this company in the near term.
Additional content:
3 Stocks from Top Industries to Bet on This Earnings Season
The earnings performance of a company is of utmost importance for its stock investor. With Q1 earnings season just around the corner, let’s have a look at the factors that are expected to impact results.
The first quarter began on a dismal note, with equity market sell-off owing to concerns on both global and domestic fronts. The economic slowdown in China, continued plunge in oil prices, stronger dollar, uncertainty over the timing of the next Fed rate hike and weaker-than-expected expansion of the U.S. economy made matters worse.
As the quarter progressed, some apprehensions were put to rest. But the overall picture still remains grim. This is definitely going to hurt the financials of companies.
Earnings for the S&P 500 stocks are projected to be down 10.3% year over year in the first quarter of 2016. Energy, which had been a major drag on results in prior quarters, is not the only weak sector this time. The earnings projection for other sectors is disappointing as well. (For a detailed look at the earnings trend, please read our latest Earnings Preview article).
In such a scenario, investors may consider it prudent to adopt a cautious approach and may even refrain from investing for a while. However, no matter how weak corporate earnings turn out to be, there are always some stocks that emerge as winners.
How to Choose Winning Stocks
You can find companies with strong fundamentals and future prospects. Another key factor that one should consider is the comprehensive performance of the industry to which a company belongs.
In fact, studies have divulged that an average stock in a strong industry is likely to perform better than an exceptional stock within an industry that is out of favor with investors. Therefore, the combination of top performing industries and stocks, which are expected to shine this earnings season and beyond, will surely strengthen your investment portfolio.
Though finding top industries is not easy, the Zacks Industry Rank makes this task relatively simple. Along with screening the industries, one needs to be very careful in picking stocks to get meaningful profits.
For this, we used the Zacks Stock Screener and zeroed in on stocks with Zack Industry Rank in top 10% and a Zacks Rank of #1 (Strong Buy) or 2 (Buy). Further, keeping the earnings season in mind, stocks with a positive Earnings ESP were considered.
In order to further strengthen our selection, we selected stocks with earnings growth rate of 5% or more for 2016 and VGM score of ‘’A’’ (V stands for Value, G for Growth and M for Momentum).
3 Stocks to Buy Now
The Goodyear Tire & Rubber Company (GT), based in Akron, OH, is one of the world’s largest tire manufacturing companies. Belonging to the Auto-Tires-Trucks industry that carries a Zacks Industry Rank #4 (top 2%), the company develops, manufactures, markets, and distributes tires, and related products and services.
Goodyear aims to achieve segment operating income of $2.1–$2.2 billion for 2016, up 10–15% year-over-year. This Zacks Rank #2 stock is expected to benefit from lower raw material costs, strong economic trends in North America and continued cost savings.
Goodyear is expected to report results on May 4.
Earnings ESP: +5.71%
Market Cap: $8.39 billion
Growth Expectation for 2016: 15.78%
Thor Industries Inc. (THO), headquartered in Elkhart, IN, designs, manufactures and sells a range of recreational vehicles (RV), and related parts and accessories. The company belongs to the Construction industry, which has a Zacks Industry Rank #4 (top 2%).
With continued improvement in consumer confidence, availability of retail and wholesale credit and low interest rates, this Zacks Rank #1 stock is expected to witness a rise in RV sales.
Thor Industries is expected to report on Jun 2.
Earnings ESP: +1.38%
Market Cap: $3.28 billion
Growth Expectation for 2016: 25.66%
Tyson Foods, Inc. (TSN), headquartered in Springdale, AR, operates in the Consumer Staples industry, which has a Zacks Industry Rank #3 (top 1%). The company produces, distributes and markets chicken, beef, pork, prepared foods and allied products. This Zacks Rank #2 stock anticipates earnings per share in the range of $3.85 to $3.95 for 2016.
Tyson Foods is slated to announce results on May 9.
Earnings ESP: +1.12%
Market Cap: $24.61 billion
Growth Expectation for 2016: 25.29%
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About the Bull and Bear of the Day
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ALIGN TECH INC (ALGN): Free Stock Analysis Report
EOG RES INC (EOG): Free Stock Analysis Report
GOODYEAR TIRE (GT): Free Stock Analysis Report
THOR INDS INC (THO): Free Stock Analysis Report
TYSON FOODS A (TSN): Free Stock Analysis Report
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