Chicago, IL – January 10, 2024 – Zacks Equity Research shares DoorDash DASH as the Bull of the Day and Guess?, Inc GES as the Bear of the Day. In addition, Zacks Equity Research provides analysis on A.P. Moller-Maersk AMKBY, Global Ship Lease GSL and ZIM Integrated Shipping Services ZIM.
Here is a synopsis of all five stocks:
Zacks Rank #1 (Strong Buy) stock DoorDash is the leader in food delivery service industry. The DoorDash app enables customers to connect with local restaurants. Through its platform, users can browse menus, view reviews from previous customers, place orders, and have food delivered directly to their doorsteps within minutes.
DoorDash partners with a wide range of restaurants, offering customers a diverse selection of cuisines and dining options. The company employs a network of independent contractors, known as Dashers, who pick up restaurant orders and deliver them to the customer efficiently. DoorDash has become a popular solution for those seeking convenient and reliable food delivery services.
DoorDash consistently invests in expanding its partner base to offer consumers more options for its on-demand delivery platform. For example, its latest partnerships include non-restaurant options such as grocers like Sprouts Farmers Marketand Aldi, Dick's Sporting Goods, and discount retailers like Big Lotsand Grocery Outlet.Through its expanded partnership with Aldi, customers can also order alcohol – a significant potential revenue stream. With these new partnerships and the pipeline of continuous additions, DoorDash's total orders and revenue will likely continue to expand drastically.
The COVID-19 pandemic has significantly impacted consumer behavior, creating an environment where on-demand services like DoorDash can experience growth. Initially, with lockdowns and social distancing measures in place, more consumers turned to food delivery as an alternative to dining out.
Though COVID-19 may be behind us, the emergence of the "new economy" emphasizes flexible employment. This benefits DoorDash in two ways. First, people working from home may use food delivery services more than if they were in the office. Second, DoorDash may be able to recruit more "Dashers" who are looking for flexible work to its network to fulfill deliveries.
DASH missed Wall Street expectations in its first eight quarters as a public company. However, the company is turning things around and has beat expectations in three of the past four quarters including a healthy 57.78% surprise last quarter. Though analysts are becoming more bullish on the stock, it appears that the company's turnaround story is moving even faster in the right direction.
DASH shares are retreating to their 10-week moving average for the first time since its November breakout. The first pullback to the 10-week moving average after a significant breakout tends to provide traders with a high reward-to-risk zone to trade against. In addition, this week, shares are breaking out from a classic weekly bull flag.
DoorDash stands out as a leader in the food delivery service industry. The company's strategic expansion beyond traditional partnerships will spur revenue growth. Furthermore, the "new economy" will benefit the company for years to come.
Zacks Rank #5 (Strong Sell) stock Guess?, Inc is a global fashion brand known for its trendy and contemporary clothing, accessories, and footwear. Established in 1981, the company specializes in casual and upscale apparel with a focus on denim. Guess offers various products, including jeans, dresses, handbags, and accessories, catering to a younger demographic. With a strong emphasis on style and innovation, Guess has become synonymous with youth culture and remains a prominent player in the fashion industry, operating numerous retail stores and selling its products through various channels worldwide.
Guess is witnessing persistent weakness across its retail business amid a dynamic macroeconomic environment. The trend continued in late 2024, with revenues in the Americas Retail segment falling 7% year-over-year. Though retail is lagging behind hot sectors such as technology, retailers such as Lululemonand Abercrombie and Fitch are thriving in the current environment.
Unfortunately, Guess is not one of those retailers that are thriving. Over the past twelve months, ANF has been up a whopping 247% while GES only gained a feeble 3%. In other words, GES is lagging behind sector leaders and the general market – a sign of relative weakness.
The Zacks Earnings ESP (Expected Surprise Prediction) rates stocks based on recent earnings estimate revision activity. The idea behind the rating is that more recent information is, generally speaking, more accurate and is a better predictor of the future, which gives investors an advantage during earnings season. Zacks studies show that when a company has a Zacks Rank of #5 (Strong Sell) combined with a negative ESP score (like Guess does), the company is likely to miss earnings expectations and underperform the market over the next year.
Another red flag for prospective GES investors is the lethal combination of stagnant revenue and earnings growth mixed with rising expenses. Inflationary pressures and rising performance-based compensation are major headwinds for the stock moving forward.
A negative ESP score, retail sector challenges, relative weakness, and soaring expenses are all reasons to avoid this struggling retailer.
Shipping companies are responsible for transporting the bulk of the goods involved in world trade. Therefore, the improvement in the demand scenario with respect to goods and commodities from pandemic lows bodes well for this key industry. Riding on the improved demand scenario, most stocks in this key industry had a good time in 2023.
In this write-up, however, we focus on the recent catalyst in the form of tensions in the Red Sea, which have boosted shipping stocks. Notably, the Red Sea is the entry point for ships using the Suez Canal, which handles about 12% of world trade. Suez Canal represents the shortest sea route for the transportation of goods between Asia and Europe. With thousands of ships passing every day, it is an extremely busy and popular trade route.
However, the recent attacks by Yemen's Houthi militants on vessels in the Red Sea have disrupted maritime trade. As a result, many shipping companies have hit the pause button as far as transit through this route is concerned. Keeping the safety of their crew in mind, they are adopting the longer and costlier route around the Cape of Good Hope in South Africa rather than through the Suez Canal.
The reduced container availability due to the Red Sea tensions has resulted in a rise in freight costs. Reportedly, freight costs between Asia and North Europe have surged 173% since mid-December. Lower capacity is expected to boost earnings. These tailwinds are primarily responsible for the Zacks Transportation - Shippingindustry surging 18.6% in the past month, outperforming the S&P 500's 1.6% rise.
Rates are likely to remain high for quite some time, which may translate into further upside potential for shipping stocks. In view of this rosy backdrop, we highlight three shipping stocks that have gained in double digits in the past month.
A.P. Moller-Maersk, based in Denmark, has had a good run on the bourses recently. AMKBY shares have gained 28.9% over the past month. Due to the Houthi attacks, the Danish company decided to reroute all its shipping vessels away from the Red Sea.
Maersk currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for 2024 earnings has been revised upward by 87.18% over the past 60 days. Maersk currently has a VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum. Back-tested results have shown that stocks with a VGM Score of A or B combined with a Zacks Rank #1 or #2 (Buy) offer better returns. You can see the complete list of today's Zacks #1 Rank stocks here.
Global Ship Lease is headquartered in London. Driven by the Red Sea tensions, shares of the shipping company have gained 13.4% in the past month. GSL currently carries a Zacks Rank #2.
GSL boasts a diversified fleet of mid-sized and smaller containerships. Global Ship Lease currently has a VGM Score of A. The Zacks Consensus Estimate for 2024 earnings has been revised 1.22% upward over the past 60 days.
ZIM Integrated Shipping Services is based in Israel. Shares of this shipping company have surged 79.4% in a month's time. ZIM provides service to the East Mediterranean and Israeli ports.
ZIM currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for 2024 earnings has been revised 37.14% upward over the past 60 days. ZIM currently has a VGM Score of A.
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Guess?, Inc. (GES) : Free Stock Analysis Report
Global Ship Lease, Inc. (GSL) : Free Stock Analysis Report
A.P. Moller-Maersk (AMKBY) : Free Stock Analysis Report
DoorDash, Inc. (DASH) : Free Stock Analysis Report
ZIM Integrated Shipping Services Ltd. (ZIM) : Free Stock Analysis Report
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