Chicago, IL – April 18, 2024 – Zacks Equity Research shares The Geo Group GEO as the Bull of the Day and Academy Sports and Outdoors ASO as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Centerspace CSR, Ellington Residential Mortgage REIT EARN and Iron Mountain Incorporated IRM.
Here is a synopsis of all five stocks.
Bull of the Day:
The market is under pressure. The “soft landing” and “no landing” narratives are being tested. Important technical support levels like the 50-day moving average are failing left-and-right. It’s beginning to feel a lot like the bull run we’ve enjoyed since October is nearing an end.
You can do one of two things in a market like this. You can cower under your desk and ignore your statements, or you can get together a neat little shopping list and keep investing. The latter is really how the money is made in markets. You buy the dips. How low it goes doesn’t matter as much as if you stay invested or buy more.
How do you know if the stock you’re looking at is a total dud or potential hero? Earnings are the great equalizer. Stocks with strong earnings trends are likely to come out looking like champs on the other end of the dip. Finding these stocks is as easy as 1,2,3. Look for stocks that are Zacks Rank #1 (Strong Buy) stocks. Those have the strongest earnings trends over time.
Today’s Bull of the Day is one such stock. It ‘s Zacks Rank #1 (Strong Buy) The Geo Group.The GEO Group engages in ownership, leasing, and management of secure facilities, processing centers, and community-based reentry facilities in the United States, Australia, the United Kingdom, and South Africa.
The reason for the favorable Zacks Rank is analysts all over Wall Street have been increasing their earnings estimates for the current year and next year. Over the last thirty days, two analysts have pushed up their estimates for both periods. The bullish moves have increased our Zacks Consensus Estimates for the current year from 94 cents to $1.01. Next year’s number is up from $1.28 to $1.37.
That means that current year earnings growth is now forecast to come in at 6.32%. That’s not over the top fantastic, but next year is when things really heat up. FY2025 estimates call for 35.72% growth for the year.
Bear of the Day:
The market has come under pressure in recent days. It can make it very easy for the bears to now look back and give their “I told you so” speeches. Most of them have been watching the whole run, pulling their hair out and screaming at the screen. These Bear of the Day articles are not meant create a bearish story on the broad market. Rather, they are meant to point out earnings trends that investors might not have been aware of. They are trends which are moving in a negative direction, and are single stock stories.
Today’s Bear of the Day is Academy Sports and Outdoors.Academy Sports and Outdoors, operates as a sporting goods and outdoor recreational retailer in the United States. The company outdoor division comprises camping products, such as coolers and drinkware, and camping accessories and equipment,; fishing products, including marine equipment and fishing rods, reels, and baits and equipment; and hunting products, which includes firearms, ammunition, archery and archery equipment, camouflage apparel, waders, shooting accessories, gun safes, optics, airguns, and hunting equipment.
The company is currently a Zacks Rank #5 (Strong Sell). The reason for the unfavorable ranking is that several analysts have come out and cut their earnings estimates on the company. Six analysts have brought down their numbers for the current year while four have cut next year’s number. The negative moves have dropped our Zacks Consensus Estimate for the current year from $7.59 to $6.93 while next year’s number is down from $8.46 to $7.73.
The Leisure and Recreation Products industry ranks in the Bottom 23% of our Zacks Industry Rank.
Additional content:
Sticky Inflation a Boon for These Top 3 REITs
Even if price pressures have declined from their peak in 2022, they continue to hover above the pandemic mark. Federal Reserve Chair Jerome Powell recently acknowledged that prices of essential commodities remain elevated, indicating that more time is required to trim interest rates.
A healthy labor market and a persistent uptick in consumer outlays pushed consumer prices higher in March. Last month, the consumer price index (CPI) advanced 0.4% in sequence and registered an increase of 3.5% year over year, its biggest six-month jump, per the Labor Department. Market pundits had expected the CPI to increase 0.3% month over month and 3.4% from a year ago.
The core CPI that eliminates volatile energy and food costs increased by 0.4% for the month and 3.8% year over year. Nonetheless, an increase in energy and shelter costs resulted in an acceleration in consumer prices. The cost of auto insurance and food prices ticked up as well.
All at once, wholesale prices heated up. The Labor Department reported that the producer price index increased 2.1% in March, up from a gain of 1.6% in February. An increase in service cost accounted for most of the rise in wholesale prices.
It’s worth highlighting that the Fed’s favored inflation gauge, the personal consumption expenditures (PCE) index increased 0.3% month over month in February and 2.5% on a 12-month basis, according to the Commerce Department. Powell expects the 12-month inflation rate measured by the PCE index to rise slightly more in March than in February.
Now, inflationary pressure may burn a hole in your pocket. However, for investment purposes, investing in a real estate investment trust (REIT) seems prudent. This is because REITs act as a hedge against price rises.
Lest we forget, with the rise in inflation, property prices scale upward. Landlords, too, charge higher rent amid elevated inflation, which increases rental income.
Thus, one should consider investing in Centerspace, Ellington Residential Mortgage REIT and Iron Mountain Incorporated. They carry a Zacks Rank #1 (Strong Buy) and 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Centerspace is a real estate development company. Centerspace currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 1.5% over the past 60 days. CSR’s expected earnings growth rate for the current quarter is 4.7%.
Ellington Residential Mortgage REIT specializes in acquiring and managing residential mortgage and real estate-related assets. Ellington Residential Mortgage REIT presently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 2% over the past 60 days. EARN’s expected earnings growth rate for the current year is 16.3%.
Iron Mountain operates as a real estate investment trust and serves customers of various industries through its facilities. Iron Mountain currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 4.5% over the past 60 days. IRM’s expected earnings growth rate for the current year is 7.3%.
Shares of Centerspace, Ellington Residential Mortgage REIT, and Iron Mountain have gained 6.6%, 6.9% and 6.8%, respectively, year to date.
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