Newmont Mining, Boston Beer, Amazon.com, Alphabet and Facebook highlighted as Zacks Bull and Bear of the Day
Zacks Equity Research
Updated
For Immediate Release
Chicago, IL – April 29, 2016– Zacks Equity Research highlights Newmont Mining (NEM) as the Bull of the Day and Boston Beer (SAM) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Amazon.com (AMZN), Alphabet (GOOGL) and Facebook (FB).
Here is a synopsis of all five stocks:
Bull of the Day:
I’ve been hemming and hawing about mining stocks for several months. It’s one of those falling knife scenarios. For every turnaround story out there I can give you six stocks that are on pink sheets. I think this is a great example of how you can use the Zacks Rank to confirm your trades.
It’s easy to find turnaround opportunities. Look at the oil patch right now. I can find you thirty oil names at the drop of a dime that may be turning the corner now. The earnings estimate revisions haven’t turned the corner yet on oil stocks. So while the Zacks Rank may not help me pick the perfect bottom for these stocks, it’s also stopping me from riding these industries down to the bottom.
The mining industry hasn’t popped up on my stock screeners until very recently. That’s because the earnings estimates weren’t following the shares higher. Now things seem a little healthier and we’re seeing not only a pick-up in estimates but also an uptick in volume. We are getting a primer on what’s going to happen in the oil industry. Companies in that industry will become more nimble, better run, more efficient and the ones who survive will be lean, mean and very profitable should the underlying commodity continue to appreciate in price.
With the turnaround full steam right now, I’m making Newmont Mining (NEM) my Bull of the Day. It’s a Zacks Rank #1 (Strong Buy) with a Momentum Style Score of A. There has been so much bullish activity in the industry that Gold Mining industry is now in the Top 23% of our Zacks Industry Rank.
Bear of the Day:
These hipsters and their craft beers have changed the industry. What used to only be a small chunk of the business is now demanding attention from the big players in the business. Then you have the previously unthinkable matrimony of the largest beer names. Budweiser and Miller under the same roof? It’s blasphemy, but right now it’s reality.
It’s put the industry on its heels and forced it down to the Bottom 20% of our Zacks Industry Rank. Today’s Bear of the Day is one of those companies, Boston Beer (SAM). By looking at the ticker you can probably guess which brand this is associated with. That’s right, Boston Beer proudly brews Sam Adams beer. Their beer products are primarily positioned in the “Better Beer” category of the beer industry which includes craft beers and most imports sold at premium prices.
Back in the day before all these craft breweries started popping up, reaching for a Sam Adams may have been your only choice aside from downing Miller Lites. But now there is so much competition in that space that Sam Adams is probably very low on the list of beers you’d chose if you could have other craft options.
The fickle tastes of beer drinkers is reflected in the turning tide of earnings estimates for SAM. This Zacks Rank #5 (Strong Sell) stock has seen three analysts drop their estimates for the current year and next year in the last week. The bearish sentiment has dropped our Zacks Consensus Estimate from $7.84 to $6.51 for the current year and down from $9.06 to $6.99 for the next year. That’s a nasty drop and a big reason why SAM has the rank it does. Last quarter’s 43 cent disappointment with earnings coming in at 53 cents versus 96 cents in another big reason.
Additional content:
Amazon Crushes Q1 Earnings, Stock Soars 11%
After the closing bell, Amazon.com (AMZN) reported Q1 earnings and really blew away expectations: earnings per share of $1.01 simply trounced the expected 61 cents, and sales of $29.13 billion topped the Zacks consensus estimate by a cool $1 billion. As a result, we see AMZN shares soaring immediately in late trading, up 11 percent and effectively bringing Amazon back to positive, year to date.
Operating income was miles ahead of the top of the company's guidance range ($700 million) by bringing in $1.1 billion for the first 3 months of the year. Revenues came in just north of Amazon's top guidance range of $29 billion. Guidance for Q2 revenues also increased to a range of $28 - 30.5 billion for next quarter.
Aside from last quarter's earnings miss for Amazon, the prior 3 quarters posted big positive surprises as well, averaging 116.6 percent. Amazon's Q1 earnings didn't quite match that, but an upside surprise of 75 percent is certainly admirable. And while Amazon's AWS cloud-based business was predictably solid and growing, with net sales of $2.6 billion in the quarter and also better than expected, it is the businesses outside AWS that have delivered remarkably well this quarter.
Thus, Amazon's quarter more resembles Facebook's (FB) blowout performance from yesterday than it does Alphabet's (GOOGL) disappointing one from a week ago. With a total VGM style score of A ahead of the earnings report (Value: C, Growth: A, Momentum: A), the stock's vigorous move up double-digits in late Thursday trading won't be working any miracles in the Value category. That said, like Facebook, we are looking at a company that is (so far) at the absolute height of its powers right now.
After many quarters of investing in more and more fulfillment centers and cloud-based infrastructure, the chickens have come home to roost for Amazon in a big, positive way. It just goes to show what some extensive focus on operating margins can do for a company's earnings sheet.
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About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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