For Immediate Release

Chicago, IL – October 4, 2024 – Zacks Equity Research shares SharkNinja SN as the Bull of the Day and Ulta Beauty ULTA as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Williams Companies Inc. WMB, Kinder Morgan Inc. KMI and ConocoPhillips COP.

Here is a synopsis of all five stocks.

Bull of the Day:

SharkNinja, a current Zacks Rank #1 (Strong Buy), is a diversified product design and technology company that creates lifestyle solutions through products for consumers. The company’s outlook has shifted bullishly across the board.

Let’s take a closer look at how the company currently stacks up.

SharkNinja Posts Big Growth

Up more than 100% in 2024, SharkNinja shares have been red hot, regularly soaring post-earnings. Concerning its latest quarterly release, SN posted 34% EPS Growth on 31% higher sales, with revenue of $1.2 billion penciling in the fifth consecutive period of double-digit percentage Y/Y sales growth.

The company’s margins have continued to expand, as shown below.

And the growth is expected to continue nicely, with consensus expectations for its current fiscal year alluding to 31% EPS growth on 22% higher sales. Peeking a bit ahead, expectations for FY25 suggest an additional 14% pop in EPS paired with a 10% sales increase.

The stock sports a Style Score of ‘B’ for Growth. And the valuation picture here isn’t rich, with the current 1.3X PEG reflecting a fair deal.

Bottom Line

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SharkNinja would be an excellent stock for investors to consider, as displayed by its Zack Rank #1 (Strong Buy).

Bear of the Day:

Ulta Beauty is a leading beauty retailer in the United States. The company offers a wide range of products, including cosmetics, fragrances, skincare, hair care, bath and body products, and salon styling tools in stores.

Analysts have taken a bearish stance on the stock’s outlook, lowering their earnings expectations across the board and landing it into an unfavorable Zacks Rank #5 (Strong Sell).

In addition, the company is in the Zacks Retail – Miscellaneous industry, which is currently ranked in the bottom 42% of all Zacks industries. Let’s take a closer look at the company.

Ulta's Growth Cools

ULTA shares have been hit hard in 2024, down nearly 25% and widely underperforming relative to the S&P 500. Quarterly results haven’t ushered in positivity, with its shares seeing negative post-earnings reactions regularly as of late.

Perhaps to the surprise of some, ULTA shares are essentially flat over the last three years following its insane run and subsequent cooldown, up just a marginal 0.8% overall.

While the company’s top line performance has largely remained constructive over recent years, regularly seeing year-over-year growth, the growth rates have cooled significantly. The overwhelmingly bearish share performance seems to largely be driven by this growth slowdown, which we can see in the chart below.

The stock traded at high multiples for some time before the growth slowdown, with the current 16.1X forward 12-month earnings multiple a bargain relative to five-year highs of 80.8X. Investors took note of the slowing growth, as reflected by the valuation multiple cratering.

Bottom Line

Slowing growth paints a challenging picture for the company’s shares in the near term.

Ulta Beauty is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.

For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.

Additional content:

Middle Eastern Tensions Intensify: Are These the Stocks to Gain?

The oil-energy sector is fraught with uncertainty as tensions between Iran and Israel continue to escalate. According to reports, eight soldiers, including a team commander, have been confirmed dead by the Israeli military during ground operations in southern Lebanon. This escalation comes in the wake of Iranian missile strikes aimed at Tel Aviv, prompting a warning from Israel's military chief about an imminent retaliation.

Amid these concerns, oil prices are rising as investors become increasingly worried that the escalating tensions in the Middle East could threaten supplies from key producers. While this dynamic prompts investors to reevaluate their positions in the sector, companies such as The Williams Companies Inc., Kinder Morgan Inc. and ConocoPhillips are in a stronger position.

How Can Midstream Firms Tackle Energy Market Uncertainty?

Midstream companies’ pipeline and storage assets are secured under long-term take-or-pay contracts. These contracts ensure that shippers pay for the capacity reserved, whether they utilize it or not, which provides a steady stream of revenues. This structure allows companies to generate stable earnings, insulated from fluctuations in the volume and prices of oil and natural gas transported, offering significant stability to their bottom line.

Thus, operations of midstream energy players have significantly lower exposure to oil and gas price volatility and the Middle East tension-induced energy market uncertainty.

Higher Oil Price to Aid Upstream Energy Players

West Texas Intermediate (WTI) crude is currently trading above $70 per barrel, presenting a favorable landscape for exploration and production. Despite moderation in drilling activity as upstream companies prioritize stockholder returns over production growth, the robust pricing environment remains advantageous for energy producers. U.S. oil and gas companies benefit from significantly lower breakeven WTI prices across all shale plays, particularly for existing wells. Furthermore, the average breakeven price for most new wells remains below current market levels, positioning upstream players for continued profitability in the current environment.

Breakeven WTI Price for US Producers

Therefore, it's an opportune moment for investors to keep an eye on companies within the midstream and upstream energy space. Using our proprietary Stock Screener, we've identified four stocks that are well-positioned for growth. All of these stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

4 Energy Stocks to Keep an Eye on: WMB, KMI, COP

WMB's Leadership in Natural Gas Transport

The Williams Companies generates stable fee-based earnings since it transports one-third of the natural gas consumed in the United States. Having ownership and operating interests in pipeline networks spanning 33,000 miles, WMB transports natural gas from the prolific basins in the United States to the end market. The leading midstream player is thus well-positioned to gain from rising clean energy demand since the transported natural gas is used for generating electricity, heating rooms and cooking.

In recent years, WMB has consistently provided investors with higher dividend yields compared to the oil-energy sector, demonstrating the company's strong commitment to returning capital to shareholders.

KMI: Shaping the Landscape of Natural Gas Infrastructure

Kinder Morgan’s stable business model is reflected in its natural gas transportation activities, where its pipeline networks are responsible for transporting roughly 40% of the commodity produced in the United States. In North America, KMI’s pipeline network is spread over 79,000 miles, transporting natural gas, gasoline, crude oil, carbon dioxide and more, securing long-term, stable, fee-based earnings.

Most of the time over the past several years, Kinder Morgan has been rewarding investors with higher dividend yields than the oil-energy sector.

ConocoPhillips: Harnessing Shale Amid Oil Price Surge

Considering its production and reserves, ConocoPhillips is a prominent exploration and production company with a strong presence in oil and gas resources worldwide. The United States is responsible for significant production volumes of the company with a presence in prolific oil-rich resources like Eagle Ford, Bakken, and Permian shale plays. ConocoPhillips is thus also well positioned to gain from handsome oil prices.

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Williams Companies, Inc. (The) (WMB) : Free Stock Analysis Report

ConocoPhillips (COP) : Free Stock Analysis Report

Ulta Beauty Inc. (ULTA) : Free Stock Analysis Report

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SharkNinja, Inc. (SN) : Free Stock Analysis Report

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