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The Zacks Analyst Blog Highlights: AAN, JELD, BJ, GPK and HOME
Read MoreHide Full Article
For Immediate Release
Chicago, IL – September 21, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Aarons, Inc. (AAN - Free Report) , JELD-WEN Holding, Inc. (JELD - Free Report) , BJ’s Wholesale Club Holdings, Inc. (BJ - Free Report) , Graphic Packaging Holding Co. (GPK - Free Report) and At Home Group Inc. .
Here are highlights from Friday’s Analyst Blog:
5 Super-Safe Growth Stocks Ripe for the Picking
With Mr. Market moving up, down and sideways over the last few days, there’s a growing feeling of uncertainty about investing in stocks. Things look even more uncertain when you consider that the elections are right around the corner. And the elections have always added to the uncertainty.
News has also started trickling in about retail sales that won’t track historical patterns. Black Friday won’t see the long lines we’re used to. There could still be the deals and promotions online, but without the throngs of people in the holiday spirit, filling the shops, restaurants and bars, it just won’t be the same thing.
The holiday season usually goes to retailers, but there are, understandably, many unknowns this year. So whatever you do right now, it’s best to tread with caution.
With that in mind, I’ve made safety the main criterion to pick a few stocks.
The first step in that direction is choosing stocks with Zacks Ranks #1 (Strong Buy) or #2 (Buy) because they have historically offered above-market returns.
Second, try to leverage our Style Score system that uses a number of criteria to identify winners. Undervalued/cheap stocks with prices that don’t reflect their potential would have a Value Score of A or B. A stock with strong growth potential would have high grades for growth. And similarly for Momentum stocks that would generate quick returns. When we’re playing safe, we really want stocks that the system ranks higher for growth and value.
Third, take a look at revenue growth trajectory in the last few years. A steadily rising graph is a big positive. At times, however, a stock with good grades may not have a good history. If you’re in doubt, it’s better to trust the score because it’s very likely that the bad phase is over. This actually brings us to the next point.
So fourth, take a look at growth estimates for the current and future years. You should see a rising trend. If you see a big jump in the current year estimate followed by a smaller increase or even a slight decline in the following year, this may not be negative.
There are two reasons for this. First, very strong growth in the current year would make for harder comparisons in the next because the next year’s growth would be coming off a high base. So as long as the next year’s (2021) numbers are at or around last year’s (2019), it wouldn’t be such a bad thing, considering the pandemic.
The second reason is, 2021 results are a long way off and unless there are significant events that change in the trend, there’s a very good chance that the number will be raised in the future. There’s certainly a lot of time to do it.
So fifth, to double-check that you’re on a plane set to fly high, check the long-term growth estimate. If that looks good, there’s a good chance you’re safe. But it doesn’t end there.
Sixth, check the valuation. If you’re not comfortable with valuation multiples, simply look for P/S and PEG ratios of under 1. Now you’re totally safe.
So here are a few stocks that satisfy all of the above criteria-
Aarons, Inc.
The company is a major omnichannel provider of lease-purchase solutions, mainly to underserved and credit-challenged customers. It is also a specialty retailer of furniture, home appliances, consumer electronics and accessories.
Management said last week that the company’s businesses are doing well in the third quarter with strong customer payment activity and lease portfolio performance. Therefore, despite some supply chain issues and more conservative lease decisioning, third-quarter guidance was raised.
Other details-
Zacks Rank #1
Growth Score A
Value Score B
Revenue and earnings expected to grow 5.56% and 17.48%, respectively in 2020
Revenue and earnings expected to grow 7.77% and 5.14%, respectively in 2021
Long-term (3-5 year) growth rate18.10%
Dividend yield 0.18%
P/S 0.94X
PEG 0.69X
Beta 1.70
Market cap 3.84B
Graphic Packaging Holding Co.
A leading provider of paperboard packaging solutions for a wide variety of products including food, beverage and other consumer products, the company counts as its customers, companies like Anheuser-Busch, MillerCoors, PepsiCo, Coca-Cola, Kraft Heinz, General Mills, Inc., Nestlé USA, Kellogg, HAVI Global Solutions, Kimberly-Clark Corporation, McDonald's, Wendy's, Panda Express, Dairy Queen, Chipotle, Panera and Kentucky Fried Chicken, among others.
The move toward online ordering of as many things as possible is a natural positive for this company and will support its growth for many quarters to come. This is however only a continuation of an ongoing trend that was accelerated in recent history.
Other details-
Zacks Rank #2
Growth Score A
Value Score A
Revenue and earnings expected to grow 4.49% and 21.84%, respectively in 2020
Revenue and earnings expected to grow 1.49% and 7.55%, respectively in 2021
Long-term (3-5 year) growth rate 25.00%
Dividend yield 2.11%
P/S 0.63X
PEG 0.53X
Beta 1.21
Market cap 3.97B
JELD-WEN Holding, Inc.
The company is a global leader in the design, manufacture and sale of interior and exterior doors, wood, vinyl and aluminum windows and related products for new construction as well as repair and remodeling of old residential and non-residential buildings. It has operations across 20 countries in North America, Europe and Australia.
As such it is impacted by demand patterns across many markets. That’s what led to a weaker 2019, with management implementing measures to modernize and trim cost. These efforts continued in the current year, with the company claiming market share gains, even as overall revenue remained weak.
The encouraging thing is that the rebound seems to be in progress all over the world and especially in the U.S. as many people settle down to working and learning from home on a more permanent basis. As a result, there’s extremely strong demand for new homes and increasingly, for existing ones as well. The exposure to the repair/remodeling/existing home segment is also positive for the long term, because it is generally a more stable business than the one tied to new construction activity.
Other details-
Zacks Rank #1
Growth Score B
Value Score B
Revenue and earnings expected to grow -4.32% and 11.67%, respectively in 2020
Revenue and earnings expected to grow 4.50% and 24.50%, respectively in 2021
Long-term (3-5 year) growth rate 19.57%
Dividend nil
P/S 0.56X
PEG 0.88X
Beta 2.82
Market cap 2.32B
BJ’s Wholesale Club Holdings, Inc.
BJ’s operates 218 warehouse clubs and 145 gas stations in 17 states concentrated in Eastern USA. It primarily sells a broad range of groceries that span perishables, edible grocery, non-edible grocery, general merchandise, gasoline and related services through its physical outlets, online stores and mobile app.
Because it sells essentials, BJ’s March sales soared as people attempted to hoard these items. But there was no slowdown in the following quarter as sales continued to grow strongly, albeit at a somewhat moderated rate. The strength came from the firm’s rapid digitization, especially across key categories like appliance, home improvement and telemedicine; a new focus on healthy foods and successful targeting of younger customers.
Earnings followed the path of revenue, despite increased COVID-related costs and rising beef prices.
Before 2020, revenue was following a very gradual upward trajectory, which is a general positive. But the pickup this year has come from both pandemic-induced buying and internal efforts.
Other details-
Zacks Rank #2
Growth Score B
Value Score B
Revenue and earnings expected to grow 15.66% and 77.40%, respectively in 2020
Revenue and earnings expected to grow -4.07% and -7.84%, respectively in 2021, because of tougher comparisons coming off a very strong 2020, but remain above 2019 levels
Long-term (3-5 year) growth rate 15.78%
Dividend nil
P/S 0.37X
PEG 0.95X
Beta 0.41
Market cap 5.35B
At Home Group Inc.
The company offers a wide range of mainly unbranded, private label or specifically designed home products, including furniture, mirrors, rugs, art, housewares, tabletop, patio and seasonal decor.
The company didn’t start trading until 2016 and public records show a steady upward revenue trend since then (ignoring seasonal variations). Since it operates through physical stores, it was badly impacted by the lockdowns, but sales came back very strongly, hitting all-time highs in the last-reported quarter. The strength is obviously attributable to the new and emerging “at-home’ economy.
Other details-
Zacks Rank #2
Growth Score A
Value Score A
Revenue and earnings expected to grow 13.19% and 196.49%, respectively in 2021 (ending January)
Revenue and earnings expected to grow 2.19% and -11.48%, respectively in 2022 (2020 earnings are roughly a third of 2022 earnings)
Long-term (3-5 year) growth rate 42.55%
Dividend nil
P/S 0.68X
PEG 0.21X
Beta 2.92
Market cap 965.98M
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: AAN, JELD, BJ, GPK and HOME
For Immediate Release
Chicago, IL – September 21, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Aarons, Inc. (AAN - Free Report) , JELD-WEN Holding, Inc. (JELD - Free Report) , BJ’s Wholesale Club Holdings, Inc. (BJ - Free Report) , Graphic Packaging Holding Co. (GPK - Free Report) and At Home Group Inc. .
Here are highlights from Friday’s Analyst Blog:
5 Super-Safe Growth Stocks Ripe for the Picking
With Mr. Market moving up, down and sideways over the last few days, there’s a growing feeling of uncertainty about investing in stocks. Things look even more uncertain when you consider that the elections are right around the corner. And the elections have always added to the uncertainty.
News has also started trickling in about retail sales that won’t track historical patterns. Black Friday won’t see the long lines we’re used to. There could still be the deals and promotions online, but without the throngs of people in the holiday spirit, filling the shops, restaurants and bars, it just won’t be the same thing.
The holiday season usually goes to retailers, but there are, understandably, many unknowns this year. So whatever you do right now, it’s best to tread with caution.
With that in mind, I’ve made safety the main criterion to pick a few stocks.
The first step in that direction is choosing stocks with Zacks Ranks #1 (Strong Buy) or #2 (Buy) because they have historically offered above-market returns.
Second, try to leverage our Style Score system that uses a number of criteria to identify winners. Undervalued/cheap stocks with prices that don’t reflect their potential would have a Value Score of A or B. A stock with strong growth potential would have high grades for growth. And similarly for Momentum stocks that would generate quick returns. When we’re playing safe, we really want stocks that the system ranks higher for growth and value.
Third, take a look at revenue growth trajectory in the last few years. A steadily rising graph is a big positive. At times, however, a stock with good grades may not have a good history. If you’re in doubt, it’s better to trust the score because it’s very likely that the bad phase is over. This actually brings us to the next point.
So fourth, take a look at growth estimates for the current and future years. You should see a rising trend. If you see a big jump in the current year estimate followed by a smaller increase or even a slight decline in the following year, this may not be negative.
There are two reasons for this. First, very strong growth in the current year would make for harder comparisons in the next because the next year’s growth would be coming off a high base. So as long as the next year’s (2021) numbers are at or around last year’s (2019), it wouldn’t be such a bad thing, considering the pandemic.
The second reason is, 2021 results are a long way off and unless there are significant events that change in the trend, there’s a very good chance that the number will be raised in the future. There’s certainly a lot of time to do it.
So fifth, to double-check that you’re on a plane set to fly high, check the long-term growth estimate. If that looks good, there’s a good chance you’re safe. But it doesn’t end there.
Sixth, check the valuation. If you’re not comfortable with valuation multiples, simply look for P/S and PEG ratios of under 1. Now you’re totally safe.
So here are a few stocks that satisfy all of the above criteria-
Aarons, Inc.
The company is a major omnichannel provider of lease-purchase solutions, mainly to underserved and credit-challenged customers. It is also a specialty retailer of furniture, home appliances, consumer electronics and accessories.
Management said last week that the company’s businesses are doing well in the third quarter with strong customer payment activity and lease portfolio performance. Therefore, despite some supply chain issues and more conservative lease decisioning, third-quarter guidance was raised.
Other details-
Zacks Rank #1
Growth Score A
Value Score B
Revenue and earnings expected to grow 5.56% and 17.48%, respectively in 2020
Revenue and earnings expected to grow 7.77% and 5.14%, respectively in 2021
Long-term (3-5 year) growth rate18.10%
Dividend yield 0.18%
P/S 0.94X
PEG 0.69X
Beta 1.70
Market cap 3.84B
Graphic Packaging Holding Co.
A leading provider of paperboard packaging solutions for a wide variety of products including food, beverage and other consumer products, the company counts as its customers, companies like Anheuser-Busch, MillerCoors, PepsiCo, Coca-Cola, Kraft Heinz, General Mills, Inc., Nestlé USA, Kellogg, HAVI Global Solutions, Kimberly-Clark Corporation, McDonald's, Wendy's, Panda Express, Dairy Queen, Chipotle, Panera and Kentucky Fried Chicken, among others.
The move toward online ordering of as many things as possible is a natural positive for this company and will support its growth for many quarters to come. This is however only a continuation of an ongoing trend that was accelerated in recent history.
Other details-
Zacks Rank #2
Growth Score A
Value Score A
Revenue and earnings expected to grow 4.49% and 21.84%, respectively in 2020
Revenue and earnings expected to grow 1.49% and 7.55%, respectively in 2021
Long-term (3-5 year) growth rate 25.00%
Dividend yield 2.11%
P/S 0.63X
PEG 0.53X
Beta 1.21
Market cap 3.97B
JELD-WEN Holding, Inc.
The company is a global leader in the design, manufacture and sale of interior and exterior doors, wood, vinyl and aluminum windows and related products for new construction as well as repair and remodeling of old residential and non-residential buildings. It has operations across 20 countries in North America, Europe and Australia.
As such it is impacted by demand patterns across many markets. That’s what led to a weaker 2019, with management implementing measures to modernize and trim cost. These efforts continued in the current year, with the company claiming market share gains, even as overall revenue remained weak.
The encouraging thing is that the rebound seems to be in progress all over the world and especially in the U.S. as many people settle down to working and learning from home on a more permanent basis. As a result, there’s extremely strong demand for new homes and increasingly, for existing ones as well. The exposure to the repair/remodeling/existing home segment is also positive for the long term, because it is generally a more stable business than the one tied to new construction activity.
Other details-
Zacks Rank #1
Growth Score B
Value Score B
Revenue and earnings expected to grow -4.32% and 11.67%, respectively in 2020
Revenue and earnings expected to grow 4.50% and 24.50%, respectively in 2021
Long-term (3-5 year) growth rate 19.57%
Dividend nil
P/S 0.56X
PEG 0.88X
Beta 2.82
Market cap 2.32B
BJ’s Wholesale Club Holdings, Inc.
BJ’s operates 218 warehouse clubs and 145 gas stations in 17 states concentrated in Eastern USA. It primarily sells a broad range of groceries that span perishables, edible grocery, non-edible grocery, general merchandise, gasoline and related services through its physical outlets, online stores and mobile app.
Because it sells essentials, BJ’s March sales soared as people attempted to hoard these items. But there was no slowdown in the following quarter as sales continued to grow strongly, albeit at a somewhat moderated rate. The strength came from the firm’s rapid digitization, especially across key categories like appliance, home improvement and telemedicine; a new focus on healthy foods and successful targeting of younger customers.
Earnings followed the path of revenue, despite increased COVID-related costs and rising beef prices.
Before 2020, revenue was following a very gradual upward trajectory, which is a general positive. But the pickup this year has come from both pandemic-induced buying and internal efforts.
Other details-
Zacks Rank #2
Growth Score B
Value Score B
Revenue and earnings expected to grow 15.66% and 77.40%, respectively in 2020
Revenue and earnings expected to grow -4.07% and -7.84%, respectively in 2021, because of tougher comparisons coming off a very strong 2020, but remain above 2019 levels
Long-term (3-5 year) growth rate 15.78%
Dividend nil
P/S 0.37X
PEG 0.95X
Beta 0.41
Market cap 5.35B
At Home Group Inc.
The company offers a wide range of mainly unbranded, private label or specifically designed home products, including furniture, mirrors, rugs, art, housewares, tabletop, patio and seasonal decor.
The company didn’t start trading until 2016 and public records show a steady upward revenue trend since then (ignoring seasonal variations). Since it operates through physical stores, it was badly impacted by the lockdowns, but sales came back very strongly, hitting all-time highs in the last-reported quarter. The strength is obviously attributable to the new and emerging “at-home’ economy.
Other details-
Zacks Rank #2
Growth Score A
Value Score A
Revenue and earnings expected to grow 13.19% and 196.49%, respectively in 2021 (ending January)
Revenue and earnings expected to grow 2.19% and -11.48%, respectively in 2022 (2020 earnings are roughly a third of 2022 earnings)
Long-term (3-5 year) growth rate 42.55%
Dividend nil
P/S 0.68X
PEG 0.21X
Beta 2.92
Market cap 965.98M
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.