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Camping World, Beyond Meat, General Motors, Ford and Fiat Chrysler highlighted as Zacks Bull and Bear of the Day

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For Immediate Release

Chicago, IL – November 12, 2020 – Zacks Equity Research Shares of Camping World Holdings, Inc. (CWH - Free Report) as the Bull of the Day, Beyond Meat, Inc. (BYND - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on General Motors Company (GM - Free Report) , Ford Motor Company (F - Free Report) and Fiat Chrysler Automobiles N.V. .

Here is a synopsis of all five stocks:

Bull of the Day:

Camping World is a Zacks Rank #1 (Strong Buy) that provides services, protection plans, products and resources for recreational vehicle enthusiasts. The company consists of the popular brand Good Sam as well as Camping World.

About the Company

Camping World is headquartered in Lincolnshire, IL and employs over 10,000. The company was founded in 1966 and has over 225 locations in 36 states.

CWH is valued at $2.3 billion and has a Forward PE of 9. The company holds a Zacks Style Score of “A” in Growth, but “F” in momentum.

Q3 Earnings

Earlier this month, the company reported EPS and saw a big beat on both the top and bottom lines. Q3 came on at $1.60 v the $1.03 expected, a 53% beat above Zacks estimates. Revenues came in at $1.6B v the $1.52B expected and the company raised its FY20 EBITDA forecast. Additionally, the company authorized a buyback of $100M, or about 4% of the market cap  

The beat on earnings is the third straight after almost two years of disappointing investors.

CEO Marcus Lemonis, a popular figure on CNBC, had the following comments on the quarter:

"Coming off of an extremely positive second quarter, demand remained strong and we were able to achieve record breaking third quarter results.” 

Estimates and Upgrades

Looking at estimates for the current quarter, we see a slight drop. However, for the current year estimates have ticked 15% higher over the last month, from $2.61 to $2.99.

After earnings, the company saw a handful of analysts reiterating their bullish stance. JPMorgan reiterated its Overweight and price target of $45, while Monness Capital reiterated its $49 target.

Stock Drops   

Camping World saw a lot of success during the pandemic as international travel was much harder. Consumers flocked to recreational vehicles and hit the road, exploring regional destinations. The stock went from a low of $3.40 in March to $42.49 in August on this phenomenon.

With a vaccine on the horizon and travel likely opening up next summer, the wind has been taken out of the sails. So, a pullback is definitely warranted and the stock fell almost 50%. However, if another stimulus package comes soon, the company could see another ramp in sales.

The Technical Take

The charts say this recent sell off is likely overdone and investors should expect a relief rally at the very least.

The earnings numbers were good, so the stock rallied up to the 50-day moving average at $30.50, but found sellers. From there, the news of a vaccine brought selling into the companies that benefited from COVID, which was CWH. It fell 25%, all the way to the 200-day MA, where it bounced.

Bulls will look to test the 50-day MA again around the $30 level. If further selling persists, watch the 61.8% Fibonacci retracement level under the $19 level.

In Summary

Camping World has been an extremely volatile stock in 2020. The move from the pandemic lows to August highs was overdone and now the stock is pulling into buyable levels.

Investors should be aware of the risk that numbers won’t be as good over the winter and into a COVID free 2021. However, there is no reason to believe that pent up demand and more stimulus could provide additional tailwinds next spring and summer.

Bear of the Day:

Beyond Meat is a Zacks Rank #5 (Strong Sell) that manufactures, markets and sells plant-based meat products. The stock has been a high flyer since its IPO in 2019, but recent earnings has investors licking their wounds.

About the Company

Beyond Meat is headquartered in El Segundo, CA and employs 472 people. The company was founded in 2009 and sells its products through grocery stores, mass merchandisers, direct to consumer, schools and restaurants.  

BYND is valued at $7.8 billion and has an off the chart valuation. The company holds a Zacks Style Score of “F” in both Value and Growth.

Q3 Earnings

The company announced earnings earlier in the week, seeing a big miss on both the top and bottom lines. Revenues came in at $94.4M v the $136M expected and the company missed EPS by 1033%. The company suspended its outlook as it continues to struggle due to COVID-19. Here are some comments from the company:

Due to the COVID-19 pandemic, the Company continues to experience a meaningful slowdown in its foodservice business as stay-at-home advisories and restrictions on foodservice locations’ operating capacity have resulted in closures or significantly curtailed operations of many of its foodservice customers. At the same time, the surge in demand from retail customers that characterized the early stages of the pandemic as consumers shifted towards more at-home consumption has moderated as panic-buying generally has subsided.

The tailwind in retail has stopped and now the company is seeing a double whammy in revenues. The drop off in sales came with a gross margin that fell to 28.9% v 35.6% last year.

Valuation and Stock Plunge

Beyond Meat is priced in for big growth, so when the company reports a big miss like it did this week the valuation has to be reassessed. After earnings were announced, the stock fell after hours from $155 to $105. The stock has rallied off the lows, but investors will be in a tough spot as the high valuation will be a hurdle.

Estimates

Analysts are already starting to adjust their numbers. For next quarter, estimates have fallen from $0.14 to $0.10, or 40% over the last week.

There is hope for the future as analysts think BYND can bounce back if the atmosphere normalizes. 2021 estimates are still flat, but investors might start to get antsy in the meantime, which could lead the stock back below $100.  

In Summary

When a growth company stops growing, there is trouble. Yes, there is a pandemic getting in the way, but until Beyond Meat can prove they are back on track, that valuation will be questioned. I expect shorts sellers to pile into the stock and try to take the stock back under the $100 level.

Additional content:

GM Inks 3-Year Deal with Canadian Union

General Motors Company recently announced that its workers in Canada, represented by Unifor, have ratified a new three-year collective agreement between the union body and the company.

Key Takeaways from the Deal

Per the agreement, the Detroit auto biggie’s Oshawa plant in Ontario will be reopened to manufacture light and heavy-duty pick-up trucks. Reportedly, 85% of the 1,600 Unifor members at all three of the company’s Canadian sites — St. Catharines, Oshawa and Woodstock plants — have voted in favor of the agreement.

The deal encompasses General Motors’ investment to the tune of $1.3 billion, creating 1,700 jobs in the Oshawa plant. More than $109 million will be invested to facilitate V-8 engine and transmission production in St. Catharines. The contract will also ensure job security across all the three Canadian plants for the duration of the agreement, including at the Woodstock Parts Distribution Centre, which will also witness some major reforms and an investment of $500,000 in operations.

The Oshawa plant will resume production of both light and heavy-duty trucks in 2022, and St. Catharines will manufacture engines for those pick-ups.

In 2018, General Motors had announced the decision to halt production in Oshawa and several other facilities. This had led to major resentments in the United States and Canada. Since then the future of the Oshawa facility had been a major concern for the union and it commenced negotiations with General Motors this year. The union had previously reached a deal with the auto giant to keep the Oshawa facility open for producing aftermarket parts, employing about 300 workers there. The latest deal marks a major victory for the Unifor members in Canada.

This latest development will fortify General Motors’ foothold in Canada. Also, restarting pick-up production in Oshawa is encouraging for the company as the demand for pick-ups has been spurred by the coronavirus pandemic, accounting for more than 40% of its Canada sales. Thus, the deal will make the Oshawa plant an integral part of the automaker’s success story In Canada and fuel its long-term growth.

Unifor in a Win-Win Situation on Deals With Detroit 3

Unifor’s deal with General Motors marks the third consecutive win for the union body after it struck similar deals with Ford and Fiat Chrysler Automobiles. The agreements would entail a total investment of $ 5 billion by the Detroit Three automakers.

In September, Unifor entered into a deal with Ford involving the investment of $1.46 billion to introduce battery-powered electric vehicle production in its manufacturing facility in Oakville, Ontario, and a new engine derivative to Windsor, Ontario.

The Fiat Chrysler agreement reached in October includes more than $1.5 billion in investment in latest and innovative technologies to build both plug-in hybrid vehicles and battery-powered electric vehicles.

Though General Motors’ deal with Unifor did not pivot on electric vehicles, all three contracts include support from both the federal and the Ontario governments. Per the agreement, Unifor and General Motors will provide for other economic benefits of the workers like establishing an anti-racism action plan, setting up a new Racial Justice Advocate in the workplace and giving up to 10 paid days of domestic violence leave.
 
General Motors — peers of which include Ford — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Notably, shares of General Motors have appreciated 12.2%, year to date, while the industry has surged 143.4%.

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