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Dick's, RealReal, SelectQuote, TRI and Glu as Zacks Bull and Bear of the Day

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For Immediate Release             

Chicago, IL – December 2, 2020 – Zacks Equity Research highlights Dick’s Sporting Goods (DKS - Free Report) as the Bull of the Day and The RealReal (REAL - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on SelectQuote, Inc. (SLQT - Free Report) , TRI Pointe Group, Inc. (TPH - Free Report) and Glu Mobile .

Here is a synopsis of all five stocks:

Bull of the Day:                                                 

In the post-COVID world, the last place I would look for a great stock is in retail. I mean, it’s pretty obvious that shut-downs would put companies like this on the back foot. They would be reeling for weeks, months, possibly even years, trying to fight back and earn all those lost dollars. So, it was so surprising for me to find that one of these stocks was not only ranked a Zacks Rank #1 (Strong Buy), but that they were positioned to make a mighty comeback.

Today’s Bull of the Day is Zacks Rank #1 (Strong Buy) Dick’s Sporting Goods. DICK'S Sporting Goods, Inc., together with its subsidiaries, operates as a sporting goods retailer primarily in the eastern United States. It provides hardlines, including sporting goods equipment, fitness equipment, golf equipment, and hunting and fishing gear products; apparel; and footwear and accessories. The company also owns and operates Golf Galaxy, Field & Stream, and other specialty concept stores; and e-commerce websites, as well as GameChanger, a youth sports mobile app for scheduling, communications, and live scorekeeping. As of August 01, 2020, it operated 726 DICK'S Sporting Goods stores. 

The reason for the favorable Zacks Rank lies within the series of recent earnings estimates to the upside from analysts all over Wall Street. DKS is in the Retail – Miscellaneous industry which ranks in the Top 18% of our Zacks Industry Rank. In addition to the favorable rank. Dick’s also features a Zacks Momentum Style Score of A and a VGM Composite Score of B.

The rank is so good because over the last week 10 analysts have increased their earnings estimates for the current year as well as next year. The bullish sentiment has pushed up our Zacks Consensus Estimate for next year from $3.92 to $5.85, while next year’s number is up from $4.19 to $5.01.

Bear of the Day:

This is a market where it is easy to pick on some stocks. After all, we are living in the post-COVID world, where beating up on certain industries have been a daily occurrence. But, in actuality, the Bear of the Day is not meant to be a hit piece. I am saying this to long-term shareholders which may take offence to such articles. Rather, the Bear of the Day is merely meant to point out some trends which folks may not have been paying the closest attention to. Namely, the trend in earnings estimate revisions that people may not even be aware of.

Today’s Bear of the Day is The RealReal. The RealReal, Inc. operates an online marketplace for consigned luxury goods. It offers various resale product categories, including women's, men's, kids', jewelry, and watches, as well as home and art products. The company was founded in 2011 and is headquartered in San Francisco, California.

If you have ever bought a luxury item for $300, wanted to get $150 for it and settled for a $30 check, then you probably know the RealReal. I am not making this to be a hit piece, as I said before, I am merely speaking from my personal experience in selling an item on the site. I am not saying that their coupon applications destroy seller’s equity across the board, I’m just saying I was robbed by them once. It seems that there are analysts out there which have also taken note on some of their sales practices.

In the post-COVID world, an online apparel website should be killing the game. This website has still yet to make real profits. Current year estimates call for a $1.63 loss per share. That has gotten worse than the $1.41 per share loss previously expected just 90 short days ago. For the growth crowd, next year is not forecast to be much better. Next year estimates call for a $1.32 loss. That widening loss compared to the $1.07 loss forecast 90 days ago is due to 5 analysts cutting their numbers for the stock.

This market, while it sounds great, is probably not as profitable as the RealReal would like to have you believe. Especially as they continue to gauge sellers for their profit margins. This is not a business model with real sustainability. It’s a function of, fool me once, shame on you. Fool me twice, well, you don’t need President George W Bush to fill in the rest. Repeat business does not come that easy when you burn sellers the first time.

You don’t need to take my word for it. Just look at the estimates. The proof is in the pudding, and an online marketplace for second-hand luxury goods should be doing great in an online ordering environment. Somehow, the RealReal is struggling.

Additional content:

3 Cheap Stocks to Buy After the Market's Strong November

The market fell on the last day of November. But that didn’t stop it from posting an impressive month of gains. In fact, the Dow climbed 12%, for its best month since 1987 and the S&P 500 jumped 11%. The climb, of course, followed positive vaccine news from multiple firms, alongside continued signs of recovery for the U.S. economy, and more.

Investors should also know that November’s rally finally expanded far outside of a smaller section of pandemic winners like Amazon and others that were able to grow during social distancing. This showcases Wall Street’s growing optimism. And it’s not just the possibility of a vaccine that should have people in a bullish mindset.

For instance, S&P 500 earnings came in stronger than expected in Q3 and the outlook was improving well before the Pfizer and Moderna news. Plus, investors must always remember that the Fed is prepared to keep its interest rate near zero through at least 2023. This should help support stocks as Wall Street chases returns.

With this in mind, let’s look at three highly-ranked stocks that are trading for under $25 per share that investors might want to consider buying after the market’s November rally…

SelectQuote, Inc.

Prior Close: $21.45 USD

SelectQuote was founded in 1985 and the tech-focused insurance company went public in May of 2020. The firm uses a direct-to-consumer comparison model to help people find the right auto and home insurance, as well as life insurance and senior health insurance.

The firm boasts that its proprietary technology allows it to “find people the right coverage with the right carrier at the right price in just minutes.” The company has crushed our bottom line estimates in the trailing two periods and it is coming off an impressive first quarter of FY21 that saw its revenue soar 91%.

The company’s top-line expansion was driven by 165% growth in its senior unit, which accounted for roughly 60% of total sales. This space allows people to select from a range of Medicare Advantage and Medicare Supplement plans from “15 leading, nationally-recognized carriers, as well as prescription drug plan, dental, vision and hearing plans.”

SLQT stands to benefit from an aging U.S. population. “The first Baby Boomers reached 65 years old in 2011,” Dr. Luke Rogers of the U.S. Census Bureau said in prepared remarks in June 2020. “Since then, there’s been a rapid increase in the size of the 65-and-older population, which grew by over a third since 2010. No other age group saw such a fast increase.”

Zacks estimates call for SelectQuote’s current-year sales to surge over 60% to reach $853.6 million, which would top FY20’s 58% revenue expansion. Its FY22 sales are then projected to climb another 35% to $1.2 billion. Meanwhile, SLQT is expected to swing from an adjusted loss of -$0.16 a share to +$0.83 this year, with FY22 projected to jump another 40%. Plus, SelectQuote’s EPS revisions help it land a Zacks Rank #2 (Buy) right now.

SLQT has jumped 30% over the last month, which includes its November 5 earnings release, and it closed regular trading Monday at $21.45 a share. Despite its strong run over the last month, SelectQuote sits 25% below the $29 it traded at in early June after its post-IPO climb. And five of the nine brokerage recommendations Zacks has accumulated for SelectQuote come in at “Strong Buy” with two more at a “Buy.”

TRI Pointe Group, Inc.

Prior Close: $17.48 USD

TRI Pointe Group is one of the biggest public homebuilders in the U.S. and sits in the top 10 in terms of sales. The Irvine, California-based firm designs, constructs, and sells single-family homes and condos through its portfolio of six regional brands. The company operates in key hubs within California, Texas, Colorado, Arizona, Virginia, and many other locations. TRI Pointe’s revenue climbed by over 16% in both FY17 and FY18, before it slipped by 5% last year. Luckily, the housing market has started to boom again and the company topped our Q3 estimates.

Last quarter, TRI Pointe’s net new home orders jumped 50%, with its backlog dollar value up 39%. Zacks estimates call for the company’s full-year fiscal 2020 revenue to climb 1% to $3.1 billion. Then, its FY21 revenue is projected to surge another 15% higher, as it benefits from the soaring housing market. TRI Pointe’s adjusted earnings are projected to jump by 28% and 33%, respectively over this stretch.

TRI Pointe’s earnings revisions help it grab a Zacks Rank #1 (Strong Buy) at the moment. The stock also boasts “B” grades for Growth and Momentum in our Style Scores system. TPH shares have slightly outpaced its industry over the last 12 months, up 18%. It is also worth pointing out that its Building Products-Home Builders space rests in the top 3% of our over 250 Zacks industries. Plus, the company announced in November that its board approved a new stock repurchase program of up to $250 million.

More broadly, U.S. home sales jumped to a 14-year high in October, which marked the fifth straight monthly increase. The recent growth has been spurred by the coronavirus that has millions of Americans searching for more space. On top of that, millennials continue to reach their prime homebuying years and a shortage of homes could help TRI Pointe and other homebuilders going forward. And TRI Pointe stock rests about 10% off its mid-October highs, which could make it more enticing.

Glu Mobile 

Prior Close: $10.11 USD

Mobile gaming plays a pivotal role in the growth of the broader gaming industry that’s set to expand from $159 billion this year to over $200 billion by 2023. Investors should note that mobile gaming is projected to account for roughly 50% of the market this year vs. the console space’s 28% and PC’s 25%. Glu Mobile, with a portfolio that includes Deer Hunter, Kim Kardashian: Hollywood, MLB Tap Sports Baseball, Disney Sorcerer’s Arena and other popular titles, stands to benefit from this expansion and importance. 

Glu beat our Q3 earnings estimates by roughly 60% in early November. Meanwhile, the company’s revenue soared 48% to a record of $158.5 million, with bookings up 22%. Peeking ahead, Zacks estimates call for its fiscal 2020 sales to climb over 31% to $556 million, with another 11% expansion projected in FY21. And the mobile gaming firm’s adjusted earnings are expected to skyrocket over 140% this year and another 34% next year.

Glu’s post-release earnings revisions help it grab a Zacks Rank #2 (Buy) right now, alongside its “A” grade for Growth in our Styles Scores system. The company is also part of a highly-ranked industry that includes Activision Blizzard, Mattel and others. GLUU shares have surged 40% in the last month, as part of an 85% climb during the past year. And it still sits about 7% off its April 2019 records.

On top of that, GLUU trades below its own 12-month highs in terms of forward sales and at a big discount to its industry at 2.8X vs. 5.5X. And perhaps most importantly, millions and millions of people around the world are addicted to their smartphones.

The Hottest Tech Mega-Trend of All

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