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The Zacks Analyst Blog Highlights: Nucor, ON Semiconductor, CarMax, O'Reilly Automotive and Ulta Beauty

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For Immediate Release

Chicago, IL – September 15, 2021 – 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: Nucor Corporation (NUE - Free Report) , ON Semiconductor Corporation (ON - Free Report) , CarMax, Inc. (KMX - Free Report) , O'Reilly Automotive, Inc. (ORLY - Free Report) and Ulta Beauty, Inc. (ULTA - Free Report) .

Here are highlights from Tuesday’s Analyst Blog:

5 Top-Ranked Large-Cap Stocks That Have Skyrocketed YTD

On Sep 13, Wall Street ended its five-day losing streak buoyed by gains in reopening stocks. Nevertheless, investors have remained cautious this month about the spread of the Delta variant of COVID-19 and a possible slack in the U.S. economic recovery.

Market participants are also keenly awaiting the Fed's decision regarding any sort of tapering of its $120 billion per month bond-buy policy in the face of higher inflationary pressure. The central bank will conduct its next FOMC meeting on Sep 21-22.

However, U.S. stock markets have provided impressive returns to investors so far this year. Year to date, the large-cap specific three major indexes — the Dow, the S&P 500 and the Nasdaq Composite — have rallied 13.9%, 19% and 17.2%, respectively. The small-cap-centric benchmark Russell 2000 has also advanced 13.5%.

Consequently, several stocks have popped so far this year. Among those stocks, we have identified a handful of large-cap stocks that have provided higher returns than the market's benchmark S&P 500 Index. These stocks have seen positive earnings estimate revisions in the last 30 days indicating that the market is expecting these companies to do good business for the rest of 2021.

Finally, these stocks currently sport a Zacks Rank #1 (Strong Buy) indicating strong upside potential in the near future. Investment in these stocks with the above-mentioned favorable features should be fruitful going forward.

Near-Term Drivers

The economic effect of the Delta variant of coronavirus may not be as severe as last year when there was no vaccine. According to the U.S. CDC, the 7-day average of COVID-19 new cases came in at around 136,000 for the week ended Sep 10, down from 157,000 average new cases at the end of August.

On Aug 23, the FDA granted the first full approval to the COVID-19 vaccine developed by Pfizer and BioNTech. CNBC reported citing two sources familiar with the situation that the FDA is likely to authorize this vaccine for children aged 5-11 years old by the end of October.

The full approval of the vaccine is expected to convince many Americans who are still reluctant to receive a shot despite the rapid spread of the highly-infectious Delta variant of coronavirus. More than 60% of U.S. citizens have already received at least one shot.

Meanwhile, total earnings of the S&P 500 Index are currently projected to grow 26.2% year over year on 13.7% higher revenues in third-quarter 2021 after earnings soared 94.6% on 24% higher revenues in second-quarter 2021. Total earnings of the S&P 500 Index are expected to climb 42.6% year over year on 13% higher revenues in 2021 and increase 9.3% year over year on 6.7% higher revenues in 2022.

Moreover, in absolute terms, U.S. GDP in second-quarter 2021 exceeded the pre-pandemic level. On Sep 10, the Atlanta Fed projected that the U.S. economy will grow by 3.7% in the third quarter.

Finally, on Aug 24, the House of Representatives advanced a $1 trillion bipartisan infrastructure bill. On Aug 10, the U.S. Senate passed a bipartisan infrastructure bill of $550 billion in addition to the previously approved funds of $450 billion for five years.

Total spending may go up to $1.2 trillion if the plan is extended to eight years. Infrastructure projects such as roads, bridges, passenger rails, airports, drinking water and waste-water systems, high-speed Internet, and climate-related infrastructure should benefit.

Our Top Picks

We have narrowed down our search to five large-cap stocks (market capital > $20 billion) with strong potential for the rest of 2021. These stocks have skyrocketed nearly 30% or more year to date. Each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Nucor Corp. is a leading producer of structural steel, steel bars, steel joists, steel deck and cold-finished bars in the United States. It operates through three segments: Steel Mills, Steel Products, and Raw Materials.

The company is seeing consistent momentum in the non-residential construction market. Demand in non-residential construction markets was strong in the most recent quarter. Nucor's downstream products unit is benefiting from the continued strength in the non-residential construction markets.

The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings improved 2.1% over the last 30 days. The stock price has soared 105.3% year to date.

ON Semiconductor Corp. is seeing strengthening demand across most end markets as evident from its booking trends over the last few quarters. ON Semiconductor has a well-diversified business generating a significant percentage of revenues from each of the computing, consumer, industrial, communications and automotive end markets.

ON Semiconductor continues to gain traction among electric vehicle manufacturers. It witnessed a solid demand environment in the second quarter, particularly for its power and sensing products, which it expects will  continue in the near term.

The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings improved 0.4% over the last 30 days. The stock price has jumped 45.5% year to date.

CarMax operates as a retailer of used vehicles in the United States. It operates in two segments, CarMax Sales Operations and CarMax Auto Finance. Increasing sales of used vehicles remain a bright spot for the firm.

Store-expansion initiatives and high-quality product offerings are likely to boost CarMax's prospects. Its omni-channel offerings to improve customer shopping experience are likely to bolster revenues. Ship-to-home next day, curb-side pick-up option, buy online, pick-up in stores and commercial customer ordering are picking up pace, driving traffic to the company's online site.  

The company has an expected earnings growth rate of 65.7% for the current year (ending February 2022). The Zacks Consensus Estimate for its current-year earnings improved 2.6% over the last 30 days. The stock price has climbed 42.3% year to date.

O'Reilly Automotive operates as a retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States. The specialty retailer of automotive aftermarket parts is poised to benefit from store openings and distribution centers in profitable regions.

The company has a competitive edge due to a dual market strategy by serving the Do-it-Yourself and Do-it-for-Me customers. A customer-centric business model and the growing demand for high-quality auto parts are likely to boost O'Reilly's prospects.

The company has an expected earnings growth rate of 17.5% for the current year. The Zacks Consensus Estimate for its current-year earnings improved 0.1% over the last 30 days. The stock price has appreciated 29.8% year to date.

Ulta Beauty operates as a retailer of beauty products in the United States. The company has been seeing market share gains in major beauty categories for a while now, with skincare standing out. Its foremost priority is to strengthen its omnichannel business and explore the potential of both physical and digital facets.

The company has an expected earnings growth rate of more than 100% for the current year (ending January 2022). The Zacks Consensus Estimate for current-year earnings improved 23.6% over the last 30 days. The stock price has surged 29.6% year to date.

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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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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