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Coinbase Global and Tyson Foods have been highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – November 21, 2023 – Zacks Equity Research shares Coinbase Global (COIN - Free Report) as the Bull of the Day and Tyson Foods (TSN - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Baker Hughes Company (BKR - Free Report) , EOG Resources (EOG - Free Report) and Matador Resources Company (MTDR - Free Report) .
Zacks Rank #2 (Buy) stock Coinbase Global is the largest and most popular cryptocurrency exchange in the US. The platform allows users to buy, sell, and store cryptocurrencies like Bitcoin, Ethereum, and Ripple.
Spotty But Improving Earnings Surprise History
Coinbase went public in 2021 and has ten quarters of earnings history. Though COIN's earnings history is brief, thus far, it paints a mixed but improving picture. COIN has missed Zacks Consensus Estimates in seven of eleven quarters. However, the past three quarters have been solid with double-digit EPS surprises in each quarter.
SEC Lawsuit
The biggest cloud surrounding Coinbase is its ongoing battle with the US Securities and Exchange Commission. In June, the SEC charged Coinbase with operating a crypto asset trading platform as an unregistered securities exchange. Despite the obvious uncertainty the lawsuit creates for investors, Coinbase shares are much higher than when the SEC lawsuit was filed on June 6th. A plethora of recent crypto industry legal victories is likely spurring investor confidence. The main takeaway for investors is how resilient the price action has been in the face of the lawsuit.
Forward Guidance
Coinbase is very likely to report a loss for the quarter. However, Wall Street is forward-looking. Watch to see if Coinbase's positive earnings trajectory is expected to continue.
Bitcoin Halving
The next Bitcoin Halving will occur in the first half of 2024. When a halving occurs, the reward for mining new blocks is halved, making it more challenging for miners to earn net Bitcoins. Historically, this event has led to increased scarcity and has driven up the value of Bitcoin due to reduced supply. Because Coinbase's business is deeply intertwined with the world's most popular cryptocurrency, the halving is a potential bullish catalyst for COIN shares.
Institutional Adoption Commentary: Slowly, then all at Once
For most of its history, small retail investors have comprised most of the investment in the crypto industry. However, Bitcoin has stood the test of time and is garnering attention from the world's largest asset managers.If Bitcoin ETFs are to be approved (I expect them to be), Coinbase will benefit dramatically because it is the listed exchange for most of the Bitcoin ETF filings. Furthermore, COIN CEO Brian Armstrong divulged in an interview that deep-pocketed sovereign wealth funds have already begun to allocate assets to crypto. While adoption is already in motion, the floodgates will swing open if the crypto industry gets long-awaited regulatory clarity from regulators.
Coinbase is a Cash Cow
Value investing legend Seth Klarman shocked Wall Street when he invested in Coinbase. Though Klarman is far from a crypto proponent, he explained that he bought shares because "Coinbase is sitting on $5 billion in cash, has less than that in debt, and is doing some smart things." Though Coinbase is losing money, its growing cash hoard should attract new investment dollars from investors who would otherwise avoid the crypto industry.
Bitcoin is Being Used as an Inflation-Fighting Tool
Bitcoin is being used in the real world to stave off inflation. The evidence? Bitcoin hit new highs in three inflation-plagued countries, including Nigeria, Turkey, and, of course, Argentina. The evidence is clear: world citizens are gravitating toward Bitcoin because of its inflation-resistant protocol (there will only ever be 21 million coins, while countries around the world print money endlessly). Year-to-date, Bitcoin is up a robust 351% versus the Argentine Peso.
Zacks Rank #5 (Strong Sell) stock Tyson Foods is a multinational food company that operates in the meat and poultry industry. Headquartered in the United States, Tyson Foods is one of the largest producers of chicken, beef, and pork products globally. The company is involved in various aspects of the food supply chain, including the processing, production, and marketing of a wide range of protein-based products. Tyson Foods serves retail and food service customers, providing a diverse portfolio of brands and products.
Margin Pressures
In April, I wrote a "Bear of the Day" article on Tyson Foods discussing its margin pressures. Since then, little has changed. Tyson has been facing weak margins for quite some time due to increased cattle costs, unfavorable derivative impacts, and higher labor costs.
Spotty Earnings Surprise History
Earnings surprises account for one of the main driving forces behind a stock's move. That's bad news for Tyson. The company has missed earnings in four of the past five quarters.
Debt Concerns
Tyson Food's long-term debt of $8,863 million at the end of the third quarter of fiscal 2023 increased from $7,862 million in the second quarter. Margin pressure coupled with debt concerns is a fundamental recipe for disaster.
Opportunity Cost
Because each investor has finite resources, a big part of being a winning investor is gravitating to what's working and avoiding what's not. For months, TSN has exhibited relative weakness. Relative weakness in the stock market refers to the underperformance of a particular stock versus the general market. When an asset displays relative weakness, its price tends to decline at a faster rate or rise more slowly than the overall market or its peers. Investors often analyze relative strength and weakness to make informed decisions about their portfolio allocation, identifying opportunities to capitalize on stronger-performing assets or to manage risk by avoiding or reducing exposure to weaker ones. Year-to-date TSN is down 22.4%, while the S&P 500 Index is up 18.4%. In other words, there are better places to allocate your money. Don't fight the trend.
Additional content:
Permian Oil Drilling Rig Count Rises 4th Week of Past 6
In its weekly release, Baker Hughes Company stated that the U.S. rig count was higher than the prior week's figure. The rotary rig count, issued by BKR, is usually published in major newspapers and trade publications.
Baker Hughes' data, issued at the end of every week since 1944, helps energy service providers gauge the overall business environment of the oil and gas industry. The number of active rigs and its comparison with the week-ago figure indicates the demand trajectory for the company's oilfield services from exploration and production companies.
Rig Count Data in Detail
Total U.S. Rig Count Rises: The number of rigs engaged in the exploration and production of oil and natural gas in the United States was 618 in the week ended Nov 17. The figure is higher than the week-ago count of 616. The figure decreased in two of the prior three weeks amid a slowdown in drilling activities. Some analysts think that shale producers are getting more efficient, requiring fewer rigs, while some doubt whether certain producers have enough prospective land to drill. The current national rig count is, however, lower than the year-ago level of 782.
Onshore rigs in the week that ended on Nov 17 totaled 597, higher than the prior week's count of 595. In offshore resources, 19 rigs were operating, in line with a week-ago count.
U.S. Oil Rig Count Increases: The oil rig count was 500 in the week ended Nov 17, higher than the week-ago figure of 494. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — is down from the year-ago figure of 623.
U.S. Natural Gas Rig Count Falls: The natural gas rig count of 114 is lower than the week-ago figure of 118. The count of rigs exploring the commodity is also below the year-ago week's 157. Per the latest report, the number of natural gas-directed rigs is almost 93% lower than the all-time high of 1,606 recorded in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 13 units, higher than the week-ago count of 12. The horizontal/directional rig count (encompassing new drilling technology with the ability to drill and extract gas from dense rock formations, also known as shale formations) of 605 is higher than the prior-week level of 604.
Gulf of Mexico (GoM) Rig Count Flat: TheGoM rig count was 17 units, all oil-directed. The count was flat with a week-ago number.
Rig Count in the Most Prolific Basin
Permian — the most prolific basin in the United States — recorded a weekly oil rig count of 307, higher than a week-ago figure of 303. The number increased in four of the prior six weeks.
Outlook
The West Texas Intermediate crude price is trading at more than the $75-per-barrel mark. Although the commodity pricing scenario is favorable for exploration and production operations, there has been a slowdown in drilling activities, which may continue as upstream players are prioritizing stockholder returns rather than boosting output.
Despite anticipating higher daily crude production in the oil-rich Permian next month compared to November, the combined production from all prolific resources, including Anadarko, Appalachia, Bakken, Eagle Ford, Haynesville, Niobrara and Permian, is expected to be slightly lower in December than in the current month, per the U.S. Energy Information Administration. This further confirms the slowdown in drilling activities.
In light of short-term uncertainties, investors seeking medium to long-term gains may consider placing their bets on energy stocks such as EOG Resources and Matador Resources Company.
EOG Resources, currently carrying a Zacks Rank #2 (Buy), is a leading oil and natural gas exploration and production company. It is well-placed to capitalize on the promising business scenario. It has many undrilled premium locations, resulting in a brightened production outlook. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
EOG Resources is strongly committed to returning capital to shareholders. Since transitioning to premium drilling, the company has returned a handsome amount of cash to stockholders. With the employment of premium drilling, EOG can reduce its cash operating costs per barrel of oil equivalent, thereby aiding its bottom line.
Matador Resources has a strong presence in the oil-rich core acres of the Wolfcamp and Bone Spring plays in the Delaware Basin. Promising oil price is likely to aid it in increasing production volumes. Matador acquired Advance Energy Partners Holdings, LLC, which comprises several oil and natural gas-producing properties and undeveloped acreage. MTDR, sporting a Zacks Rank #1, expects the buyout to be accretive to important valuation and financial metrics.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
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/performancefor information about the performance numbers displayed in this press release.
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Coinbase Global and Tyson Foods have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – November 21, 2023 – Zacks Equity Research shares Coinbase Global (COIN - Free Report) as the Bull of the Day and Tyson Foods (TSN - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Baker Hughes Company (BKR - Free Report) , EOG Resources (EOG - Free Report) and Matador Resources Company (MTDR - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Zacks Rank #2 (Buy) stock Coinbase Global is the largest and most popular cryptocurrency exchange in the US. The platform allows users to buy, sell, and store cryptocurrencies like Bitcoin, Ethereum, and Ripple.
Spotty But Improving Earnings Surprise History
Coinbase went public in 2021 and has ten quarters of earnings history. Though COIN's earnings history is brief, thus far, it paints a mixed but improving picture. COIN has missed Zacks Consensus Estimates in seven of eleven quarters. However, the past three quarters have been solid with double-digit EPS surprises in each quarter.
SEC Lawsuit
The biggest cloud surrounding Coinbase is its ongoing battle with the US Securities and Exchange Commission. In June, the SEC charged Coinbase with operating a crypto asset trading platform as an unregistered securities exchange. Despite the obvious uncertainty the lawsuit creates for investors, Coinbase shares are much higher than when the SEC lawsuit was filed on June 6th. A plethora of recent crypto industry legal victories is likely spurring investor confidence. The main takeaway for investors is how resilient the price action has been in the face of the lawsuit.
Forward Guidance
Coinbase is very likely to report a loss for the quarter. However, Wall Street is forward-looking. Watch to see if Coinbase's positive earnings trajectory is expected to continue.
Bitcoin Halving
The next Bitcoin Halving will occur in the first half of 2024. When a halving occurs, the reward for mining new blocks is halved, making it more challenging for miners to earn net Bitcoins. Historically, this event has led to increased scarcity and has driven up the value of Bitcoin due to reduced supply. Because Coinbase's business is deeply intertwined with the world's most popular cryptocurrency, the halving is a potential bullish catalyst for COIN shares.
Institutional Adoption Commentary: Slowly, then all at Once
For most of its history, small retail investors have comprised most of the investment in the crypto industry. However, Bitcoin has stood the test of time and is garnering attention from the world's largest asset managers.If Bitcoin ETFs are to be approved (I expect them to be), Coinbase will benefit dramatically because it is the listed exchange for most of the Bitcoin ETF filings. Furthermore, COIN CEO Brian Armstrong divulged in an interview that deep-pocketed sovereign wealth funds have already begun to allocate assets to crypto. While adoption is already in motion, the floodgates will swing open if the crypto industry gets long-awaited regulatory clarity from regulators.
Coinbase is a Cash Cow
Value investing legend Seth Klarman shocked Wall Street when he invested in Coinbase. Though Klarman is far from a crypto proponent, he explained that he bought shares because "Coinbase is sitting on $5 billion in cash, has less than that in debt, and is doing some smart things." Though Coinbase is losing money, its growing cash hoard should attract new investment dollars from investors who would otherwise avoid the crypto industry.
Bitcoin is Being Used as an Inflation-Fighting Tool
Bitcoin is being used in the real world to stave off inflation. The evidence? Bitcoin hit new highs in three inflation-plagued countries, including Nigeria, Turkey, and, of course, Argentina. The evidence is clear: world citizens are gravitating toward Bitcoin because of its inflation-resistant protocol (there will only ever be 21 million coins, while countries around the world print money endlessly). Year-to-date, Bitcoin is up a robust 351% versus the Argentine Peso.
Bear of the Day:
Company Overview
Zacks Rank #5 (Strong Sell) stock Tyson Foods is a multinational food company that operates in the meat and poultry industry. Headquartered in the United States, Tyson Foods is one of the largest producers of chicken, beef, and pork products globally. The company is involved in various aspects of the food supply chain, including the processing, production, and marketing of a wide range of protein-based products. Tyson Foods serves retail and food service customers, providing a diverse portfolio of brands and products.
Margin Pressures
In April, I wrote a "Bear of the Day" article on Tyson Foods discussing its margin pressures. Since then, little has changed. Tyson has been facing weak margins for quite some time due to increased cattle costs, unfavorable derivative impacts, and higher labor costs.
Spotty Earnings Surprise History
Earnings surprises account for one of the main driving forces behind a stock's move. That's bad news for Tyson. The company has missed earnings in four of the past five quarters.
Debt Concerns
Tyson Food's long-term debt of $8,863 million at the end of the third quarter of fiscal 2023 increased from $7,862 million in the second quarter. Margin pressure coupled with debt concerns is a fundamental recipe for disaster.
Opportunity Cost
Because each investor has finite resources, a big part of being a winning investor is gravitating to what's working and avoiding what's not. For months, TSN has exhibited relative weakness. Relative weakness in the stock market refers to the underperformance of a particular stock versus the general market. When an asset displays relative weakness, its price tends to decline at a faster rate or rise more slowly than the overall market or its peers. Investors often analyze relative strength and weakness to make informed decisions about their portfolio allocation, identifying opportunities to capitalize on stronger-performing assets or to manage risk by avoiding or reducing exposure to weaker ones. Year-to-date TSN is down 22.4%, while the S&P 500 Index is up 18.4%. In other words, there are better places to allocate your money. Don't fight the trend.
Additional content:
Permian Oil Drilling Rig Count Rises 4th Week of Past 6
In its weekly release, Baker Hughes Company stated that the U.S. rig count was higher than the prior week's figure. The rotary rig count, issued by BKR, is usually published in major newspapers and trade publications.
Baker Hughes' data, issued at the end of every week since 1944, helps energy service providers gauge the overall business environment of the oil and gas industry. The number of active rigs and its comparison with the week-ago figure indicates the demand trajectory for the company's oilfield services from exploration and production companies.
Rig Count Data in Detail
Total U.S. Rig Count Rises: The number of rigs engaged in the exploration and production of oil and natural gas in the United States was 618 in the week ended Nov 17. The figure is higher than the week-ago count of 616. The figure decreased in two of the prior three weeks amid a slowdown in drilling activities. Some analysts think that shale producers are getting more efficient, requiring fewer rigs, while some doubt whether certain producers have enough prospective land to drill. The current national rig count is, however, lower than the year-ago level of 782.
Onshore rigs in the week that ended on Nov 17 totaled 597, higher than the prior week's count of 595. In offshore resources, 19 rigs were operating, in line with a week-ago count.
U.S. Oil Rig Count Increases: The oil rig count was 500 in the week ended Nov 17, higher than the week-ago figure of 494. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — is down from the year-ago figure of 623.
U.S. Natural Gas Rig Count Falls: The natural gas rig count of 114 is lower than the week-ago figure of 118. The count of rigs exploring the commodity is also below the year-ago week's 157. Per the latest report, the number of natural gas-directed rigs is almost 93% lower than the all-time high of 1,606 recorded in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 13 units, higher than the week-ago count of 12. The horizontal/directional rig count (encompassing new drilling technology with the ability to drill and extract gas from dense rock formations, also known as shale formations) of 605 is higher than the prior-week level of 604.
Gulf of Mexico (GoM) Rig Count Flat: TheGoM rig count was 17 units, all oil-directed. The count was flat with a week-ago number.
Rig Count in the Most Prolific Basin
Permian — the most prolific basin in the United States — recorded a weekly oil rig count of 307, higher than a week-ago figure of 303. The number increased in four of the prior six weeks.
Outlook
The West Texas Intermediate crude price is trading at more than the $75-per-barrel mark. Although the commodity pricing scenario is favorable for exploration and production operations, there has been a slowdown in drilling activities, which may continue as upstream players are prioritizing stockholder returns rather than boosting output.
Despite anticipating higher daily crude production in the oil-rich Permian next month compared to November, the combined production from all prolific resources, including Anadarko, Appalachia, Bakken, Eagle Ford, Haynesville, Niobrara and Permian, is expected to be slightly lower in December than in the current month, per the U.S. Energy Information Administration. This further confirms the slowdown in drilling activities.
In light of short-term uncertainties, investors seeking medium to long-term gains may consider placing their bets on energy stocks such as EOG Resources and Matador Resources Company.
EOG Resources, currently carrying a Zacks Rank #2 (Buy), is a leading oil and natural gas exploration and production company. It is well-placed to capitalize on the promising business scenario. It has many undrilled premium locations, resulting in a brightened production outlook. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
EOG Resources is strongly committed to returning capital to shareholders. Since transitioning to premium drilling, the company has returned a handsome amount of cash to stockholders. With the employment of premium drilling, EOG can reduce its cash operating costs per barrel of oil equivalent, thereby aiding its bottom line.
Matador Resources has a strong presence in the oil-rich core acres of the Wolfcamp and Bone Spring plays in the Delaware Basin. Promising oil price is likely to aid it in increasing production volumes. Matador acquired Advance Energy Partners Holdings, LLC, which comprises several oil and natural gas-producing properties and undeveloped acreage. MTDR, sporting a Zacks Rank #1, expects the buyout to be accretive to important valuation and financial metrics.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
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/performancefor information about the performance numbers displayed in this press release.