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Even though the market has been flirting with record territory recently, it’s bene tough to find trends. This last earnings season would put stocks en vogue for a week or two then they would fall back to pre-breakout levels. For trend-following and momentum strategies, that’s made for some tough times. However, through all the choppiness, today’s Bull of the Day has continued to deliver lots of strength.
CAI International (NYSE: – Free Report)is a Zacks Rank #1 (Strong Buy) in the transportation equipment and leasing industry which ranks in the Top 38% of our Zacks Industry Rank. CAI International, Inc. operates as transportation finance and logistics company in the United States and internationally. The company operates through three segments: Container Leasing, Rail Leasing, and Logistics. It leases, re-leases, and disposes equipment; and contracts for the repair, repositioning, and storage of equipment.
A big reason for the favorable Zacks Rank is the recent adjustment several analysts have made to their EPS estimates for CAI International. Three analysts have come out and increased their estimates for the current quarter, next quarter, the current year and next year. The bullish revisions have pushed up the current year consensus from $1.78 to $2.33 and next year’s number up from $2.14 all the way to $3.15.
There’s been a big jump in earnings recently, not just because of high utilization of its container fleet, but also because of newly acquired containers which are fully leased out. The company has recently purchased over $152 million worth of new containers. In addition to this huge chunk, they have plans for another $227 million. A growing fleet with high utilization means their EPS could continue to grow for the next several years.
Some stocks are very cyclical in nature. Their business cycles dictate that certain parts of the year are heavily loaded with revenues while other times things can get lean. Today’s Bear of the Day is a company which profits the most during an accountant’s favorite time of the year, tax time. We are sitting a half-year away from next year’s deadline though so things could be a little rough.
Liberty Tax (Nasdaq: – Free Report)is a Zacks Rank #5 (Strong Sell) with a Momentum Style Score of F. Liberty Tax, Inc., together with its subsidiaries, provides tax preparation services and solutions in the United States and Canada. The company also facilitates refund-based tax settlement financial products, such as refund transfer products, refund-based loans, and personal income tax refund discounting, as well as provides an online digital Do-It-Yourself tax program in the United States. Its customers include taxpayers who, for reasons of complexity, convenience, or the need for prompt tax refunds, seek assisted tax preparation services.
The reason for the unfavorable Zacks Rank is the recent estimate revisions to the downside. Over the last week, analysts have dropped their estimates for the current quarter, current year and next year. The bearish sentiment has pushed down our Zacks Consensus Estimate from $1.60 to $1.20 for the current year while dropping next year’s number from $1.50 to $1.40.
In recent U.S. macro data, I noted two very important U.S. business cycle points.
First, one of the biggest sources of support for the S&P 500 -- now trading at a lofty forward 12-month P/E ratio of 17.5 -- is the paltry return coming from risk-free U.S. Treasuries. That latest P/E ratio is well above the 5-year average (15.5) and even further above the 10-year average of 14.1.
The logic: An investor sitting on a pile of cash cannot make more than 3% by holding U.S. 10-yr Treasuries in 2015 and 2016. And it is looking to get much, much worse for these risk-averse types in 2017, 2018 and 2019, as the Fed raises short-term rates.
During 2015 and 2016, the S&P 500 made annual returns of +1.4% and +12%. Even counting the lousy year of 2015, an investor averages +6.5% returns on a plain vanilla S&P 500 index fund each year. YTD for 2017 is showing the S&P 500 up +11.3%.
What’s my first point? Stocks are going to be the only place to be for another 2 years, or until the U.S. sees an actual downturn in output, ending this expansion.
The second point I want to make comes NOT from the U.S. unemployment rate.
That data is benignly quoted in news as frictional at 4.4%. However, take a look at what is called the DURATION OF UNEMPLOYMENT.
In the past 10 business cycles, going from 1950 to 2010, you can see. The average duration of unemployment never got higher than 20 weeks during the worst period of ANY recession. What of today? After nearly 9 years, it still stands at 25 weeks!
What’s my second point? The duration of unemployment data is a ‘tell.’
This U.S. economy is not producing enough jobs yet to really get labor demand moving. No wonder the wage inflation rate is not moving up much. That tells us. The call for any hikes by the U.S. Fed are likely to be watered down, not lifted. In any event, this second set of macro data implies this long business cycle needs to get longer still.
Zacks September Sector/Industry/Company Telescope
There are some notable upgrades and downgrades, as covering earnings analysts transition into the Fall reporting season.
The clearest sector leader is the Consumer Discretionary sector, with its multiple strong industry players. Surprisingly, the other clear leader came from the Telco sector, which is usually a defensive area.
Industrials stayed at Attractive, as did Health Care (look at Medical Care only), Consumer Staples, and Info Tech (with the usual strong performer in Semis). The Market Weight sectors are Energy, Financials, Materials, and Utilities.
Interestingly, there are no Very Unattractive sectors in this S&P 500 framework.
(1) Consumer Discretionary is Very Attractive. The many leaders include Publishing, Autos-Tires-Trucks, Home Furnishings-Appliances, and Consumer Electronics.
Top Zacks #1 Rank Pick: Movado Group (NYSE: MOV – Free Report)
Movado Group is a designer, manufacturer and distributor of quality watches with prominent brands sold in almost every price category comprising the watch industry. The company's watch brands include Movado, Concord, and ESQ.
(2) Telcos rise to a Very Attractive sector. Leadership comes from Utility-Telephone and Telco Services.
Top Zacks #1 Rank Pick: China Telecom Group (NYSE: CHA – Free Report)
China Telecom is a state-owned telecommunications company in China. They operate local telephone networks in ten provinces in China.
(3) Industrials are Attractive. The leaders are Machinery, Aerospace & Defense, and Railroads.
Komatsu, headquartered in Tokyo, Japan, is the world's second largest manufacturer of earthmoving and construction machines, with annual revenues of 7,580 million euros (9.2 billion US$) and more than 30.000 employees worldwide.
(4) Info Tech is Attractive. The leader (not surprisingly) is the semiconductor group.
(5) Health Care is now an Attractive sector. The industry leader is Medical Care.
(6) Consumer Staples are Attractive. Leaders are Beverages, and Soaps & Cosmetics.
(7) Energy gets back to a Market Weight. The leader is Coal, a Trump supported pick.
(8) Financials are a Market Weight. One industry looks great. It is the Major Banks.
(9) Materials fall back to a Market Weight. Company leaders are found in Chemicals.
(10) Utilities are a Market Weight.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
4 Surprising Tech Stocks to Keep an Eye On
Tech stocks have been a major force behind the market’s record highs, but picking the best ones to buy can be tough. There’s a simple way to invest in the success of the entire sector. Zacks has just released a Special Report revealing one thing tech companies literally cannot function without.
More importantly, it reveals 4 top stocks set to skyrocket on increasing demand for these devices. I encourage you to get the report now – before the next wave of innovations really take off. See Stocks Now>>
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
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.
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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CAI International, Liberty Tax, Movado Group, China Telecom and Komatsu highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – September 11, 2017 – Zacks Equity Research CAI International (NYSE: – Free Report)as the Bull of the Day, Liberty Tax (Nasdaq: – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onto Movado Group (NYSE: (MOV - Free Report) – Free Report), China Telecom Group (NYSE: (CHA - Free Report) – Free Report) and Komatsu (OTCMKTS: (KMTUY - Free Report) – Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Even though the market has been flirting with record territory recently, it’s bene tough to find trends. This last earnings season would put stocks en vogue for a week or two then they would fall back to pre-breakout levels. For trend-following and momentum strategies, that’s made for some tough times. However, through all the choppiness, today’s Bull of the Day has continued to deliver lots of strength.
CAI International (NYSE: – Free Report)is a Zacks Rank #1 (Strong Buy) in the transportation equipment and leasing industry which ranks in the Top 38% of our Zacks Industry Rank. CAI International, Inc. operates as transportation finance and logistics company in the United States and internationally. The company operates through three segments: Container Leasing, Rail Leasing, and Logistics. It leases, re-leases, and disposes equipment; and contracts for the repair, repositioning, and storage of equipment.
A big reason for the favorable Zacks Rank is the recent adjustment several analysts have made to their EPS estimates for CAI International. Three analysts have come out and increased their estimates for the current quarter, next quarter, the current year and next year. The bullish revisions have pushed up the current year consensus from $1.78 to $2.33 and next year’s number up from $2.14 all the way to $3.15.
There’s been a big jump in earnings recently, not just because of high utilization of its container fleet, but also because of newly acquired containers which are fully leased out. The company has recently purchased over $152 million worth of new containers. In addition to this huge chunk, they have plans for another $227 million. A growing fleet with high utilization means their EPS could continue to grow for the next several years.
Bear of the Day:
Some stocks are very cyclical in nature. Their business cycles dictate that certain parts of the year are heavily loaded with revenues while other times things can get lean. Today’s Bear of the Day is a company which profits the most during an accountant’s favorite time of the year, tax time. We are sitting a half-year away from next year’s deadline though so things could be a little rough.
Liberty Tax (Nasdaq: – Free Report)is a Zacks Rank #5 (Strong Sell) with a Momentum Style Score of F. Liberty Tax, Inc., together with its subsidiaries, provides tax preparation services and solutions in the United States and Canada. The company also facilitates refund-based tax settlement financial products, such as refund transfer products, refund-based loans, and personal income tax refund discounting, as well as provides an online digital Do-It-Yourself tax program in the United States. Its customers include taxpayers who, for reasons of complexity, convenience, or the need for prompt tax refunds, seek assisted tax preparation services.
The reason for the unfavorable Zacks Rank is the recent estimate revisions to the downside. Over the last week, analysts have dropped their estimates for the current quarter, current year and next year. The bearish sentiment has pushed down our Zacks Consensus Estimate from $1.60 to $1.20 for the current year while dropping next year’s number from $1.50 to $1.40.
Additional content:
This Business Cycle IS Different!
The following is an excerpt from Zacks Chief Strategist John Blank’s full Sep Market Strategy report To access the full PDF, click here
In recent U.S. macro data, I noted two very important U.S. business cycle points.
First, one of the biggest sources of support for the S&P 500 -- now trading at a lofty forward 12-month P/E ratio of 17.5 -- is the paltry return coming from risk-free U.S. Treasuries. That latest P/E ratio is well above the 5-year average (15.5) and even further above the 10-year average of 14.1.
The logic: An investor sitting on a pile of cash cannot make more than 3% by holding U.S. 10-yr Treasuries in 2015 and 2016. And it is looking to get much, much worse for these risk-averse types in 2017, 2018 and 2019, as the Fed raises short-term rates.
During 2015 and 2016, the S&P 500 made annual returns of +1.4% and +12%. Even counting the lousy year of 2015, an investor averages +6.5% returns on a plain vanilla S&P 500 index fund each year. YTD for 2017 is showing the S&P 500 up +11.3%.
What’s my first point? Stocks are going to be the only place to be for another 2 years, or until the U.S. sees an actual downturn in output, ending this expansion.
The second point I want to make comes NOT from the U.S. unemployment rate.
That data is benignly quoted in news as frictional at 4.4%. However, take a look at what is called the DURATION OF UNEMPLOYMENT.
In the past 10 business cycles, going from 1950 to 2010, you can see. The average duration of unemployment never got higher than 20 weeks during the worst period of ANY recession. What of today? After nearly 9 years, it still stands at 25 weeks!
What’s my second point? The duration of unemployment data is a ‘tell.’
This U.S. economy is not producing enough jobs yet to really get labor demand moving. No wonder the wage inflation rate is not moving up much. That tells us. The call for any hikes by the U.S. Fed are likely to be watered down, not lifted. In any event, this second set of macro data implies this long business cycle needs to get longer still.
Zacks September Sector/Industry/Company Telescope
There are some notable upgrades and downgrades, as covering earnings analysts transition into the Fall reporting season.
The clearest sector leader is the Consumer Discretionary sector, with its multiple strong industry players. Surprisingly, the other clear leader came from the Telco sector, which is usually a defensive area.
Industrials stayed at Attractive, as did Health Care (look at Medical Care only), Consumer Staples, and Info Tech (with the usual strong performer in Semis). The Market Weight sectors are Energy, Financials, Materials, and Utilities.
Interestingly, there are no Very Unattractive sectors in this S&P 500 framework.
(1) Consumer Discretionary is Very Attractive. The many leaders include Publishing, Autos-Tires-Trucks, Home Furnishings-Appliances, and Consumer Electronics.
Top Zacks #1 Rank Pick: Movado Group (NYSE: MOV – Free Report)
Movado Group is a designer, manufacturer and distributor of quality watches with prominent brands sold in almost every price category comprising the watch industry. The company's watch brands include Movado, Concord, and ESQ.
(2) Telcos rise to a Very Attractive sector. Leadership comes from Utility-Telephone and Telco Services.
Top Zacks #1 Rank Pick: China Telecom Group (NYSE: CHA – Free Report)
China Telecom is a state-owned telecommunications company in China. They operate local telephone networks in ten provinces in China.
(3) Industrials are Attractive. The leaders are Machinery, Aerospace & Defense, and Railroads.
Top Zacks #1 Rank Pick: Komatsu (OTCMKTS: KMTUY – Free Report)
Komatsu, headquartered in Tokyo, Japan, is the world's second largest manufacturer of earthmoving and construction machines, with annual revenues of 7,580 million euros (9.2 billion US$) and more than 30.000 employees worldwide.
(4) Info Tech is Attractive. The leader (not surprisingly) is the semiconductor group.
(5) Health Care is now an Attractive sector. The industry leader is Medical Care.
(6) Consumer Staples are Attractive. Leaders are Beverages, and Soaps & Cosmetics.
(7) Energy gets back to a Market Weight. The leader is Coal, a Trump supported pick.
(8) Financials are a Market Weight. One industry looks great. It is the Major Banks.
(9) Materials fall back to a Market Weight. Company leaders are found in Chemicals.
(10) Utilities are a Market Weight.
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
4 Surprising Tech Stocks to Keep an Eye On
Tech stocks have been a major force behind the market’s record highs, but picking the best ones to buy can be tough. There’s a simple way to invest in the success of the entire sector. Zacks has just released a Special Report revealing one thing tech companies literally cannot function without.
More importantly, it reveals 4 top stocks set to skyrocket on increasing demand for these devices. I encourage you to get the report now – before the next wave of innovations really take off. See Stocks Now>>
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential 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.