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Thanks to a recent uptick in the global economy, companies in the industrial space have been on fire. We have actually seen the sector surge up to #2 overall, and it has been in that position for the entire month of September too.
While many are responsible for this impressive staying power, one company that is definitely worth watching in this environment is Alcoa (NYSE: (AA - Free Report) – Free Report). This aluminum giant has been on a great run in recent months, and the latest numbers suggest that it could retain its leadership role into the Fall as well.
AA in Focus
Alcoa has been seeing rising earnings estimates following its solid earnings report, and we haven’t seen any analysts slash estimates in the past month for any of the time periods we study. This includes the current quarter, current year, next quarter, and next year, so clearly the optimism regarding AA’s future is widespread.
Much of this is thanks to strength in aluminum prices, which is largely due to Chinese growth prospects picking up steam. It also doesn’t hurt that China is cracking down on aluminum production, shuttering plants that do not have the required permits, as well as those that do not pass environmental muster.
This kind of situation is obviously great news for Alcoa, as a reduced supply and possible increases in demand have led to the boost in prices. And with Alcoa as a major producer, it looks to scoop up some additional demand—or at least display pricing power—in the near future.
No wonder analysts have been raising estimates, and why we see the most accurate estimate for the current year higher than the consensus by nearly 11%, and the most accurate estimate for the next year higher by an impressive 25%.
With such strength in the industry, strong trends in the aluminum market, and remarkable earnings estimate revisions, it isn’t surprising at all that Alcoa has recently moved up into Zacks Rank #1 (Strong Buy) territory. That is why we are looking for continued strength out of this name, and particularly if industry trends remain in place.
About two months ago, I featured Cheesecake Factory (Nasdaq: (CAKE - Free Report) – Free Report) as a ‘Bear of the Day.’ Since then, the stock has been under additional pressure, losing a double-digit percentage of its share price, and continuing its weak trend.
However, the company did manage to beat out earnings estimates for the most recent quarter, while its PE is just over 15. This could suggest to some investors that the bottom is finally in for this restaurant stock, but is that really the case?
Recent Report & Outlook
Though CAKE did beat out estimates for the most recent report—edging out expectations by just 2.6%-- its sales estimates were just in-line (and really it was a razor-thin miss). Higher costs are really hampering the outlook for the company, while sluggish comps aren’t helping matters either.
If that wasn’t enough, CAKE also lowered its full year outlook, blaming the challenging restaurant environment. Comps are now expected to decline 1%-- which is compared to previous expectations of minimal growth—while EPS estimates took a modest hit too.
Additional content:
3 Healthcare Stocks to Buy on Renewed Obamacare Repeal Talks
Healthcare has been a newsworthy topic for decades, and that is unlikely to cease anytime soon as the Republican effort to repeal and replace the Affordable Care Act, or Obamacare, ramps up ahead of a key Sept. 30 deadline.
One of the most recent bills, from Republican Sens. Lindsey Graham of South Carolina and Louisiana’s Bill Cassidy, plans to convert money that the ACA uses on insurance subsidies and Medicaid into block grants that would allow states to design their own health care systems.
The bill was proposed in the hopes that it will be passed before October, when a simple majority is all that is required. After the end of the month, any healthcare legislation will require 60 votes.
On top of the Graham-Cassidy proposal, a bipartisan healthcare plan was also recently announced, along with a different bill that calls for the creation of a government-sponsored national healthcare system, which was proposed by Sen. Bernie Sanders.
But even if none of these new healthcare proposals are able to make headway in Washington, the healthcare industry is unlikely to slow down, as many drug makers, HMOs, hospitals, medical device companies, and many more continue to grow.
With the industry once again be under the microscope, let’s take a look at some healthcare and medical industry stocks and their fundamentals to see if investors might consider buying in these relatively uncertain times.
This Austin, Texas-based company develops and manufactures products to help tests for infectious diseases. Luminex also markets its open-architecture designed research platform to clients for clinical and academic research, as well as biodefense. The company is currently a Zacks Rank #1 (Strong Buy) stock.
Luminex has a P/B ratio of 2.07, which is far better than the “Medical – Instruments” industry’s 3.97, and it could mean the company’s stock is currently undervalued. On top of its discounted price, the company looks like it could be a strong choice for value investors because its cash flow per share of $0.78 tops the industry average of a $0.10 loss.
According to our current Zacks Consensus Estimates, the company’s earnings are expected to skyrocket 150% next quarter and jump 25% for the year. Also, Luminex’s sales are set to gain 4.21% in the current quarter and pop 12.75% for the year to hit $306.66 million.
Ligand Pharmaceuticals focuses on technologies that aim to help pharmaceutical companies discover and develop new medicines. The company has a net margin of 7.39%, which blows away the “Biomedical and Genetic” industry average and underscores the fact that Ligand has a proven product portfolio—a fact that eludes many early-stage pharma companies.
Based on our current consensus estimate, Ligand’s sales are expected to climb 44.42% this quarter and 23.44% for the year. The company is currently a Zacks Rank #1 (Strong Buy) and sports a “B” grade for both Growth and Momentum in our Style Scores system.
Although Ligand has experienced a 16.91% 52-week price change and rests near the top of its 52-week high, the company might still have room to grow. Ligand has received one upward earnings estimate revision for next quarter within the last 60 days. In that same time frame, the company received two positive revisions for its full-year and following year estimates.
This HMO provider specializes in providing the under-insured and uninsured with health plans through Medicaid, Medicare, and other programs. The company was recently ranked #19 on Fortune’s annual “Change the World” list based on its commitment to continue to cover Affordable Care Act customers. Centene is currently a Zacks Rank #2 (Buy) and scored an “A” for both Value and Growth in our Style Scores system.
The company has received 11 positive full-year earnings estimate revisions within the last 60 days. Centene’s full-year earnings are projected to surge 11.04% to hit $4.88 per share. The company’s revenues for the year are expected to climb 16.19% to reach $47.57 billion. And with a price to sales ratio of 0.36, investors get a lot of bang for their respective bucks.
4 Promising Stock Picks to Keep an Eye On
With news stories about computer hacking and identity theft becoming increasingly commonplace, the cybersecurity industry looks like a promising investment opportunity. But which stocks should you buy? Zacks just released Cybersecurity: An Investor’s Guide to Locking Down Profits to help answer this question.
This new Special Report gives you the information you need to make well-informed investment choices in this space. More importantly, it also highlights 4 cybersecurity picks with strong profit potential. Get the new Investing Guide 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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Alcoa, Cheesecake Factory, Luminex, Ligand Pharmaceuticals and Centene highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – September 20, 2017 – Zacks Equity Research Alcoa (NYSE: (AA - Free Report) – Free Report) as the Bull of the Day, Cheesecake Factory (Nasdaq: (CAKE - Free Report) – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Luminex Corp. (Nasdaq: – Free Report),Ligand Pharmaceuticals Inc. (Nasdaq: (LGND - Free Report) – Free Report), Centene Corp. (NYSE: (CNC - Free Report) – Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
Thanks to a recent uptick in the global economy, companies in the industrial space have been on fire. We have actually seen the sector surge up to #2 overall, and it has been in that position for the entire month of September too.
While many are responsible for this impressive staying power, one company that is definitely worth watching in this environment is Alcoa (NYSE: (AA - Free Report) – Free Report). This aluminum giant has been on a great run in recent months, and the latest numbers suggest that it could retain its leadership role into the Fall as well.
AA in Focus
Alcoa has been seeing rising earnings estimates following its solid earnings report, and we haven’t seen any analysts slash estimates in the past month for any of the time periods we study. This includes the current quarter, current year, next quarter, and next year, so clearly the optimism regarding AA’s future is widespread.
Much of this is thanks to strength in aluminum prices, which is largely due to Chinese growth prospects picking up steam. It also doesn’t hurt that China is cracking down on aluminum production, shuttering plants that do not have the required permits, as well as those that do not pass environmental muster.
This kind of situation is obviously great news for Alcoa, as a reduced supply and possible increases in demand have led to the boost in prices. And with Alcoa as a major producer, it looks to scoop up some additional demand—or at least display pricing power—in the near future.
No wonder analysts have been raising estimates, and why we see the most accurate estimate for the current year higher than the consensus by nearly 11%, and the most accurate estimate for the next year higher by an impressive 25%.
With such strength in the industry, strong trends in the aluminum market, and remarkable earnings estimate revisions, it isn’t surprising at all that Alcoa has recently moved up into Zacks Rank #1 (Strong Buy) territory. That is why we are looking for continued strength out of this name, and particularly if industry trends remain in place.
Bear of the Day:
About two months ago, I featured Cheesecake Factory (Nasdaq: (CAKE - Free Report) – Free Report) as a ‘Bear of the Day.’ Since then, the stock has been under additional pressure, losing a double-digit percentage of its share price, and continuing its weak trend.
However, the company did manage to beat out earnings estimates for the most recent quarter, while its PE is just over 15. This could suggest to some investors that the bottom is finally in for this restaurant stock, but is that really the case?
Recent Report & Outlook
Though CAKE did beat out estimates for the most recent report—edging out expectations by just 2.6%-- its sales estimates were just in-line (and really it was a razor-thin miss). Higher costs are really hampering the outlook for the company, while sluggish comps aren’t helping matters either.
If that wasn’t enough, CAKE also lowered its full year outlook, blaming the challenging restaurant environment. Comps are now expected to decline 1%-- which is compared to previous expectations of minimal growth—while EPS estimates took a modest hit too.
Additional content:
3 Healthcare Stocks to Buy on Renewed Obamacare Repeal Talks
Healthcare has been a newsworthy topic for decades, and that is unlikely to cease anytime soon as the Republican effort to repeal and replace the Affordable Care Act, or Obamacare, ramps up ahead of a key Sept. 30 deadline.
One of the most recent bills, from Republican Sens. Lindsey Graham of South Carolina and Louisiana’s Bill Cassidy, plans to convert money that the ACA uses on insurance subsidies and Medicaid into block grants that would allow states to design their own health care systems.
The bill was proposed in the hopes that it will be passed before October, when a simple majority is all that is required. After the end of the month, any healthcare legislation will require 60 votes.
On top of the Graham-Cassidy proposal, a bipartisan healthcare plan was also recently announced, along with a different bill that calls for the creation of a government-sponsored national healthcare system, which was proposed by Sen. Bernie Sanders.
But even if none of these new healthcare proposals are able to make headway in Washington, the healthcare industry is unlikely to slow down, as many drug makers, HMOs, hospitals, medical device companies, and many more continue to grow.
With the industry once again be under the microscope, let’s take a look at some healthcare and medical industry stocks and their fundamentals to see if investors might consider buying in these relatively uncertain times.
1. Luminex Corp. (Nasdaq: – Free Report)
This Austin, Texas-based company develops and manufactures products to help tests for infectious diseases. Luminex also markets its open-architecture designed research platform to clients for clinical and academic research, as well as biodefense. The company is currently a Zacks Rank #1 (Strong Buy) stock.
Luminex has a P/B ratio of 2.07, which is far better than the “Medical – Instruments” industry’s 3.97, and it could mean the company’s stock is currently undervalued. On top of its discounted price, the company looks like it could be a strong choice for value investors because its cash flow per share of $0.78 tops the industry average of a $0.10 loss.
According to our current Zacks Consensus Estimates, the company’s earnings are expected to skyrocket 150% next quarter and jump 25% for the year. Also, Luminex’s sales are set to gain 4.21% in the current quarter and pop 12.75% for the year to hit $306.66 million.
2. Ligand Pharmaceuticals Inc. (Nasdaq: (LGND - Free Report) – Free Report)
Ligand Pharmaceuticals focuses on technologies that aim to help pharmaceutical companies discover and develop new medicines. The company has a net margin of 7.39%, which blows away the “Biomedical and Genetic” industry average and underscores the fact that Ligand has a proven product portfolio—a fact that eludes many early-stage pharma companies.
Based on our current consensus estimate, Ligand’s sales are expected to climb 44.42% this quarter and 23.44% for the year. The company is currently a Zacks Rank #1 (Strong Buy) and sports a “B” grade for both Growth and Momentum in our Style Scores system.
Although Ligand has experienced a 16.91% 52-week price change and rests near the top of its 52-week high, the company might still have room to grow. Ligand has received one upward earnings estimate revision for next quarter within the last 60 days. In that same time frame, the company received two positive revisions for its full-year and following year estimates.
3. Centene Corp. (NYSE: (CNC - Free Report) – Free Report)
This HMO provider specializes in providing the under-insured and uninsured with health plans through Medicaid, Medicare, and other programs. The company was recently ranked #19 on Fortune’s annual “Change the World” list based on its commitment to continue to cover Affordable Care Act customers. Centene is currently a Zacks Rank #2 (Buy) and scored an “A” for both Value and Growth in our Style Scores system.
The company has received 11 positive full-year earnings estimate revisions within the last 60 days. Centene’s full-year earnings are projected to surge 11.04% to hit $4.88 per share. The company’s revenues for the year are expected to climb 16.19% to reach $47.57 billion. And with a price to sales ratio of 0.36, investors get a lot of bang for their respective bucks.
4 Promising Stock Picks to Keep an Eye On
With news stories about computer hacking and identity theft becoming increasingly commonplace, the cybersecurity industry looks like a promising investment opportunity. But which stocks should you buy? Zacks just released Cybersecurity: An Investor’s Guide to Locking Down Profits to help answer this question.
This new Special Report gives you the information you need to make well-informed investment choices in this space. More importantly, it also highlights 4 cybersecurity picks with strong profit potential. Get the new Investing Guide 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 >>.
Get the full Report on AA - FREE
Get the full Report on CAKE - 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.