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The Zacks Analyst Blog Highlights: Unisys, MCBC Holdings, Harsco and Heritage Insurance Holdings
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For Immediate Release
Chicago, IL – March 14, 2018 – 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 Unisys Corporation (UIS - Free Report) , MCBC Holdings Inc. (MCFT - Free Report) , Harsco Corporation and Heritage Insurance Holdings Inc. (HRTG - Free Report) .
Signs of a recovery, albeit moderate, in the U.S. economy, are now evident, thanks to a solid labor market. Decent inflation, impressive Q4 earnings season, moderate retail sales, the passing of the tax reform and last but not the least uptick in global growth have been fueling optimism in the market.
Still, rising rate concerns occasionally dampen the Wall Street rally. Though tepid wage growth in February put off the blazing bets of faster Fed rate hikes this year, it is uncertain how long this speculation can be deferred. At the current level, the Fed is seemingly enacting three rate hikes this year, if not four.
Inside Hawkish Views
Goldman Sachs analysts estimate that there will be eight rate hikes in 2018 and 2019, economic growth will slow down to 2.2% in 2019 from 2.3% recorded in 2017 and bond yields may shoot up to as high as 4% (a mark not touched since May 2008). Notably, before Powell became the Fed head, the bank had penciled three rate hikes in 2018 and two more in 2019.
Coming to wage growth, it rose 0.1% to $26.75 in February, marking a slowdown from the 0.3% rise in January. However, some economists do not see this as a concern. Per Reuters, this group of economists believes that wage growth has actually been stronger than indicated by average hourly earnings, which appears more volatile on a monthly basis. Average hourly earnings for production and non-supervisory workers, which economists say are better measured, rose 0.3% in February, per Reuters.
Are Rising Rate Fears Overblown?
If we delve a little deeper, we’ll see there is no need to fear rising rate risks. The last full cycle of rate increases happened in the United States between June 2004 and June 2006 as rates progressively rose from 1.00% to 5.25%. The Federal Reserve started slashing rates from September 2007 through December 2008 until the rates reached the 0.00 - 0.25% range.
In December 2015, the Fed again embarked on a tightening spree and since then has enacted five hikes and brought key rates within the 1.25 - 1.50% range. Even if we assume four rate hikes this year, each worth 25 bps, key rates will not cross the 2.25 – 2.50% range. This is nothing considering the highs seen in 2005-2006.
Is U.S. Economy In a Mid Cycle of Recovery?
According to Fidelity, the mid business cycle of recovery is marked by factors like upbeat growth, strong credit growth, solid earnings growth and accommodative but neutral monetary policy. Many of these factors match with the current state of the U.S. economy. Plus, the tax reform is an added tailwind.
Moreover, if healthy stock market momentum is maintained, a wealth effect can be realized. As per Investopedia, “the wealth effect helps to power economies during bull markets. Big gains in people's portfolios can make them feel more secure about their wealth and their spending."
As Fidelity sector strategist noted that “there is a high correlation between corporate profit growth of more than 5% and strong stock market returns,” we are likely to see wealth effect building up this year (given expected 2018 earnings growth rate of the S&P 500 is 20.7%).
Cyclical Sectors Sizzle When Rates Normalize
In a steadily-growing economy, most sectors surge from a wealth effect, with a few of the more cyclical corners making the most of this rally. These industries often sag in a slumping economy but are the biggest winners during a revival. Historically, cyclical sectors outperform the defensive ones when rates normalize.
4 Top Picks
Information Technology
The technology sector is on a tear lately. Emerging new technologies like cloud computing, big data and Internet of Things are expected to pull the sector forward in the coming days.
Unisys Corporation
A worldwide technology services and solutions company with a Zacks Rank #1 (Strong Buy) and a VGM Score of A. It belongs to a top-ranked Zacks Industry (top 42%).
Consumer Discretionary
The sector is likely to benefit from the rising income levels of consumers.
MCBC Holdings Inc.
A manufacturer and marketer of MasterCraft brand premium performance sport boats. It has a Zacks Rank #1 and VGM Score of B. It hails from a top-ranked Zacks Industry (top 25%).You can see the complete list of today’s Zacks #1 Rank stocks here.
Industrials
Per Fidelity, sectors like industrials do better in the mid-cycle phase of the economy. In any case, an industrial boom is apparent in the U.S. economy, thanks to Trump’s infrastructure plan and tax cuts.
Harsco Corporation
This Zacks Rank #1 company is a services and engineered products company. The stock has a VGM Score of A and belongs to a top-ranked Zacks Industry (top 10%).
Financials
Rising rate environment will lead to a favorable operating environment for financial stocks.
Heritage Insurance Holdings Inc.
This is a property and casualty insurance holding company. It has a Zacks Rank #1 and a VGM Score of A. It hails from a top-ranked Zacks Industry (top 45%).
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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 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.
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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The Zacks Analyst Blog Highlights: Unisys, MCBC Holdings, Harsco and Heritage Insurance Holdings
For Immediate Release
Chicago, IL – March 14, 2018 – 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 Unisys Corporation (UIS - Free Report) , MCBC Holdings Inc. (MCFT - Free Report) , Harsco Corporation and Heritage Insurance Holdings Inc. (HRTG - Free Report) .
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Tuesday’s Analyst Blog:
Cyclical Stocks Could Win 2018: 4 Top Picks
Signs of a recovery, albeit moderate, in the U.S. economy, are now evident, thanks to a solid labor market. Decent inflation, impressive Q4 earnings season, moderate retail sales, the passing of the tax reform and last but not the least uptick in global growth have been fueling optimism in the market.
Still, rising rate concerns occasionally dampen the Wall Street rally. Though tepid wage growth in February put off the blazing bets of faster Fed rate hikes this year, it is uncertain how long this speculation can be deferred. At the current level, the Fed is seemingly enacting three rate hikes this year, if not four.
Inside Hawkish Views
Goldman Sachs analysts estimate that there will be eight rate hikes in 2018 and 2019, economic growth will slow down to 2.2% in 2019 from 2.3% recorded in 2017 and bond yields may shoot up to as high as 4% (a mark not touched since May 2008). Notably, before Powell became the Fed head, the bank had penciled three rate hikes in 2018 and two more in 2019.
Coming to wage growth, it rose 0.1% to $26.75 in February, marking a slowdown from the 0.3% rise in January. However, some economists do not see this as a concern. Per Reuters, this group of economists believes that wage growth has actually been stronger than indicated by average hourly earnings, which appears more volatile on a monthly basis. Average hourly earnings for production and non-supervisory workers, which economists say are better measured, rose 0.3% in February, per Reuters.
Are Rising Rate Fears Overblown?
If we delve a little deeper, we’ll see there is no need to fear rising rate risks. The last full cycle of rate increases happened in the United States between June 2004 and June 2006 as rates progressively rose from 1.00% to 5.25%. The Federal Reserve started slashing rates from September 2007 through December 2008 until the rates reached the 0.00 - 0.25% range.
In December 2015, the Fed again embarked on a tightening spree and since then has enacted five hikes and brought key rates within the 1.25 - 1.50% range. Even if we assume four rate hikes this year, each worth 25 bps, key rates will not cross the 2.25 – 2.50% range. This is nothing considering the highs seen in 2005-2006.
Is U.S. Economy In a Mid Cycle of Recovery?
According to Fidelity, the mid business cycle of recovery is marked by factors like upbeat growth, strong credit growth, solid earnings growth and accommodative but neutral monetary policy. Many of these factors match with the current state of the U.S. economy. Plus, the tax reform is an added tailwind.
Moreover, if healthy stock market momentum is maintained, a wealth effect can be realized. As per Investopedia, “the wealth effect helps to power economies during bull markets. Big gains in people's portfolios can make them feel more secure about their wealth and their spending."
As Fidelity sector strategist noted that “there is a high correlation between corporate profit growth of more than 5% and strong stock market returns,” we are likely to see wealth effect building up this year (given expected 2018 earnings growth rate of the S&P 500 is 20.7%).
Cyclical Sectors Sizzle When Rates Normalize
In a steadily-growing economy, most sectors surge from a wealth effect, with a few of the more cyclical corners making the most of this rally. These industries often sag in a slumping economy but are the biggest winners during a revival. Historically, cyclical sectors outperform the defensive ones when rates normalize.
4 Top Picks
Information Technology
The technology sector is on a tear lately. Emerging new technologies like cloud computing, big data and Internet of Things are expected to pull the sector forward in the coming days.
Unisys Corporation
A worldwide technology services and solutions company with a Zacks Rank #1 (Strong Buy) and a VGM Score of A. It belongs to a top-ranked Zacks Industry (top 42%).
Consumer Discretionary
The sector is likely to benefit from the rising income levels of consumers.
MCBC Holdings Inc.
A manufacturer and marketer of MasterCraft brand premium performance sport boats. It has a Zacks Rank #1 and VGM Score of B. It hails from a top-ranked Zacks Industry (top 25%).You can see the complete list of today’s Zacks #1 Rank stocks here.
Industrials
Per Fidelity, sectors like industrials do better in the mid-cycle phase of the economy. In any case, an industrial boom is apparent in the U.S. economy, thanks to Trump’s infrastructure plan and tax cuts.
Harsco Corporation
This Zacks Rank #1 company is a services and engineered products company. The stock has a VGM Score of A and belongs to a top-ranked Zacks Industry (top 10%).
Financials
Rising rate environment will lead to a favorable operating environment for financial stocks.
Heritage Insurance Holdings Inc.
This is a property and casualty insurance holding company. It has a Zacks Rank #1 and a VGM Score of A. It hails from a top-ranked Zacks Industry (top 45%).
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.
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 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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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.