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The coronavirus ended the 11-year bull market at breakneck speed and selling and volatility look set to remain amid increasing uncertainty. The Dow, the S&P 500, and the Nasdaq all plummeted again Wednesday, which pushed them all down roughly 30% from their mid-February highs.
With that said, some investors might want to start hunting for stocks to consider buying, or at least putting on their watchlists. But now likely isn’t time to look for speculative stocks. It’s time to search for longer-term buys that also help provide income amid the downturn.
Today we dive into why Intel might be worth considering even as the coronavirus pandemic causes market chaos.
Intel’s Quick Pitch
Intel is the largest semiconductor maker in the U.S. by revenue. The historic chip powerhouse topped our fourth quarter estimates in late January, driven by data-center and PC demand. INTC also upped its guidance and noted that it is set to benefit from the on-going expansion of the cloud computing market and more.
INTC is set to expand and grow for years to come as part of the broader technological revolution that chips support. Intel might not be the flashy growth name in the semiconductor space, like Nvidia or others.
But Intel’s stability might be better suited for our current market and it is prepared for the future. “One year into our long-term financial plan, we have outperformed our revenue and EPS expectations,” CEO Bob Swan said in prepared Q4 remarks.
“Looking ahead, we are investing to win the technology inflections of the future, play a bigger role in the success of our customers and increase shareholder returns."
Speaking of innovation, Intel on Wednesday announced its “latest and most powerful neuromorphic research system providing the computational capacity of 100 million neurons.” Intel noted that the cloud-based system, called Pohoiki Springs, will be made available to members of the Intel Neuromorphic Research Community.
Investors should note that neuromorphic computing tries to mimic and simulate the way human brains work. Neuromorphic chips are expected to lead to faster and more energy-efficient computing. Tech research firm Gartner Inc. expects neuromorphic chips will be the predominant computing architecture for advanced forms of artificial intelligence by 2025.
Other Fundamentals
The nearby chart shows that Intel’s free cash flow has grown steadily in the last five years. In fiscal 2019, the firm returned roughly $19.2 billion to shareholders through buybacks and dividends. Last quarter, INTC announced that it raised its dividend by 5% to an annualized basis to $1.32 a share.
Intel’s dividend yield currently rests at 2.80%. This tops the 10-year U.S. Treasury’s 1.18%, the S&P 500’s 2.33% average—based on the SPDR S&P 500 ETF Trust—as well as Apple’s 1.25%, and blows away NVDA’s 0.30%
Meanwhile, INTC is trading at 10.0X forward 12-month earnings estimates. This marks a discount against its industry’s 12.5X average, Texas Instruments’ 20.4X, as well as its own three-year median of 12.1X and 14.8X high. Intel is also part of an industry that rests in the top 16% of our more than 250 Zacks industries.
Bottom Line
Looking ahead, our Zacks estimates call for Intel’s fiscal 2020 revenue to jump 2.1% to reach $73.43 billion to help lift its bottom-line by 2.1%. The company’s adjusted 2021 EPS figure is then projected to pop another 2.1%, on 1.2% stronger sales.
We can also see that Intel’s earnings revision activity has remained strong, which helps it hold a Zacks Rank #1 (Strong Buy).
INTC stock closed regular trading on Wednesday at $47.61 a share, down over 30% from its January 2020 highs of around $69 per share. Obviously, the market could continue to fall and volatility is likely to remain the name of the game for now, but Intel might be worth considering.
Royal Caribbean Cruises Ltd. has been hit hard by the coronavirus, with its stock down over 80% in a month. Some might think this massive drop could set up a buying opportunity, but chasing a bottom for this global cruise giant amid the current market turbulence doesn’t seem wise.
Rough Seas
Royal Caribbean is a global cruise firm that controls and operates under four brands, which include its namesake Royal Caribbean International, Celebrity Cruises, and more. The firm is a travel industry powerhouse that had been on a strong run over the last decade. But then the spread of the coronavirus began to scare travelers, and that was a month ago.
Since then, the novel coronavirus has been officially declared a pandemic by the World Health Organization. On top of that, large gatherings have been canceled, businesses have closed, and travel has all but halted. This situation is completely out of RCL management’s control. Nonetheless, it forced the firm on March 10 to pull its first quarter and full-year 2020 guidance.
Royal Caribbean also at that time increased its revolving credit capacity by $550 million, “bolstering the company's liquidity.” Then the bombshell dropped on March 14, when RCL announced that it was suspending all of its cruises, citing the “global public health circumstances.”
The firm said it would “conclude all current sailings as scheduled” and noted that it expected to return to service on April 11. Plus, cruise operators were not mentioned as part of the roughly $1 trillion U.S. stimulus proposal.
Bottom Line
The first chart shows us just how fast and far Royal Caribbean stock has tumbled. The stock fell another 19% during regular trading Wednesday to close at $22.33 a share—RCL was trading at $135 in January 2020.
The fall has helped make Royal Caribbean’s dividend yield more attractive, resting at 13.97%. But our Zacks estimates call for the company’s adjusted earnings to fall 40% this year. And RCL’s negative earnings revision activity helps it hold a Zacks Rank #5 (Strong Sell) at the moment, alongside fellow cruise firm Norwegian.
Eventually, the stock might hit a bottom and demand could climb once Royal Caribbean resumes travel. However, the April timetable is hardly guaranteed. Therefore, it is likely best to wait for ships to actually leave the dock before buying RCL stock.
Additional content:
Coronavirus Testing Players Gain Momentum: 3 Picks
The COVID-19 jitters have been intensifying since the viral outbreak was declared a pandemic by WHO last week.Last month, a study by The Guardian estimated that the outbreak might cost the global economy more than $1 trillion.Similar to other benchmark indices, the Dow Jones plummeted almost 3000 points, on Mar 17, mostly as investors believe that the Fed’s slashing of interest rates could barely do much to mitigate the crisis.
Diagnostic Testing Companies Gaining Traction
Most U.S. companies across all industry domains have slashed their first-quarter guidance owing to expectations of revenue losses. However, there are several key biotech and molecular diagnostic players whose prospects seem bright on account of rigorous work on the development of diagnostic testing for the coronavirus and attaining regulatory approvals for them.
On Feb 29, the FDA made a flexible decision to allow certain certified laboratories to urgently begin developing validated coronavirus diagnostics, subject to the condition that the test is submitted for review within 15 days to the federal agency.
In this regard, LabCorp announced the availability of its LabCorp 2019 Novel Coronavirus (COVID-19), NAA test, effective Mar 5, for doctors and other authorized healthcare personnel in the United States. The test diagnoses the presence of the underlying virus responsible for COVID-19 and should benefit patients who meet current guidelines for evaluation of the disease.
Also, Bio-Rad Laboratories announced the launch of SARS CoV-2 Standard to enable the laboratory assay authentication of testing for COVID-19 as well as accelerate the access to testing. Notably, the SARS CoV-2 Standard was launched through the company’s Exact Diagnostics product line.
Roche Holding: This company recently attained the FDA’s Emergency Use Authorization (EUA) for the cobas SARS-CoV-2 Test. The test will be used for qualitative detection of SARS-CoV-2in nasopharyngeal and oropharyngeal swab samples from patients who meet COVID-19 clinical and/or epidemiological criteria for testing.
The CE-IVD test is also available in markets accepting the CE mark for patients with signs and symptoms of COVID-19 and living in affected areas. The cobas test aims to deliver outcomes with a total of 1,440 samples tested per day on the 6800 system and 4,128 per day on the larger 8800. Also, the FDA has declared that it has approved the pre-shipping of the tests to laboratories so that they can be utilized immediately following authorization.
In the past year, the company’s shares have outperformed the industry. The stock has rallied 16.6% against the industry’s 12.6% decline.
Thermo Fisher: This global manufacturer of scientific instruments recently attained EUA from the FDA for its diagnostic test to be used immediately by CLIA high-complexity laboratories in the United States. The test has been developed for the detection of nucleic acid exclusively from SARS-CoV-2.
The authorized test utilizes the Applied Biosystems TaqPath Assay technology and has been developed to deliver patient outcomes within four hours of a sample reaching a laboratory. The estimated time-to-result constitutes of time for sample preparation and instrument analysis.
The EUA test is optimized for use on the company's Applied Biosystems 7500 Fast Dx Real-time PCR instrument. The instrument is covered under the EUA and is already utilized in clinical laboratories across the globe.
In the past year, the company’s shares have outperformed the industry.The stock has rallied 11.4% against the industry’s 21.7% decline.
Quest Diagnostics: This major diagnostic testing firm recently announced plans to launch the COVID-19 test service once it is prepared to receive specimens for testing. Notably, the testing procedures have started from Mar 9, 2020. Through the latest service, the company will cater to the testing requirements of patients in the United States. This test would facilitate the potential detection of nucleic acid in respiratory specimens of patients who fulfill CDC's clinical criteria for COVID-19 testing.
In the past year, the company’s shares have outperformed the industry. The stock has lost 3.6% compared with the industry’s 19.2% decline.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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/performance for information about the performance numbers displayed in this press release.
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Intel, Royal Caribbean Cruises, Roche, Thermo Fisher and Quest Diagnostics highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – March 19, 2020 – Zacks Equity Research Shares of Intel (INTC - Free Report) as the Bull of the Day, Royal Caribbean Cruises Ltd. (RCL - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Roche Holding (RHHBY - Free Report) , Thermo Fisher (TMO - Free Report) and Quest Diagnostics (DGX - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
The coronavirus ended the 11-year bull market at breakneck speed and selling and volatility look set to remain amid increasing uncertainty. The Dow, the S&P 500, and the Nasdaq all plummeted again Wednesday, which pushed them all down roughly 30% from their mid-February highs.
With that said, some investors might want to start hunting for stocks to consider buying, or at least putting on their watchlists. But now likely isn’t time to look for speculative stocks. It’s time to search for longer-term buys that also help provide income amid the downturn.
Today we dive into why Intel might be worth considering even as the coronavirus pandemic causes market chaos.
Intel’s Quick Pitch
Intel is the largest semiconductor maker in the U.S. by revenue. The historic chip powerhouse topped our fourth quarter estimates in late January, driven by data-center and PC demand. INTC also upped its guidance and noted that it is set to benefit from the on-going expansion of the cloud computing market and more.
INTC is set to expand and grow for years to come as part of the broader technological revolution that chips support. Intel might not be the flashy growth name in the semiconductor space, like Nvidia or others.
But Intel’s stability might be better suited for our current market and it is prepared for the future. “One year into our long-term financial plan, we have outperformed our revenue and EPS expectations,” CEO Bob Swan said in prepared Q4 remarks.
“Looking ahead, we are investing to win the technology inflections of the future, play a bigger role in the success of our customers and increase shareholder returns."
Speaking of innovation, Intel on Wednesday announced its “latest and most powerful neuromorphic research system providing the computational capacity of 100 million neurons.” Intel noted that the cloud-based system, called Pohoiki Springs, will be made available to members of the Intel Neuromorphic Research Community.
Investors should note that neuromorphic computing tries to mimic and simulate the way human brains work. Neuromorphic chips are expected to lead to faster and more energy-efficient computing. Tech research firm Gartner Inc. expects neuromorphic chips will be the predominant computing architecture for advanced forms of artificial intelligence by 2025.
Other Fundamentals
The nearby chart shows that Intel’s free cash flow has grown steadily in the last five years. In fiscal 2019, the firm returned roughly $19.2 billion to shareholders through buybacks and dividends. Last quarter, INTC announced that it raised its dividend by 5% to an annualized basis to $1.32 a share.
Intel’s dividend yield currently rests at 2.80%. This tops the 10-year U.S. Treasury’s 1.18%, the S&P 500’s 2.33% average—based on the SPDR S&P 500 ETF Trust—as well as Apple’s 1.25%, and blows away NVDA’s 0.30%
Meanwhile, INTC is trading at 10.0X forward 12-month earnings estimates. This marks a discount against its industry’s 12.5X average, Texas Instruments’ 20.4X, as well as its own three-year median of 12.1X and 14.8X high. Intel is also part of an industry that rests in the top 16% of our more than 250 Zacks industries.
Bottom Line
Looking ahead, our Zacks estimates call for Intel’s fiscal 2020 revenue to jump 2.1% to reach $73.43 billion to help lift its bottom-line by 2.1%. The company’s adjusted 2021 EPS figure is then projected to pop another 2.1%, on 1.2% stronger sales.
We can also see that Intel’s earnings revision activity has remained strong, which helps it hold a Zacks Rank #1 (Strong Buy).
INTC stock closed regular trading on Wednesday at $47.61 a share, down over 30% from its January 2020 highs of around $69 per share. Obviously, the market could continue to fall and volatility is likely to remain the name of the game for now, but Intel might be worth considering.
Bear of the Day:
Royal Caribbean Cruises Ltd. has been hit hard by the coronavirus, with its stock down over 80% in a month. Some might think this massive drop could set up a buying opportunity, but chasing a bottom for this global cruise giant amid the current market turbulence doesn’t seem wise.
Rough Seas
Royal Caribbean is a global cruise firm that controls and operates under four brands, which include its namesake Royal Caribbean International, Celebrity Cruises, and more. The firm is a travel industry powerhouse that had been on a strong run over the last decade. But then the spread of the coronavirus began to scare travelers, and that was a month ago.
Since then, the novel coronavirus has been officially declared a pandemic by the World Health Organization. On top of that, large gatherings have been canceled, businesses have closed, and travel has all but halted. This situation is completely out of RCL management’s control. Nonetheless, it forced the firm on March 10 to pull its first quarter and full-year 2020 guidance.
Royal Caribbean also at that time increased its revolving credit capacity by $550 million, “bolstering the company's liquidity.” Then the bombshell dropped on March 14, when RCL announced that it was suspending all of its cruises, citing the “global public health circumstances.”
The firm said it would “conclude all current sailings as scheduled” and noted that it expected to return to service on April 11. Plus, cruise operators were not mentioned as part of the roughly $1 trillion U.S. stimulus proposal.
Bottom Line
The first chart shows us just how fast and far Royal Caribbean stock has tumbled. The stock fell another 19% during regular trading Wednesday to close at $22.33 a share—RCL was trading at $135 in January 2020.
The fall has helped make Royal Caribbean’s dividend yield more attractive, resting at 13.97%. But our Zacks estimates call for the company’s adjusted earnings to fall 40% this year. And RCL’s negative earnings revision activity helps it hold a Zacks Rank #5 (Strong Sell) at the moment, alongside fellow cruise firm Norwegian.
Eventually, the stock might hit a bottom and demand could climb once Royal Caribbean resumes travel. However, the April timetable is hardly guaranteed. Therefore, it is likely best to wait for ships to actually leave the dock before buying RCL stock.
Additional content:
Coronavirus Testing Players Gain Momentum: 3 Picks
The COVID-19 jitters have been intensifying since the viral outbreak was declared a pandemic by WHO last week.Last month, a study by The Guardian estimated that the outbreak might cost the global economy more than $1 trillion.Similar to other benchmark indices, the Dow Jones plummeted almost 3000 points, on Mar 17, mostly as investors believe that the Fed’s slashing of interest rates could barely do much to mitigate the crisis.
Diagnostic Testing Companies Gaining Traction
Most U.S. companies across all industry domains have slashed their first-quarter guidance owing to expectations of revenue losses. However, there are several key biotech and molecular diagnostic players whose prospects seem bright on account of rigorous work on the development of diagnostic testing for the coronavirus and attaining regulatory approvals for them.
On Feb 29, the FDA made a flexible decision to allow certain certified laboratories to urgently begin developing validated coronavirus diagnostics, subject to the condition that the test is submitted for review within 15 days to the federal agency.
In this regard, LabCorp announced the availability of its LabCorp 2019 Novel Coronavirus (COVID-19), NAA test, effective Mar 5, for doctors and other authorized healthcare personnel in the United States. The test diagnoses the presence of the underlying virus responsible for COVID-19 and should benefit patients who meet current guidelines for evaluation of the disease.
Also, Bio-Rad Laboratories announced the launch of SARS CoV-2 Standard to enable the laboratory assay authentication of testing for COVID-19 as well as accelerate the access to testing. Notably, the SARS CoV-2 Standard was launched through the company’s Exact Diagnostics product line.
3 Stocks to Keep an Eye On:
These Zacks Rank #3 (Hold) stocks have been outperforming with their major strides in coronavirus testing. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Roche Holding: This company recently attained the FDA’s Emergency Use Authorization (EUA) for the cobas SARS-CoV-2 Test. The test will be used for qualitative detection of SARS-CoV-2in nasopharyngeal and oropharyngeal swab samples from patients who meet COVID-19 clinical and/or epidemiological criteria for testing.
The CE-IVD test is also available in markets accepting the CE mark for patients with signs and symptoms of COVID-19 and living in affected areas. The cobas test aims to deliver outcomes with a total of 1,440 samples tested per day on the 6800 system and 4,128 per day on the larger 8800. Also, the FDA has declared that it has approved the pre-shipping of the tests to laboratories so that they can be utilized immediately following authorization.
In the past year, the company’s shares have outperformed the industry. The stock has rallied 16.6% against the industry’s 12.6% decline.
Thermo Fisher: This global manufacturer of scientific instruments recently attained EUA from the FDA for its diagnostic test to be used immediately by CLIA high-complexity laboratories in the United States. The test has been developed for the detection of nucleic acid exclusively from SARS-CoV-2.
The authorized test utilizes the Applied Biosystems TaqPath Assay technology and has been developed to deliver patient outcomes within four hours of a sample reaching a laboratory. The estimated time-to-result constitutes of time for sample preparation and instrument analysis.
The EUA test is optimized for use on the company's Applied Biosystems 7500 Fast Dx Real-time PCR instrument. The instrument is covered under the EUA and is already utilized in clinical laboratories across the globe.
In the past year, the company’s shares have outperformed the industry.The stock has rallied 11.4% against the industry’s 21.7% decline.
Quest Diagnostics: This major diagnostic testing firm recently announced plans to launch the COVID-19 test service once it is prepared to receive specimens for testing. Notably, the testing procedures have started from Mar 9, 2020. Through the latest service, the company will cater to the testing requirements of patients in the United States. This test would facilitate the potential detection of nucleic acid in respiratory specimens of patients who fulfill CDC's clinical criteria for COVID-19 testing.
In the past year, the company’s shares have outperformed the industry. The stock has lost 3.6% compared with the industry’s 19.2% decline.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
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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/performance for information about the performance numbers displayed in this press release.