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Thor Industries is a Zacks Rank #1 (Strong Buy) that makes a wide range of recreational vehicles (RVs). The company manufactures in Indiana and Ohio and sells its products through independent dealers in the U.S. and Canada.
The stock has been hot of late as the appeal of camping has increased due to COVID-19. Consumers are changing their travel habits from international to domestic and one of the best ways to do this is by camper or RV.
Travel Has Changed
There is a lot of fear surrounding travel at the moment as COVID-19 continues to be a problem around the globe. Because the U.S. has one of the highest case counts, some countries have issued quarantine rules for travelers. This isn’t appealing for someone on vacation so we are seeing a big reduction in international travel.
Hotels and planes aren’t appealing to people yet and will likely be avoided until a vaccine comes. One of the best ways to travel the country is by camper, exploring what the campgrounds of America have to offer. The American consumer shifted with that thought in mind and the demand for RV’s has shot higher over the last few months.
Earnings Beat
The stock was crushed during the March panic, making a low of $30 a share. However, once investors realized how much traveling would be restricted to the country, the stock bounced quickly. After a rally of over 200%, we saw the earnings come out with a 200% beat on EPS.
Thor saw +$0.43 v a negative $0.43 expected. The company also beat on revenues, seeing $1.68 billion v the $1.42 expected. Moreover, Thor said that Q4 sales improved and they have a backlog for May.
As dealers reopened their dealerships, consumer demand has increased. On the call, the CFO had some comments on the current environment: “Today, market indicators in North America are increasingly positive. Every North American dealer I have spoken to in the last few weeks has been very excited about the pace at which sales are picking up.”
This change in the RV market has created a hope that the stock can return to the highs seen in 2018. The company missed earnings five quarters in a row, so these numbers are very promising.
Estimates Rising
Because the quarter was so impressive analysts were forced to take numbers higher. We now see rising estimates across all-time frames over the last month. For next quarter, analyst have raised estimates from $0.95 to $1.46, a hike of 54%. For the current year, we see a 76% hike, from $1.88 to $3.32,
The Technical Take
The move lower in March created a massive opportunity for long-term investors. However, those looking to enter the stock now might think twice after the big move higher. Let’s take a look at some levels to enter.
The 200-day is at $71 and not likely to come anytime soon. The 50-day is $90 and could print on a market selloff. With that level, there is a 61.8% Fibonacci level at $85. The $100 level has been supported and a move back over $110 would be bullish. The stock has Fib targets at $132 and $151.
In Summary
The way Americans travel has changed due to the pandemic. While this hopefully won’t last forever, the current situation makes THO a stock to own as camping gains popularity.
YELP is a Zacks Rank #5 (Strong Sell) that is a website engaged with providing information though an online community offering social network. The San Francisco based company covers restaurants, shopping, nightlife, financial services, health and other services.
The obvious problem here is most of the reason people went to Yelp was shutdown over the last few months. Even with economies reopening, people are still hesitant to go out. Additionally, when people are going out, they are sticking to the areas they know. Tourists in cities are big users of Yelp, but with very little traveling there is no need for the service.
The stock has rallied off the lows, but has struggled to continue higher like so many tech stocks had. Let’s take a look at earnings, estimates and some of the technicals.
Sharp Reductions in Local Business Spend
Yelp has a major issue as economies reopen. Local business has missed a full quarter of sales as everything has been shuttered. For that reason, they have very little budget room in their ad budgets to use with Yelp. Because of recent spikes in cases, we are seeing an even slower reopening in some markets. This is terrible news for revenue and growth at Yelp.
Online advertising is one of the first budgets to be cut and Yelp is on the chopping block for most businesses. Even if a vaccine comes soon and the economy fully reopens, the pent-up demand will not be felt at Yelp like it would in other areas. Instead, we would see a slow return to normal as businesses start getting back to where they were before COVID.
Poor Performance
We have all seen some of the big moves in stocks over the last two months. However, Yelp continues to struggle, still down over 30% from the 2020 highs. The lack of performance is concerning for investors and they should be concerned ahead of earnings on Aug 6th.
Technical Take
The stock is struggling at the $25 level after trying to move to the 200-day at $30. The bulls are trying to hold the 50-day moving average at $23, but the stock looks heavy. If the 50 fails, we could quickly see May lows around $18.
To the upside, the stock needs to break $25 and the bulls need over the $29 level to put pressure on the short sellers.
Estimates
Analysts see the reduction of ad spend as a big issue and are dropping estimates. Over the last 60 days, estimates have fallen 166% for next quarter. For the current year, estimates have dropped over 80% for the same time period.
In Summary
There are plenty of stocks to choose from that are making new highs every day. Until YELP can show that the open of the economies is turning their business around, avoid the stock.
Additional content:
Bulls Take a Powder, LEVI Gives a Taste of Q2 Earnings
Markets traded lower both in early morning activity and accelerated the selling into the close Tuesday, in something of a mirror-image from what we’d seen with bullish sentiment taking the reins in afternoon trading over the past couple weeks. After dabbling in the green mid-day, the S&P 500 finished down 1% to 3145.33 while the Nasdaq dipped -0.56% to 10,343.89. The Dow was in the red all day, closing down 1.51% to 28,890.32.
About 2 to 1 sells to buys Tuesday signaled booking profits and traders tacking a bit more risk-averse. No particular economic or headline news data struck positive momentum in any meaningful way, but lofty valuations of late in Tech, Industrials and Energy had investors see fit to pluck some low-hanging fruit. Gold rose 1% on the day, back about $1800 per ounce.
Walmart made headlines, up 6.8% on news that the retail giant plans to launch Walmart+ this month, which would be the biggest competitor to Amazon Prime to date. A yearly subscription price of $98 would include same-day grocery delivery and discounts at Walmart gasoline pumps. This service had originally been planned for launch this spring, but was mothballed while the country dealt with the coronavirus pandemic. Video entertainment is a planned service for Walmart+, similar to what Amazon Prime offers, but not upon its initial launch.
Levi Strauss & Co. reported Q2 earnings directly after Tuesday’s closing bell, giving some sense of the abyss awaiting the Retail sector when Q2 earnings season begins to heat up: -48 cents per share missed the Zacks consensus of -42 cents, on year-over-year revenues of $498 million, down 62% from the year-ago quarter. This is the first earnings miss for LEVI in its short existence on the NYSE.
COVID-related costs came to $88 million for the apparel company in the quarter, and although its E-commerce business grew 25%, it’s still a small part of the company’s sales operations. LEVI also said it will be cutting 700 jobs — 15% of its total workforce — in non-retail, non-manufacturing capacities (management), which is expected to cut $100 million off the company’s expenses.
The company had a Zacks Rank #3 (Hold) ahead of the earnings release. Shares were down 4% in regular trading, and another -2% in the late session.
Free Book: Finding #1 Stocks
In this 300-page hardcover, Zacks' Executive VP Kevin Matras reveals almost every stock-picking secret he’s learned from the system that since 1988 has more than doubled the average yearly gain of the S&P 500.
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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Thor Industries, YELP, Walmart, Amazon and Levi Strauss highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – July 8, 2020 – Zacks Equity Research Shares of Thor Industries (THO - Free Report) as the Bull of the Day, YELP (YELP - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Walmart (WMT - Free Report) , Amazon (AMZN - Free Report) and Levi Strauss & Co. (LEVI - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Thor Industries is a Zacks Rank #1 (Strong Buy) that makes a wide range of recreational vehicles (RVs). The company manufactures in Indiana and Ohio and sells its products through independent dealers in the U.S. and Canada.
The stock has been hot of late as the appeal of camping has increased due to COVID-19. Consumers are changing their travel habits from international to domestic and one of the best ways to do this is by camper or RV.
Travel Has Changed
There is a lot of fear surrounding travel at the moment as COVID-19 continues to be a problem around the globe. Because the U.S. has one of the highest case counts, some countries have issued quarantine rules for travelers. This isn’t appealing for someone on vacation so we are seeing a big reduction in international travel.
Hotels and planes aren’t appealing to people yet and will likely be avoided until a vaccine comes. One of the best ways to travel the country is by camper, exploring what the campgrounds of America have to offer. The American consumer shifted with that thought in mind and the demand for RV’s has shot higher over the last few months.
Earnings Beat
The stock was crushed during the March panic, making a low of $30 a share. However, once investors realized how much traveling would be restricted to the country, the stock bounced quickly. After a rally of over 200%, we saw the earnings come out with a 200% beat on EPS.
Thor saw +$0.43 v a negative $0.43 expected. The company also beat on revenues, seeing $1.68 billion v the $1.42 expected. Moreover, Thor said that Q4 sales improved and they have a backlog for May.
As dealers reopened their dealerships, consumer demand has increased. On the call, the CFO had some comments on the current environment: “Today, market indicators in North America are increasingly positive. Every North American dealer I have spoken to in the last few weeks has been very excited about the pace at which sales are picking up.”
This change in the RV market has created a hope that the stock can return to the highs seen in 2018. The company missed earnings five quarters in a row, so these numbers are very promising.
Estimates Rising
Because the quarter was so impressive analysts were forced to take numbers higher. We now see rising estimates across all-time frames over the last month. For next quarter, analyst have raised estimates from $0.95 to $1.46, a hike of 54%. For the current year, we see a 76% hike, from $1.88 to $3.32,
The Technical Take
The move lower in March created a massive opportunity for long-term investors. However, those looking to enter the stock now might think twice after the big move higher. Let’s take a look at some levels to enter.
The 200-day is at $71 and not likely to come anytime soon. The 50-day is $90 and could print on a market selloff. With that level, there is a 61.8% Fibonacci level at $85. The $100 level has been supported and a move back over $110 would be bullish. The stock has Fib targets at $132 and $151.
In Summary
The way Americans travel has changed due to the pandemic. While this hopefully won’t last forever, the current situation makes THO a stock to own as camping gains popularity.
Bear of the Day:
YELP is a Zacks Rank #5 (Strong Sell) that is a website engaged with providing information though an online community offering social network. The San Francisco based company covers restaurants, shopping, nightlife, financial services, health and other services.
The obvious problem here is most of the reason people went to Yelp was shutdown over the last few months. Even with economies reopening, people are still hesitant to go out. Additionally, when people are going out, they are sticking to the areas they know. Tourists in cities are big users of Yelp, but with very little traveling there is no need for the service.
The stock has rallied off the lows, but has struggled to continue higher like so many tech stocks had. Let’s take a look at earnings, estimates and some of the technicals.
Sharp Reductions in Local Business Spend
Yelp has a major issue as economies reopen. Local business has missed a full quarter of sales as everything has been shuttered. For that reason, they have very little budget room in their ad budgets to use with Yelp. Because of recent spikes in cases, we are seeing an even slower reopening in some markets. This is terrible news for revenue and growth at Yelp.
Online advertising is one of the first budgets to be cut and Yelp is on the chopping block for most businesses. Even if a vaccine comes soon and the economy fully reopens, the pent-up demand will not be felt at Yelp like it would in other areas. Instead, we would see a slow return to normal as businesses start getting back to where they were before COVID.
Poor Performance
We have all seen some of the big moves in stocks over the last two months. However, Yelp continues to struggle, still down over 30% from the 2020 highs. The lack of performance is concerning for investors and they should be concerned ahead of earnings on Aug 6th.
Technical Take
The stock is struggling at the $25 level after trying to move to the 200-day at $30. The bulls are trying to hold the 50-day moving average at $23, but the stock looks heavy. If the 50 fails, we could quickly see May lows around $18.
To the upside, the stock needs to break $25 and the bulls need over the $29 level to put pressure on the short sellers.
Estimates
Analysts see the reduction of ad spend as a big issue and are dropping estimates. Over the last 60 days, estimates have fallen 166% for next quarter. For the current year, estimates have dropped over 80% for the same time period.
In Summary
There are plenty of stocks to choose from that are making new highs every day. Until YELP can show that the open of the economies is turning their business around, avoid the stock.
Additional content:
Bulls Take a Powder, LEVI Gives a Taste of Q2 Earnings
Markets traded lower both in early morning activity and accelerated the selling into the close Tuesday, in something of a mirror-image from what we’d seen with bullish sentiment taking the reins in afternoon trading over the past couple weeks. After dabbling in the green mid-day, the S&P 500 finished down 1% to 3145.33 while the Nasdaq dipped -0.56% to 10,343.89. The Dow was in the red all day, closing down 1.51% to 28,890.32.
About 2 to 1 sells to buys Tuesday signaled booking profits and traders tacking a bit more risk-averse. No particular economic or headline news data struck positive momentum in any meaningful way, but lofty valuations of late in Tech, Industrials and Energy had investors see fit to pluck some low-hanging fruit. Gold rose 1% on the day, back about $1800 per ounce.
Walmart made headlines, up 6.8% on news that the retail giant plans to launch Walmart+ this month, which would be the biggest competitor to Amazon Prime to date. A yearly subscription price of $98 would include same-day grocery delivery and discounts at Walmart gasoline pumps. This service had originally been planned for launch this spring, but was mothballed while the country dealt with the coronavirus pandemic. Video entertainment is a planned service for Walmart+, similar to what Amazon Prime offers, but not upon its initial launch.
Levi Strauss & Co. reported Q2 earnings directly after Tuesday’s closing bell, giving some sense of the abyss awaiting the Retail sector when Q2 earnings season begins to heat up: -48 cents per share missed the Zacks consensus of -42 cents, on year-over-year revenues of $498 million, down 62% from the year-ago quarter. This is the first earnings miss for LEVI in its short existence on the NYSE.
COVID-related costs came to $88 million for the apparel company in the quarter, and although its E-commerce business grew 25%, it’s still a small part of the company’s sales operations. LEVI also said it will be cutting 700 jobs — 15% of its total workforce — in non-retail, non-manufacturing capacities (management), which is expected to cut $100 million off the company’s expenses.
The company had a Zacks Rank #3 (Hold) ahead of the earnings release. Shares were down 4% in regular trading, and another -2% in the late session.
Free Book: Finding #1 Stocks
In this 300-page hardcover, Zacks' Executive VP Kevin Matras reveals almost every stock-picking secret he’s learned from the system that since 1988 has more than doubled the average yearly gain of the S&P 500.
Learn more now >>
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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.