We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
I compiled a list of about 45 stocks that posted a clean beat and raise for the third quarter of 2016. The idea is a good one, following the performance of stocks that have beaten expectations and then guided higher. But which ones were the best?
The idea came to me on October 30th and I started it with prices as of October 31st. That means that all the beats prior to the 31st that made my list might have seen a little better (or worse) performance because of the arbitrary time that I added the names to the list. With that in mind, let’s focus on building a much cleaner list this quarter.
Next week I will do a full review of the list after I have done the same for paying subscribers of Zacks Game Changers. At this time I can tell you that the leader of the list was Ultra Clean UCTT) continues to sport a Zacks Rank #1 (Strong Buy). At the bottom of the list is Ellie Mae (ELLI) which basically flat lined since the report and is now a Zacks Rank #3 (Hold).
Recent Beaters And Raisers
First I want to mention a stock that I think will be the best performer for 1Q17. KLA Tencor (KLAC - Free Report) beat the Zacks Consensus Estimate of $1.41 by $0.11 in posting earnings of $1.52. That translates into a positive earnings surprise of 7.8% marking the 10th straight beat of the Zacks Consensus Estimate.
Guidance called for revenue of between $860M - $920M when the consensus estimate was calling for $849M. As the aggressive growth stock strategist at Zacks, this is what I love to see. Also on the call, management noted that they expect CY17 gross margin to be a “couple hundred basis points” better than previously expected.
It world of beating and raising this stock has higher revenues and higher margins. Usually, when that happens you see higher multiples. Speaking of multiples, KLAC trades at 15.6x forward estimates and over the last two years the stock has traded between 13.2x and 17.8x. This tells me that the stock could go as high as $109 (17.8*6.17) if it trades at the high end of the range over the last two years.
One thing that I like to see is a stock that has room for future catalysts. KLAC has three brokerages that have “Hold” or equivalent ratings on the stock. Instinet is by far the most bearish of the three with a price target of $78 and a neutral rating. Stifel Nicolaus has a hold and a price target of $83. A few days after the most recent report Deutsche Bank reiterated their “Hold” on the stock and increased their price target from $78 to $85.
Goldman Sachs, Cowen and Company, Credit Suise, B. Riley and Needham all have KLAC at either “Buy” or “Strong Buy” or the equivalent. Of those, B. Riley is the most bullish with a $106 price target and Needham is just a dollar behind at $105.
The Big Tell For KLAC
Over the years I have picked up on the lingo for chip stocks. At first I learned all about book to bill and after that the focus became backlog. More recently I have picked up an even bigger tell than a stock with records billings or record backlog. The phrase that pays is “design wins.”
During the most recent conference call management spoke the phrase that pays when talking to 3D NAND. If there is anything that is as good as a design win, I have yet to know what it is. This ensures some high margin business over the next 6 to 18 months, and that alone should have the multiple for this stock increasing.
KLA-Tencor Corporation Price, Consensus and EPS Surprise
Last night after the close we had earnings from Cavium Networks . The company posted a modest beat of two cents ahead of the Wall Street number for a roughly 3.8% positive earnings surprise. That didn’t catch my eye, but 124% year over year revenue growth did.
The company went on to guide analysts to a range of $0.55 to $0.57 when the consensus was calling for $0.54. Revenue also was guided higher than expectations so we should expect analysts to increase their estimates going forward.
Zack Rank
CAVM is currently a Zacks Rank #3 (Hold), but given the beat and the raise you can expect the Rank to move higher. It takes a little time for all the analyst reports to come in and get into the system so check back soon to see if the Rank has increased.
Kulicke and Soffa (KLIC - Free Report) may not be a household name, but just like KLAC, this company is in the semiconductor capital equipment space. Basically, both companies help the chips stocks makes their chips. If semiconductors were pizza’s, then KLIC and KLAC would be the oven makers while INTC and NVDA would take the dough and sauce and meat for the pizza.
KLIC reported this morning and beat the Wall Street estimate by 10 cents and posted revenue of $149.6M when $140.6 was expected. That is a solid beat.
To be part of this article you have to have a raise too, and this stock had one as well. They see next quarter revenues between $185M to $195M when the consensus was calling for $156M.
Rank Likely to Increase
Like CAVM, I would anticipate the Zacks Rank for KLIC to move higher to a Zacks Rank #1 (Strong Buy) or to a Zacks Rank #2 (Buy) in the next few days. The analyst reports will not be not be in for some time for KLIC, so it might take until Tuesday (2/7).
Kulicke and Soffa Industries, Inc. Price, Consensus and EPS Surprise
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017? Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
3 Beat And Raise Stocks Moving Higher
I compiled a list of about 45 stocks that posted a clean beat and raise for the third quarter of 2016. The idea is a good one, following the performance of stocks that have beaten expectations and then guided higher. But which ones were the best?
The idea came to me on October 30th and I started it with prices as of October 31st. That means that all the beats prior to the 31st that made my list might have seen a little better (or worse) performance because of the arbitrary time that I added the names to the list. With that in mind, let’s focus on building a much cleaner list this quarter.
Next week I will do a full review of the list after I have done the same for paying subscribers of Zacks Game Changers. At this time I can tell you that the leader of the list was Ultra Clean UCTT) continues to sport a Zacks Rank #1 (Strong Buy). At the bottom of the list is Ellie Mae (ELLI) which basically flat lined since the report and is now a Zacks Rank #3 (Hold).
Recent Beaters And Raisers
First I want to mention a stock that I think will be the best performer for 1Q17. KLA Tencor (KLAC - Free Report) beat the Zacks Consensus Estimate of $1.41 by $0.11 in posting earnings of $1.52. That translates into a positive earnings surprise of 7.8% marking the 10th straight beat of the Zacks Consensus Estimate.
Guidance called for revenue of between $860M - $920M when the consensus estimate was calling for $849M. As the aggressive growth stock strategist at Zacks, this is what I love to see. Also on the call, management noted that they expect CY17 gross margin to be a “couple hundred basis points” better than previously expected.
It world of beating and raising this stock has higher revenues and higher margins. Usually, when that happens you see higher multiples. Speaking of multiples, KLAC trades at 15.6x forward estimates and over the last two years the stock has traded between 13.2x and 17.8x. This tells me that the stock could go as high as $109 (17.8*6.17) if it trades at the high end of the range over the last two years.
Follow Brian Bolan on Twitter at @BBolan1
Room For Upgrades For KLAC
One thing that I like to see is a stock that has room for future catalysts. KLAC has three brokerages that have “Hold” or equivalent ratings on the stock. Instinet is by far the most bearish of the three with a price target of $78 and a neutral rating. Stifel Nicolaus has a hold and a price target of $83. A few days after the most recent report Deutsche Bank reiterated their “Hold” on the stock and increased their price target from $78 to $85.
Goldman Sachs, Cowen and Company, Credit Suise, B. Riley and Needham all have KLAC at either “Buy” or “Strong Buy” or the equivalent. Of those, B. Riley is the most bullish with a $106 price target and Needham is just a dollar behind at $105.
The Big Tell For KLAC
Over the years I have picked up on the lingo for chip stocks. At first I learned all about book to bill and after that the focus became backlog. More recently I have picked up an even bigger tell than a stock with records billings or record backlog. The phrase that pays is “design wins.”
During the most recent conference call management spoke the phrase that pays when talking to 3D NAND. If there is anything that is as good as a design win, I have yet to know what it is. This ensures some high margin business over the next 6 to 18 months, and that alone should have the multiple for this stock increasing.
KLA-Tencor Corporation Price, Consensus and EPS Surprise
KLA-Tencor Corporation Price, Consensus and EPS Surprise | KLA-Tencor Corporation Quote
Another Tech Raiser
Last night after the close we had earnings from Cavium Networks . The company posted a modest beat of two cents ahead of the Wall Street number for a roughly 3.8% positive earnings surprise. That didn’t catch my eye, but 124% year over year revenue growth did.
The company went on to guide analysts to a range of $0.55 to $0.57 when the consensus was calling for $0.54. Revenue also was guided higher than expectations so we should expect analysts to increase their estimates going forward.
Zack Rank
CAVM is currently a Zacks Rank #3 (Hold), but given the beat and the raise you can expect the Rank to move higher. It takes a little time for all the analyst reports to come in and get into the system so check back soon to see if the Rank has increased.
Cavium, Inc. Price, Consensus and EPS Surprise
Cavium, Inc. Price, Consensus and EPS Surprise | Cavium, Inc. Quote
Semi Capital Equipment
Kulicke and Soffa (KLIC - Free Report) may not be a household name, but just like KLAC, this company is in the semiconductor capital equipment space. Basically, both companies help the chips stocks makes their chips. If semiconductors were pizza’s, then KLIC and KLAC would be the oven makers while INTC and NVDA would take the dough and sauce and meat for the pizza.
KLIC reported this morning and beat the Wall Street estimate by 10 cents and posted revenue of $149.6M when $140.6 was expected. That is a solid beat.
To be part of this article you have to have a raise too, and this stock had one as well. They see next quarter revenues between $185M to $195M when the consensus was calling for $156M.
Rank Likely to Increase
Like CAVM, I would anticipate the Zacks Rank for KLIC to move higher to a Zacks Rank #1 (Strong Buy) or to a Zacks Rank #2 (Buy) in the next few days. The analyst reports will not be not be in for some time for KLIC, so it might take until Tuesday (2/7).
Kulicke and Soffa Industries, Inc. Price, Consensus and EPS Surprise
Kulicke and Soffa Industries, Inc. Price, Consensus and EPS Surprise | Kulicke and Soffa Industries, Inc. Quote
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017? Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>