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Bear of the Day: MSC (MSM)

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Have we finally reached a tipping point in the market? It appears that pressure on mega cap tech stocks like NVIDIA is finally showing up. It’s led to some selling in the NASDAQ but it appears to be more of a rotation into other names. This give and take has investors looking for other places to deploy that capital. The question is, where to go?

At Zacks, we prefer stocks which have strong underlying earnings trends. The thought process here is simple, stock prices tend to follow earnings so finding stocks with earnings trends on the rise should mean we find stocks that go up. It’s also important to shy away from the opposite scenario. Avoid stocks where the earnings estimates are moving in the wrong direction.

One stock that’s seen earnings come down is MSC Industrial Direct (MSM - Free Report) ). MSC Industrial Direct distributes metalworking and maintenance, repair, and operations (MRO) products and services in the United States, Canada, Mexico, the United Kingdom, and internationally. The company's MRO products include cutting tools, measuring instruments, tooling components, metalworking products, fasteners, flat stock products, raw materials, abrasives, machinery hand and power tools, safety and janitorial supplies, plumbing supplies, materials handling products, power transmission components, and electrical supplies.

The stock is currently a Zacks Rank #5 (Strong Sell) because of recent negative earnings estimate revisions coming from analysts on Wall Street. Over the course of the last week, four analysts have cut estimates for the current year and next year. The bearish moves have dropped our Zacks Consensus Estimates for the current year from $5.89 to $5.22 while next year’s number is off from $6.57 to $5.76.

MSC Industrial is in the Industrial Services industry which ranks in the Bottom 10% of our Zacks Industry Rank. There is only one stock in the industry which is in the good graces of our Zacks Rank. That’s Zacks Rank #2 (Buy) Andritz (ADRZY - Free Report) ). There are several Zacks Rank #3 (Hold) stocks, including ClearSign Technologies (CLIR - Free Report) ).


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