Today's Must Read
Solid Insurance Business Aids Berkshire (BRK.B), Cat Loss Ail
Coca-Cola (KO) Boosts Digital Investments Amid Pandemic
Wednesday, October 21, 2020
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Alibaba Group (BABA), Berkshire Hathaway (BRK.B) and Coca-Cola Company (KO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Alibaba shares have underperformed the Zacks Internet Commerce industry in the year-to-date period (+46% vs. +63.2%) on the back of continued momentum in the company's growth profile in its home market that appears to have weathered the pandemic a lot better than many other parts of the world.
Further, Alibaba’s strengthening cloud business with its expanding customer base continues to drive its performance. Its New Retail strategy is also gaining momentum. This is aiding growth in Tmall Import, Hema fresh food grocery business and Intime Department Stores.
However, higher costs associated with new initiatives remain a major concern. Also, COVID-19 related economic uncertainties and macro headwinds in China are major concerns. In addition, rising competition from e-commerce players poses a risk.
Shares of Berkshire Hathaway have lost -0.3% over the past year against the Zacks Insurance - Property and Casualty industry’s fall of -4.7%. The Zacks analyst believes that Berkshire Hathaway is expected to benefit from its growing Insurance business as well as Manufacturing, Service and Retailing, and Finance and Financial Products segments and strategic acquisitions.
Berkshire's inorganic growth story remains impressive with strategic acquisitions. A strong cash position supports earnings-accretive bolt-on buyouts and indicates its financial flexibility. The non-insurance businesses are delivering improved results with increased revenues over the past few years.
A sturdy capital level provides further impetus. However, exposure to catastrophe loss induces earnings volatility and also affects the property and casualty underwriting results of the company. Also, huge capital expenditure remains a headwind.
Coca-Cola shares have gained +9.5% over the past six months against the Zacks Soft Drinks Beverages industry’s rise of +8.3%. The Zacks analyst believes that Coca-Cola’s move to accelerate digital expansion would provide an avenue for sustainable long-term growth.
It is poised to gain from the streamlining of portfolio by exiting of Zombie brands that will help divert resources toward brands with more growth potential. It is also accelerating investments to expand presence in digital channel driven by shift in consumer preference amid coronavirus.
The company’s top line missed estimate on declines in away-from-home channels, which account for nearly half of its revenues. It also lost global value share in NARTD beverages driven by negative channel mix owing to softness in the away-from-home channel.
Other noteworthy reports we are featuring today include Medtronic (MDT), International Business Machines (IBM) and Fiserv (FISV).
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Director of Research
Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>