Today's Must Read
Goldman (GS) Exhibits Cost Control; Legal Issues Linger
Kinder Morgan (KMI) Banks on PHP Project, Debt Level High
Thursday, March 21, 2019
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 Verizon (VZ), Goldman Sachs (GS) and Kinder Morgan (KMI). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Verizon’s shares have gained +21.6% in the past year, outperforming the Zacks Wireless National industry’s increase of +4% during the same period. The Zacks analyst thinks Verizon remains poised to benefit from the upcoming 5G boom as it aims to launch the 5G Ultra Wideband network in Chicago and Minneapolis in April.
Subsequently, it plans to increase the tally of 5G Ultra Wideband mobility cities to 30 in 2019. It further combines end-to-end fiber network with a large deployment of small cells for improved connectivity and millimeter wave bandwidth. Focus on online content delivery, mobile video and online advertising should also stoke growth.
However, Verizon continues to struggle in a competitive and saturated U.S. wireless market, where spectrum crunch has become a major issue. The wireline division is struggling with persistent losses in access lines owing to competitive pressure from VoIP service providers and aggressive triple-play offerings by cable firms. Verizon is spending heavily on promotion and lucrative discounts, contracting its margins.
Shares of Goldman Sachs have gained +24.8% in the past three months, outperforming the +18.8% gain of the Zacks Investment Banking industry. Further, the company boasts an impressive earnings surprise history, outpacing expectations in all the trailing four quarters.
The Zacks analyst thinks the company’s well-diversified business and focus to capitalize on growth opportunities through strategic moves, along with cost-control efforts, will continue to strengthen the overall business. Also, its focus on digitization initiatives bode well.
However, declining revenues from the Institutional Client Services division remain a hindrance to the bottom-line expansion. Notably, Goldman has been embroiled in the heightened scandal related to the multibillion-dollar 1Malaysia Development Bhd (1MDB), which is a major concern.
Kinder Morgan’s shares have gained +11% in the six months, outperforming the +6% increase of the Zacks Oil & Gas Pipeline industry. The Zacks analyst emphasizes that Kinder Morgan has the largest network of natural gas pipelines in North America that spreads over almost 84,000 miles.
The company’s midstream properties are linked to all the prospective plays in the United States that are rich in natural gas. These extensive networks of natural gas pipelines provide it with stable fee-based revenues. Moreover, the company’s proposed Permian Highway Pipeline (PHP) Project will help the company to cash in on the region’s bottlenecks and improve cash flow visibility.
However, Kinder Morgan has significant exposure to debt with its balance sheet being more levered than the industry. Also, the current backlog of $5.7 billion is significantly lower than the high of $22 billion recorded in 2015, affecting the company’s future cash flows.
Other noteworthy reports we are featuring today include Intuitive Citigroup (C), Eversource Energy (ES) and Stanley Black & Decker (SWK).
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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>>>