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The Zacks Analyst Blog Highlights: PulteGroup, American Water Works, Kinross, AdaptHealth and Procter & Gamble
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For Immediate Release
Chicago, IL – July 31, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include PulteGroup, Inc. (PHM - Free Report) , American Water Works Company, Inc. (AWK - Free Report) , Kinross Gold Corp. (KGC - Free Report) , AdaptHealth Corp. (AHCO - Free Report) and The Procter & Gamble Company (PG - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
5 Stocks to Add as Fed Keeps Rates Unchanged
As the coronavirus outbreak continues to aggravate across the United States and several states have paused or rolled back plans to reopen their economies, the Fed reassured Americans about its promise to support the economy.
Needless to say, credit card spending declined and employment dropped in recent weeks. As a result, the Fed kept its benchmark short-term interest rate near zero and vowed to use its tools to revive the economy in such trying times. The Fed’s federal fund rate remains within a range of 0% to 0.25%. The Fed trimmed rates in mid-March as the pandemic caused serious damage to the economy.
In a statement after a two-day meeting on Jul 29, the Fed said that rates will remain at near zero levels until the economy is capable of weathering the current health crisis and achieving maximum employment.
The Fed said “the path of the economy will depend significantly on the course of the virus.” The central bank added that “economic activity has picked up somewhat in recent months but remains well below their levels at the beginning of the year.”
The Fed’s statement largely mirrors the version released in June that the pandemic “poses considerable risks to the economic outlook over the medium term.” Fed Chair Jerome Powell had cautioned that “there will be a significant chunk, well, well into the millions of people who don’t get to go back to their old jobs and there may not be a job in that industry for them for some time. It could be some years before we get back to those people finding jobs.”
Nonetheless, the Fed’s attempt to keep interest rates at low levels to bolster the U.S. economy can actually boost returns of various sectors. Let us, thus, look at who stands to benefit –
What Rate Cut Means for Mortgage Rates
With the coronavirus outbreak compelling the Fed to maintain a dovish stance, its most likely that mortgage rates will stay low in the near term as investors continue to park money in safe-haven assets like the 10-year Treasury note amid the economic slowdown.
Needless to say, mortgage rates in the United States generally follow the direction of the yield on the 10-year Treasury note. And bond yields decline when prices go up. And lower mortgage rates will certainly boost homebuying, which bodes well for housing-related stocks.
Capital-Intensive Businesses to Gain
Shares of rate-sensitive utilities will certainly climb. This is because utilities are capital-intensive businesses and the funds generated from internal sources are not always sufficient to meet requirements. Consequently, these companies have high levels of debt. Thus, low interest rates will help them pay off debts and book profits.
However, higher interest rates along with an increase in the debt level, for that matter a steep debt/equity ratio, impact the credit ratings of these utility operators. If credit ratings go down, a company will find it difficult to borrow funds from the markets at reasonable rates, leading to a rise in cost of operations.
Gold Prices to Rise
Gold mining stocks also have a fair chance to gain. Thanks to the dovish expectations, gold prices are expected to rise as lower interest rates tend to make bonds and other fixed-income investments less attractive.
Money will flow out of bonds as they can’t provide higher yields and in turn may flow into gold.
Healthcare & Consumer Staples Have Better Track Records
A low-interest environment generally indicates that the economy has hit a soft patch. In such a scenario, healthcare stocks which are predominantly defensive in nature tend to have consistent revenues and also provide comparatively high dividends.
By the way, in a low-interest environment, the cost of debt such as credit cards and mortgages are lower, freeing up income to spend on consumable items. Thus, consumer staple stocks also benefit immensely from low-interest rates.
Top 5 Choices
We have, thus, selected five solid stocks from the aforesaid areas that are poised to gain from Fed’s holding of interest rates at an all-time low. These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).
PulteGroup, Inc.primarily engages in the homebuilding business in the United States. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has risen 44.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 22.1%.
American Water Works Company, Inc. is a water supply and wastewater service provider. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has climbed 0.3% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 6.4% and 10.2%, respectively.
Kinross Gold Corp.engages in the acquisition, exploration and development of gold properties in the United States along with several other countries. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 14.5% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 125% and 85.3%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.
AdaptHealth Corp.provides home healthcare equipment, medical supplies, and home and related services. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has risen 43.3% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 43.3% and 79.1%, respectively.
The Procter & Gamble Companyprovides branded consumer packaged goods to consumers. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has risen 0.4% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 10% and 5.6%, respectively.
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.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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 http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: PulteGroup, American Water Works, Kinross, AdaptHealth and Procter & Gamble
For Immediate Release
Chicago, IL – July 31, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include PulteGroup, Inc. (PHM - Free Report) , American Water Works Company, Inc. (AWK - Free Report) , Kinross Gold Corp. (KGC - Free Report) , AdaptHealth Corp. (AHCO - Free Report) and The Procter & Gamble Company (PG - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
5 Stocks to Add as Fed Keeps Rates Unchanged
As the coronavirus outbreak continues to aggravate across the United States and several states have paused or rolled back plans to reopen their economies, the Fed reassured Americans about its promise to support the economy.
Needless to say, credit card spending declined and employment dropped in recent weeks. As a result, the Fed kept its benchmark short-term interest rate near zero and vowed to use its tools to revive the economy in such trying times. The Fed’s federal fund rate remains within a range of 0% to 0.25%. The Fed trimmed rates in mid-March as the pandemic caused serious damage to the economy.
In a statement after a two-day meeting on Jul 29, the Fed said that rates will remain at near zero levels until the economy is capable of weathering the current health crisis and achieving maximum employment.
The Fed said “the path of the economy will depend significantly on the course of the virus.” The central bank added that “economic activity has picked up somewhat in recent months but remains well below their levels at the beginning of the year.”
The Fed’s statement largely mirrors the version released in June that the pandemic “poses considerable risks to the economic outlook over the medium term.” Fed Chair Jerome Powell had cautioned that “there will be a significant chunk, well, well into the millions of people who don’t get to go back to their old jobs and there may not be a job in that industry for them for some time. It could be some years before we get back to those people finding jobs.”
Nonetheless, the Fed’s attempt to keep interest rates at low levels to bolster the U.S. economy can actually boost returns of various sectors. Let us, thus, look at who stands to benefit –
What Rate Cut Means for Mortgage Rates
With the coronavirus outbreak compelling the Fed to maintain a dovish stance, its most likely that mortgage rates will stay low in the near term as investors continue to park money in safe-haven assets like the 10-year Treasury note amid the economic slowdown.
Needless to say, mortgage rates in the United States generally follow the direction of the yield on the 10-year Treasury note. And bond yields decline when prices go up. And lower mortgage rates will certainly boost homebuying, which bodes well for housing-related stocks.
Capital-Intensive Businesses to Gain
Shares of rate-sensitive utilities will certainly climb. This is because utilities are capital-intensive businesses and the funds generated from internal sources are not always sufficient to meet requirements. Consequently, these companies have high levels of debt. Thus, low interest rates will help them pay off debts and book profits.
However, higher interest rates along with an increase in the debt level, for that matter a steep debt/equity ratio, impact the credit ratings of these utility operators. If credit ratings go down, a company will find it difficult to borrow funds from the markets at reasonable rates, leading to a rise in cost of operations.
Gold Prices to Rise
Gold mining stocks also have a fair chance to gain. Thanks to the dovish expectations, gold prices are expected to rise as lower interest rates tend to make bonds and other fixed-income investments less attractive.
Money will flow out of bonds as they can’t provide higher yields and in turn may flow into gold.
Healthcare & Consumer Staples Have Better Track Records
A low-interest environment generally indicates that the economy has hit a soft patch. In such a scenario, healthcare stocks which are predominantly defensive in nature tend to have consistent revenues and also provide comparatively high dividends.
By the way, in a low-interest environment, the cost of debt such as credit cards and mortgages are lower, freeing up income to spend on consumable items. Thus, consumer staple stocks also benefit immensely from low-interest rates.
Top 5 Choices
We have, thus, selected five solid stocks from the aforesaid areas that are poised to gain from Fed’s holding of interest rates at an all-time low. These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).
PulteGroup, Inc.primarily engages in the homebuilding business in the United States. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has risen 44.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 22.1%.
American Water Works Company, Inc. is a water supply and wastewater service provider. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has climbed 0.3% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 6.4% and 10.2%, respectively.
Kinross Gold Corp.engages in the acquisition, exploration and development of gold properties in the United States along with several other countries. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 14.5% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 125% and 85.3%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.
AdaptHealth Corp.provides home healthcare equipment, medical supplies, and home and related services. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has risen 43.3% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 43.3% and 79.1%, respectively.
The Procter & Gamble Companyprovides branded consumer packaged goods to consumers. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has risen 0.4% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 10% and 5.6%, respectively.
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.
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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 http://www.zacks.com/performancefor information about the performance numbers displayed in this press release.