For Immediate Release
Chicago, IL – August 7, 2020 –
Zacks Equity Research Shares of D.R. Horton, Inc. ( DHI Quick Quote DHI - Free Report) as the Bull of the Day, Western Digital Corporation ( WDC Quick Quote WDC - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis onBarrick Gold Corporation ( GOLD Quick Quote GOLD - Free Report) , Equinox Gold Corp. ( EQX Quick Quote EQX - Free Report) and Kinross Gold Corporation ( KGC Quick Quote KGC - Free Report) .
Here is a synopsis of all five stocks:
There are plenty of tailwinds for stocks right now. You read that right, I said tailwinds. Sure, the COVID-related shutdowns have put a huge damper on things. The market is forward-looking. It realizes that we will get out of this mess eventually. It’s the reason why so many stocks are flying high. There are some areas of the market that have been surprising though. Among them are the home builders. I didn’t realize just how good things have been.
It makes sense when you take it in the context of record low mortgage rates combined with a mass exodus from cities across the nation. Folks are packing it up for the suburbs, and have been leaving higher tax states for lower tax states since the tax code was changed.
Today’s Bull of the Day is a company benefiting from all these tailwinds. I’m talking about Zacks Rank #1 (Strong Buy)
D.R. Horton. D.R. Horton, Inc. operates as a homebuilding company in East, Midwest, Southeast, South Central, Southwest, and West regions in the United States. It engages in the acquisition and development of land; and construction and sale of homes in 20 states and 51 markets in the United States under the names of D.R. Horton, America's Builder, Express Homes, Emerald Homes, and Freedom Homes. The company constructs and sells single-family detached homes; and attached homes, such as townhomes, duplexes, and triplexes. It is also involved in the origination and sale of mortgages; and provision of title insurance policies, and examination and closing services, as well as engages in the residential lot development business.
The reason for the favorable Zacks Rank lies in the series of earnings estimate revisions coming from analysts. Over the last 60 days, thirteen analysts have increased their earnings estimates for the current year while eleven analysts have increased estimates for next year. The bullish sentiment on Wall Street has increased the current year Zacks Consensus Estimate from $4.54 to $5.27, while next year’s number is up from $4.30 to $5.55.
That has helped underpin a rally in the stock from $29 in March to over $67 where it closed today. That’s well north of the previous high earlier his year in the $61 handle.
With the market rocketing higher nearly every day, it may feel like the dart board approach works. Most of these stocks are rocketing higher. There’s no way you can lose…right? WRONG my friend. This is a treacherous business. Don’t let the euphoria of a bull market put you at ease. This added caution is not meant to turn you off stocks altogether. Rather, you should be investing in stocks with strong earnings trends. Stocks with the strongest positive earnings trends tend to perform the best year-over-year.
Then there’s the other side of the equation. Stocks which have seen negative earnings revisions coming in. While that is not a guaranteed death knell, it’s also not typically the perfect thing to see. One stock that’s been experiencing negative revisions is today’s Bear of the Day.
I’m talking about Zacks Rank #5 (Strong Sell)
Western Digital. Western Digital Corporation develops, manufactures, and sells data storage devices and solutions worldwide. It offers client devices, including hard disk drives (HDDs) and solid state drives (SSDs) for computing devices, such as desktop and notebook personal computers (PCs), security surveillance systems, gaming consoles, and set top boxes; flash-based embedded storage products for mobile phones, tablets, notebook PCs, and other portable and wearable devices, as well as automotive, Internet of Things, industrial, and connected home applications; flash-based memory wafers; and embedded storage solutions and flash products, such as multi-chip package solutions.
Not only is WDC a Zacks Rank #5 (Strong Sell), but the Computer – Storage Devices industry ranks in the Bottom 3% of our Zacks Industry Rank. Western Digital has seen earnings estimate revisions to the downside after their last earnings report beat on EPS but missed on revenue. The company guided Q1 EPS at 45 to 65 cents per share, versus previous expectations calling for $1.20. This has caused analysts to cut expectations, bringing next year’s Zacks Consensus Expectation down from $5.35 to $4.97.
Additional content: Gold Sees Fresh Highs en Route to $3000: 3 Winners
Gold prices soared on Aug 5, extending a superb run for the yellow metal that logged gains for the fourth straight trading session.
The metal has climbed more than 20% so far this year, surpassing the 22.5% year-to-date rally of the Nasdaq Composite Index that predominantly comprises high-flying tech stocks. Nonetheless, yesterday’s gains helped gold prices notch the seventh record close in eight sessions, the maximum number of record closes since April 2011, per Dow Jones Market data. Gold prices, in fact, rose $34.70 or 1.4% to $2,049.30 an ounce on Aug 5 and has already gained nearly 3.3% so far this week.
What’s more, Jan van Eck whose father John launched the first American gold fund in 1956, believes that gold may touch $3,400 in the near term, representing a roughly 68% upside from the current level. At the same time, analysts at BofA Global Research expect the yellow metal to soar 50% in the next 18-month period to around $3,000.
But what’s driving the metal and the optimism that it will continue to hit record highs? The answer is a low interest rate environment and a weak dollar.
Lower interest rates tend to make bonds and other fixed-income investments less attractive. Thus, money flowed out of bonds and money market funds into gold. The Fed, incidentally, kept its benchmark short-term interest rate near zero last month and vowed to use its tools to revive the economy battered by the coronavirus pandemic. The Fed’s federal fund rate remains within a range of 0% to 0.25%.
By the way, when the value of dollar drops relative to other currencies, the price of gold tends to rise in dollar terms. But why is the U.S. dollar weakening? Primarily, the dollar has been more or less 20% overvalued before May, which eventually led to the slide in the past three months. What’s more, fresh spikes in coronavirus cases in some of the states and the struggle to contain the spread have dashed hopes of a V-shaped recovery, eventually impacting the greenback.
To make matters worse, a weaker-than-expected reading in private-sector payrolls for the month of July boosted the yellow metal’s safe-haven appeal. Rising coronavirus infection rates slowed down the pace of U.S. private sector jobs, according to ADP. Job gains came in at 167,000, way less than analyst expectations of 1.9 million gains.
3 Gold Mining Stocks to Gain Traction
Thanks to a weakening U.S. dollar, the Fed’s holding of interest rates at an all-time low and discouraging private sector job additions amid the pandemic, the appeal for gold has increased.
And as the bullion metal glitters, gold mining stocks have a fair chance to gain. We have, thus, highlighted three stocks that are worth keeping an eye on.
Barrick Gold engages in the exploration, mine development, production and sale of gold properties. It has ownership interests in old mines that are located in many parts of the world, including the United States.
Barrick Gold is poised to gain from actions to cut debt and progress of its key projects. Moreover, the merger with Randgold and joint venture with Newmont provide additional upside.
Barrick Gold currently has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has moved up 4.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 72.6%. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Equinox Gold engages in the acquisition, exploration, and development of mineral deposits. The company primarily explores gold deposits. One of its principal properties is the Castle Mountain property in California.
Equinox Gold currently has a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its current-year earnings has risen more than 100% over the past 60 days. The company’s expected earnings growth rate for the current year is 255.2%.
Kinross Gold engages in the acquisition, exploration and development of gold properties, principally in Canada and the United States.
Kinross Gold is making steady progress in advancing the projects that give it a strong growth profile among leading gold producers. The Tasiast expansion is expected to contribute to growth. Tasiast is an operating mine and further expansion of the project will naturally boost productivity. It is also likely to gain from organic development projects and opportunities in the Americas. The Gilmore project is a low-cost brownfield expansion with low risk.
Kinross Gold currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings has moved 10.9% north over the past 60 days. The company’s expected earnings growth rate for the current year is 79.4%.
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