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Boston Beer Co, UniFirst Corp, BJ's, Gogo and TRI Pointe highlighted as Zacks Bull and Bear of the Day

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For Immediate Release

Chicago, IL – December 18, 2020 – Zacks Equity Research Shares of The Boston Beer Company (SAM - Free Report) as the Bull of the Day, UniFirst Corporation (UNF - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on BJ’s Wholesale Club Holdings Inc. (BJ - Free Report) , Gogo Inc. (GOGO - Free Report) and TRI Pointe Group Inc. (TPH - Free Report) .

Here is a synopsis of all five stocks:

Bull of the Day:

The Boston Beer Company has been part of the vanguard of two different revolutions in the alcoholic beverage market. The newest one has helped drive its recent growth and fuel SAM’s stock price over the last several years. Boston Beer’s outlook remains strong and SAM shares rest about 10% below their October records.

Leading a Revolution…

Samuel Adams started in the mid-1980s and became one of the founding fathers of the craft beer revolution in the U.S. The craft market is as crowded as ever today, and Boston Beer is certainly on the mainstream side, but it has expanded its portfolio and acquired other brands such as Dogfish Head Brewery.

Starting in the year 2000, SAM consistently grew its revenue by roughly 10% to 25% for the better part of 15 years, with a few down years and downturns mixed in. Then it posted back-to-back sales declines of around 5% in fiscal 2016 and 2017. SAM stock suffered alongside its sales during that stretch.

SAM soon turned things around as it helped popularize what the company’s founder has called the biggest thing since light beer: hard seltzer. Boston Beer launched Truly Hard Seltzer in 2016 and it was one of the first real players in the now-booming space alongside White Claw, which is owned by Mike's Hard Lemonade maker Mark Anthony Brands.

Truly’s success and the continued growth of the hard seltzer market has forced all of the industry giants to jump headfirst into the market.

In fact, the market is so hot and offers so much growth potential that Coca-Cola is set to enter under its Topo Chico brand in 2021. Investors should note that this will be Coca-Cola’s first alcoholic beverage in the U.S. since it sold its wine business nearly 40 years ago.

Truly is the No. 2 player in a market—behind White Claw—that saw Americans spend over $3 billion in U.S. retail stores over the 12-month period ended in July, which marked 241% growth. Looking ahead, reports project that the global hard seltzer market could reach $14.5 billion by 2027, expanding at a CAGR of over 16%.

What Else…

Boston Beer’s revenue jumped by 15% in 2018 and 26% in FY19, after it slipped in FY17 and FY16. The company’s sales then surged by at least 30% in the first three quarters of 2020. “The growth of the Truly brand, led by Truly Lemonade Hard Seltzer, continues to be very strong and we expect the Truly brand to continue to lead the growth of the business into 2021,” CEO Dave Burwick said in prepared Q3 remarks.

“In early 2021, we will launch Truly Iced Tea Hard Seltzer, Truly Extra, a higher ABV version of Truly, and other new Truly flavors and package sizes, as we continue to lead innovation in the Hard Seltzer category.”

Zacks estimates call for SAM’s revenue to surge by a whopping 50% in both the fourth quarter of this year and the first quarter of FY21. Its adjusted earnings are projected to climb by 146% and 154%, respectively over this same stretch.

More broadly, Boston Beer’s 2020 revenue is projected to jump 39% to reach $1.73 billion and then climb another 32% in FY21 to hit $2.29 billion. Both of these would represent SAM’s strongest growth as a public firm, easily topping 2013’s 27% sales expansion.

The company’s recent growth and its outlook has seen Wall Street drink up SAM shares. The stock has climbed 160% in the last year and 400% in the past three. This has helped the stock crush its industry’s 14% decline and the S&P 500’s 40% run. Luckily for investors, the stock has cooled off a bit recently, which seemed very needed.

SAM’s price tag of roughly $956 a share might cause some sticker shock. But it currently trades 10% below its October highs even though it’s up 5% in the last month. The stock also trades at a big discount compared to its industry at 5.2X forward 12-month sales vs. 19.9X, despite its outperformance. SAM’s not too far off from the S&P 500’s 4.3X and it rests 20% below its own year-long highs.

Bottom Line

The nearby chart shows us that its FY20 and FY22 EPS estimates are up 21%. These positive bottom-line trends help Boston Beer earn a Zacks Rank #1 (Strong Buy) right now. SAM also grabs an “A” grade for Growth in our Style Scores system and its industry rests in the top 25% of over 250 Zacks industries. It’s also worth noting that four of the eight brokerage recommendations Zacks has for SAM come in at a “Strong Buy” with one more at a “Buy.”

All that said, some investors might want to consider taking a few sips of Boston Beer stock, especially since the hard seltzer revolution is still in its early days. And the firm’s ability to grow during these tough economic conditions is impressive and helps further its bullish case.

Bear of the Day:

UniFirst Corporation stock has surged roughly 30% since the end of October, helping it recover from its post-Q4 earnings release downturn. The comeback also likely stems from the vaccine positivity, which has investors jumping back into the work uniform stock. That said, its near-term outlook remains somewhat challenging.

Outside Its Control

UniFirst is a company focused on the rental, lease, and sale of work clothing, uniforms, protective apparel, facility service products, and much more. The Wilmington, Massachusetts-based firm serves every industry from healthcare to foodservice and far beyond throughout the U.S., Canada, and Europe.

UNF had been steadily growing its sales for years, with its only recent setbacks a 1% decline in 2009 and a small, 0.3% decline during its fiscal year 2020 that ended in late August. However, things were a tad worse more recently and on the bottom line.

For instance, UNF’s Q3 sales dipped 2% and Q4 fell 11%. On top of the sales pullback, UNF’s full-year operating income fell 26% and adjusted earnings fell 24%.

All things considered, some might have expected UNF to have taken a bigger hit, given the economic devastation that the coronavirus has caused. “Overall, we are pleased with our results for the fourth quarter and full fiscal year given the headwinds that we faced during this unprecedented time in our history,” CEO Steven Sintros said in prepared remarks last quarter.

“Our ability to continue generating solid results and strong cash flows speaks to the resiliency of our company and the value of the products and services that we provide to our customers.”

What’s Next?

As we mentioned at the top, UNF stock has climbed roughly 30% since the end of October. This came after its post-earnings release pullback and coincided with the positive vaccine news that has sent the market to new highs. Clearly, UNF would stand to benefit if more areas of the economy, especially those hard-hit spaces, are able to get back up and running.  

The run has pushed the stock right back up against its January 2020 highs, which might mean UNF is a little overheated considering that Zacks estimates call for its sales to fall over 5% in Q1 and 3% in Q2.

Meanwhile, its adjusted earnings are projected to sink by 33% and 6%, respectively over this stretch. UNF’s full-year FY21 EPS estimate has also fallen 12% since its last report, with FY22 down 8%.

Bottom Line

UniFirst’s downward earnings revision trends help it grab a Zacks Rank #5 (Strong Sell) at the moment. The stock is also part of an industry that rests in the bottom 4% of our over 250 Zacks industries.

That said, the company still pays a dividend and investors might want to keep an eye on UNF when it reports its first quarter FY21 results on January 6.

Additional content:

These Stocks Could Be Your Secret Santa This Christmas

Wall Street has been on a historic rally with the roll out of the COVID-19 vaccines and Santa on the way. America has started immunizing people with Pfizer shots developed in collaboration with the German biotechnology company BioNTech.

A vaccine will end the pandemic crisis and set the stage for a speedy recovery, thereby boosting demand for several types of products and services in the economy. The increased activity will continue to propel the stock market to new heights. Additionally, a Santa rally would provide further boost to the stocks. A Santa rally refers to the increase in stock prices in the final week of the calendar year (i.e. between Christmas and New Year’s Day) that extends into the first two days of the New Year.

Further, super-easy monetary and fiscal policies adopted by the central bank and the government, and hopes for further stimulus will continue to power the stocks. The Fed has pledged to keep rates at lower levels until the end of 2023. A lower interest rate has provided consumers with extra spending power, which in turn will boost economic activities.

Notably, U.S. consumers grew more confident about the economy in early December on prospects of a vaccine. A gauge of U.S. consumer sentiment, as measured by the University of Michigan, climbed to the second-highest level since March to 81.4 from 76.9 in the prior month. Holiday fervor, which has shifted to e-commerce this year, is also adding to the strength.

How to Find Secret Santa Stocks?

While the rally will be broad-based, cyclical sectors — consumer discretionary, financials, energy, materials and industrials — tend to gain the most. As these sectors are closely tied to the economy, they are expected to outperform when economic growth improves. Most notably, the industries hardest hit by the pandemic such as airlines, hotel and casino operators, travel and entertainment-booking companies are expected to be the biggest beneficiaries.

Given this, there are some hidden gems or Secret Santa as we call them that could surprise investors with big returns this Christmas, based on the current trends. We have selected three such stocks from these sectors using our Zacks Stock Screener. These stocks have been in the red over the past month but carry a Zacks Rank #1 (Strong Buy) or 2 (Buy), VGM Score of B or better. Also, these have witnessed positive earnings estimate revisions for the current quarter in a month.

You can see the complete list of today’s Zacks #1 Rank stocks here.

BJs Wholesale Club Holdings – Down 11.9%

With a market cap of $5.1 billion, this company operates warehouse clubs on the East Coast of the United States. It offers perishable, edible grocery, general merchandise, and non-edible grocery products, as well as gasoline and other ancillary services. It has seen a positive earnings estimate revision of 9 cents for the ongoing quarter in a month. The stock has a Zacks Rank #2 and VGM Score of A.

Gogo – Down 6.1%

It is the leading provider of in-flight connectivity and wireless entertainment solutions for the global aviation industry. The Zacks Consensus Estimate for the current quarter has been narrowed from a loss of 42 cents to a loss of 25 cents over the past month. With a market cap of $850 million, the stock has a Zacks Rank #2 and VGM Score of A.

TRI Pointe Group – Down 5.5%

This company is involved in the design, construction and sale of single-family homes. The stock has seen positive earnings estimate revision of a penny for the ongoing holiday quarter in a month and has a market cap of $2.2 billion. TRI Pointe sports a Zacks Rank #1 and has a VGM Score of B.

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?

These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>

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