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The Zacks Analyst Blog Highlights: Denbury, Axon Enterprise, Caterpillar, Scotts Miracle-Gro and Eastman Chemical
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For Immediate Release
Chicago, IL – February 24, 2021 – 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: Denbury Inc. , Axon Enterprise, Inc. (AXON - Free Report) , Caterpillar Inc. (CAT - Free Report) , The Scotts Miracle-Gro Company (SMG - Free Report) and Eastman Chemical Company (EMN - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
Cyclical Sector Gains Momentum in Early 2021: Top Picks
Wall Street witnessed an impressive rally in 2020 defying coronavirus-induced economic devastations. The stock market's dream run continues in early 2021 too. While the growth-oriented technology sector was the predominant driver behind last year's rally, cyclical sectors like consumer discretionary, industrials, materials, financials and oil-energy are the main sources of Wall Street's northbound journey so far this year.
Gradual reopening of the U.S. economy on the back of nationwide deployment of COVID-19 vaccines, a sharp rebound in aggregate consumer demand and recent spike in yields of sovereign government bonds have shifted investors' preference from growth stocks to cyclical stocks.
Reopening of U.S. Economy
The U.S. government has ramped up nationwide deployment of COVID-19 vaccines. Moreover, the news cases of coronavirus infections and hospitalization declined significantly this month. The combined effect of these two factors will be a gradual reopening of the U.S. economy, which is operating at sub-optimal level since lockdowns were imposed last year. Notably, on Feb 1, the Congressional Budget Office (CBO) projected that the economy is expected to reach the pre-pandemic level of February 2020 by mid-2021.
Sharp Rebound in Consumer Demand
The U.S. economy is witnessing strong consumer demand buoyed by massive fiscal and monetary stimulus injected in it. Moreover, the Democrats are moving forward with President Biden's proposed $1.9 trillion COVID-19 relief package, which will further boost consumer demand.
Last week, Goldman Sachs reported that currently U.S. citizens have nearly $1.5 trillion in "excess" or "forced" savings that could climb to $2.4 trillion by mid-2021. The massive savings were due to concerns over pandemic-led economic uncertainties. Consumers were restrained or restricted by the government to spend on those items that were unavailable during lockdowns.
Reopening of the economy with massive savings is likely to boost personal spending, which in turn will raise demand for businesses, especially those in the cyclical sectors.
Spike in Sovereign Bond Yields
Wall Street's astonishing rally for the past 11 months prompted investors to shift the allotment of funds from safe-haven government bonds to risky equities. Consequently, on Feb 22, the yield on the benchmark 10-year US Treasury Note closed at 1.364% after hitting 1.377% in intraday trading, its highest since Feb 26, 2020. Furthermore, the yield on the 30-year US Treasury Note ended at 2.181%, its highest since January 2020.
High risk-free return is detrimental to high growth industries like technology. Most of the growth companies depend on easy borrowing at cheap rates. Higher market interest rates will raise their cost of projects. As a result, market participants have started to reallocate their funds to cyclical stocks from growth stocks.
Our Top Picks
We have narrowed down our search to five large-cap (market capital >$10 billion) cyclical stocks that have popped more than 10% year to date and still have upside left for 2021. These stocks have seen solid earnings estimate revisions in the past 30 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Denbury operates as an independent oil and natural gas company in the United States. It holds interests in various oil and natural gas properties located in Mississippi, Texas, and Louisiana in the Gulf Coast region; and in Montana, North Dakota and Wyoming in the Rocky Mountain region.
This Zacks Rank #1 company has expected earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings has increased 26.7% over the past 30 days. The stock price has soared 55.7% year to date.
Axon Enterprise develops, manufactures, and sells conducted energy weapons worldwide. It operates through two segments, TASER and Software and Sensors. This Zacks Rank #2 company has an expected earnings growth rate of 15.8% for the current year. The Zacks Consensus Estimate for the current year has improved 1.5% over the past 30 days. The stock price has jumped 38.8% year to date.
Caterpillar manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives worldwide. This Zacks Rank #2 company has an expected earnings growth rate of 21.3% for the current year. The Zacks Consensus Estimate for the current year has improved 4.5% over the past 30 days. The stock price has appreciated 19.3% year to date.
Scotts Miracle-Gro manufactures, markets and sells consumer lawn and garden products in the United States and internationally. The company operates through three segments: U.S. Consumer, Hawthorne and Other.
This Zacks Rank #1 company has an expected earnings growth rate of 21% for the current year (ending September 2021). The Zacks Consensus Estimate for the current year has improved 6.2% over the past 30 days. The stock price has risen 13.3% year to date.
Eastman Chemical operates as an advanced materials and specialty additives company worldwide that manufactures and sells chemicals, plastics and fibers. This Zacks Rank #2 company has an expected earnings growth rate of 28.1% for the current year. The Zacks Consensus Estimate for the current year has improved 7.9% over the past 30 days. The stock price has advanced 13.2% year to date.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They're also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better. See these 7 breakthrough stocks now>>
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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Denbury, Axon Enterprise, Caterpillar, Scotts Miracle-Gro and Eastman Chemical
For Immediate Release
Chicago, IL – February 24, 2021 – 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: Denbury Inc. , Axon Enterprise, Inc. (AXON - Free Report) , Caterpillar Inc. (CAT - Free Report) , The Scotts Miracle-Gro Company (SMG - Free Report) and Eastman Chemical Company (EMN - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
Cyclical Sector Gains Momentum in Early 2021: Top Picks
Wall Street witnessed an impressive rally in 2020 defying coronavirus-induced economic devastations. The stock market's dream run continues in early 2021 too. While the growth-oriented technology sector was the predominant driver behind last year's rally, cyclical sectors like consumer discretionary, industrials, materials, financials and oil-energy are the main sources of Wall Street's northbound journey so far this year.
Gradual reopening of the U.S. economy on the back of nationwide deployment of COVID-19 vaccines, a sharp rebound in aggregate consumer demand and recent spike in yields of sovereign government bonds have shifted investors' preference from growth stocks to cyclical stocks.
Reopening of U.S. Economy
The U.S. government has ramped up nationwide deployment of COVID-19 vaccines. Moreover, the news cases of coronavirus infections and hospitalization declined significantly this month. The combined effect of these two factors will be a gradual reopening of the U.S. economy, which is operating at sub-optimal level since lockdowns were imposed last year. Notably, on Feb 1, the Congressional Budget Office (CBO) projected that the economy is expected to reach the pre-pandemic level of February 2020 by mid-2021.
Sharp Rebound in Consumer Demand
The U.S. economy is witnessing strong consumer demand buoyed by massive fiscal and monetary stimulus injected in it. Moreover, the Democrats are moving forward with President Biden's proposed $1.9 trillion COVID-19 relief package, which will further boost consumer demand.
Last week, Goldman Sachs reported that currently U.S. citizens have nearly $1.5 trillion in "excess" or "forced" savings that could climb to $2.4 trillion by mid-2021. The massive savings were due to concerns over pandemic-led economic uncertainties. Consumers were restrained or restricted by the government to spend on those items that were unavailable during lockdowns.
Reopening of the economy with massive savings is likely to boost personal spending, which in turn will raise demand for businesses, especially those in the cyclical sectors.
Spike in Sovereign Bond Yields
Wall Street's astonishing rally for the past 11 months prompted investors to shift the allotment of funds from safe-haven government bonds to risky equities. Consequently, on Feb 22, the yield on the benchmark 10-year US Treasury Note closed at 1.364% after hitting 1.377% in intraday trading, its highest since Feb 26, 2020. Furthermore, the yield on the 30-year US Treasury Note ended at 2.181%, its highest since January 2020.
High risk-free return is detrimental to high growth industries like technology. Most of the growth companies depend on easy borrowing at cheap rates. Higher market interest rates will raise their cost of projects. As a result, market participants have started to reallocate their funds to cyclical stocks from growth stocks.
Our Top Picks
We have narrowed down our search to five large-cap (market capital >$10 billion) cyclical stocks that have popped more than 10% year to date and still have upside left for 2021. These stocks have seen solid earnings estimate revisions in the past 30 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Denbury operates as an independent oil and natural gas company in the United States. It holds interests in various oil and natural gas properties located in Mississippi, Texas, and Louisiana in the Gulf Coast region; and in Montana, North Dakota and Wyoming in the Rocky Mountain region.
This Zacks Rank #1 company has expected earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for its current-year earnings has increased 26.7% over the past 30 days. The stock price has soared 55.7% year to date.
Axon Enterprise develops, manufactures, and sells conducted energy weapons worldwide. It operates through two segments, TASER and Software and Sensors. This Zacks Rank #2 company has an expected earnings growth rate of 15.8% for the current year. The Zacks Consensus Estimate for the current year has improved 1.5% over the past 30 days. The stock price has jumped 38.8% year to date.
Caterpillar manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives worldwide. This Zacks Rank #2 company has an expected earnings growth rate of 21.3% for the current year. The Zacks Consensus Estimate for the current year has improved 4.5% over the past 30 days. The stock price has appreciated 19.3% year to date.
Scotts Miracle-Gro manufactures, markets and sells consumer lawn and garden products in the United States and internationally. The company operates through three segments: U.S. Consumer, Hawthorne and Other.
This Zacks Rank #1 company has an expected earnings growth rate of 21% for the current year (ending September 2021). The Zacks Consensus Estimate for the current year has improved 6.2% over the past 30 days. The stock price has risen 13.3% year to date.
Eastman Chemical operates as an advanced materials and specialty additives company worldwide that manufactures and sells chemicals, plastics and fibers. This Zacks Rank #2 company has an expected earnings growth rate of 28.1% for the current year. The Zacks Consensus Estimate for the current year has improved 7.9% over the past 30 days. The stock price has advanced 13.2% year to date.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They're also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>
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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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.