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The Zacks Analyst Blog Highlights: ASML Holding, Lam Research and MKS Instruments
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For Immediate Release
Chicago, IL – June 2, 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: ASML Holding N.V. (ASML - Free Report) , Lam Research Corporation (LRCX - Free Report) and MKS Instruments, Inc. (MKSI - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
OPEC+ Meets: Global Week Ahead
In this short 4-day Global Week Ahead, the Organization of the Petroleum Exporting Countries (OPEC) and their allies (the +) will have a lot on their minds on Tuesday. They gather via teleconference to assess the latest developments in the oil sector.
Crude oil prices have tallied two straight monthly gains (going from $61 a WTI barrel to $67). And demand for gasoline-at-the-pump is expected to rise. For example, the past U.S. Memorial Day weekend marks the start to the American summer driving season.
The recent surge in oil prices “will not go unnoticed” in this virtual gathering of OPEC +, Phillip Streible, chief strategist at Blue Line Futures, told MarketWatch.
In a note dated Thursday, May 27th, analysts at RBC Capital Markets, said the producer group will “stick with the cautious production return schedule” it agreed to in April.
But Russia is likely to “seek to accelerate the pace of the ramp up” in output.
Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman may call for “keeping the more conservative increase given the high COVID case counts in India and Japan, as well as the looming return of Iranian exports in the back half of the year,” RBC Capital Markets wrote.
That last paragraph summarizes the current constraints on global demand, succinctly.
Down the road, a potential revival of the 2015 Iran nuclear deal threatens to add a significant amount of crude supply to the global market.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) On Friday, U.S. Nonfarm Payrolls for May Show Up
How fast is the U.S. recovery?
Friday’s U.S. monthly jobs report will add fuel to the debate.
In April, U.S. job growth unexpectedly slowed, possibly because of shortages of workers and raw material. Non-farm payrolls added a mere 266,000 jobs compared to predictions for more than 3 1/2 times that.
Optimism over jobs has offset concerns about rising inflation and diminishing government financial support, lifting May U.S. consumer confidence to a 14-month high.
For May jobs, a Reuters poll predicts a 621,000 rise. Strong data could again raise concerns of an earlier-than-expected stimulus unwind by the Fed.
(2) What to Make of an Expensive Chinese Yuan?
China’s yuan is at the highest since 2018 but the People’s Bank of China seems to show no discomfort with the recent gains.
That’s got markets guessing how policymakers in the world’s second-largest economy plan to navigate economic recovery, the commodity price gains and inflation pressures.
Friday’s official guidance rate — the strongest since May 2018 and set above the psychologically important 6.4 per dollar level — seemed like a tacit acceptance of a stronger yuan.
But officials have also become more vocal in recent days on pledges to crack down on forex market manipulation, warning on Friday against one-way yuan bets. They reiterated, however, there was no change to the country’s currency policy.
(3) On Tuesday, OPEC+ and Allies Meet
OPEC and its allies, the OPEC+ grouping, are expected to stick to the gradual easing of oil supply curbs at their Tuesday meeting, pinning hopes on a strong demand recovery.
Since OPEC+ decided to taper cuts by 2.1 million barrels per day in April, oil has extended its 2021 rally and is currently up over 30% and closing in on $70 a barrel.
One factor limiting oil price upside is the prospect of higher Iranian output should its nuclear deal with world powers be revived. If a deal is struck, Iran could add as much as 2 million bpd to supply.
(4) On Tuesday, the Reserve Bank of Australia Meets
The Reserve Bank of Australia meets on Tuesday and focus is on whether it will provide any hawkish hints, given a strong economic rebound and moves from peers towards slowing stimulus.
Few expect Australia to follow neighbor New Zealand, which signaled a potential rate hike in 2022. But investors are seeking clues on the RBA’s asset-purchase plans ahead of its July meeting when it is due to decide whether to expand its quantitative easing program.
Australia’s pluses? A relatively low COVID-19 caseload and rising commodity prices. China’s yuan at a three-year highs and signs of Beijing’s comfort with the exchange rate bodes well for commodity exports too. The risk? A weaker Australian dollar versus the yuan, potentially spelling higher inflation.
(5) On Tuesday, We Get Eurozone Flash Inflation Reading
Tuesday’s Eurozone flash inflation is sure to grab attention as the next European Central Bank meeting nears.
Inflation in the bloc is approaching its 2% target — the fastest in years — thanks to higher spending and base effects stemming from the 2020 oil price crash. Strong data could spark excitement or fear that a new era of inflation is dawning.
Not so fast, others argue. ECB Chief Economist Philip Lane, for one, has pushed against the inflation-is-back narrative, stressing labour markets will take years to return to pre-crisis levels and that stimulus is still needed to secure the recovery.
The data could pave the way for a lively June ECB meeting.
Top Zacks #1 Rank Stocks
With a global semiconductor chip shortage, let’s examine the top 3 large-cap chip stocks in our Zacks Rank system, at the moment.
(1) ASML Holding: This is a $665 stock, and the market cap is $280B. They are a semiconductor equipment-wafer fabrication player. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of F.
(2) Lam Research: This is a $645 stock, and the market cap is $92B. They (once again!) are a semiconductor equipment-wafer fabrication player. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of D.
(3) MKS Instruments: This is a $186 stock, and the market cap is $10.4B. They are in the electronics-manufacturing machinery industry. I see a Zacks Value score of D, a Zacks Growth score of B and a Zacks Momentum score of C.
In light of the industries I wrote, this should be clear to you. Actual chipmakers are not benefitting, in the sense of rising earnings estimates. Companies further back in the value chain are extracting the most value out of the chip shortage.
Added to that insight, the Zacks Value scores are F, F and D. In sum, this chip shortage story is also likely priced in. The 3 stocks could see some distribution shortly.
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: ASML Holding, Lam Research and MKS Instruments
For Immediate Release
Chicago, IL – June 2, 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: ASML Holding N.V. (ASML - Free Report) , Lam Research Corporation (LRCX - Free Report) and MKS Instruments, Inc. (MKSI - Free Report) .
Here are highlights from Tuesday’s Analyst Blog:
OPEC+ Meets: Global Week Ahead
In this short 4-day Global Week Ahead, the Organization of the Petroleum Exporting Countries (OPEC) and their allies (the +) will have a lot on their minds on Tuesday. They gather via teleconference to assess the latest developments in the oil sector.
Crude oil prices have tallied two straight monthly gains (going from $61 a WTI barrel to $67). And demand for gasoline-at-the-pump is expected to rise. For example, the past U.S. Memorial Day weekend marks the start to the American summer driving season.
The recent surge in oil prices “will not go unnoticed” in this virtual gathering of OPEC +, Phillip Streible, chief strategist at Blue Line Futures, told MarketWatch.
In a note dated Thursday, May 27th, analysts at RBC Capital Markets, said the producer group will “stick with the cautious production return schedule” it agreed to in April.
But Russia is likely to “seek to accelerate the pace of the ramp up” in output.
Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman may call for “keeping the more conservative increase given the high COVID case counts in India and Japan, as well as the looming return of Iranian exports in the back half of the year,” RBC Capital Markets wrote.
That last paragraph summarizes the current constraints on global demand, succinctly.
Down the road, a potential revival of the 2015 Iran nuclear deal threatens to add a significant amount of crude supply to the global market.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) On Friday, U.S. Nonfarm Payrolls for May Show Up
How fast is the U.S. recovery?
Friday’s U.S. monthly jobs report will add fuel to the debate.
In April, U.S. job growth unexpectedly slowed, possibly because of shortages of workers and raw material. Non-farm payrolls added a mere 266,000 jobs compared to predictions for more than 3 1/2 times that.
Optimism over jobs has offset concerns about rising inflation and diminishing government financial support, lifting May U.S. consumer confidence to a 14-month high.
For May jobs, a Reuters poll predicts a 621,000 rise. Strong data could again raise concerns of an earlier-than-expected stimulus unwind by the Fed.
(2) What to Make of an Expensive Chinese Yuan?
China’s yuan is at the highest since 2018 but the People’s Bank of China seems to show no discomfort with the recent gains.
That’s got markets guessing how policymakers in the world’s second-largest economy plan to navigate economic recovery, the commodity price gains and inflation pressures.
Friday’s official guidance rate — the strongest since May 2018 and set above the psychologically important 6.4 per dollar level — seemed like a tacit acceptance of a stronger yuan.
But officials have also become more vocal in recent days on pledges to crack down on forex market manipulation, warning on Friday against one-way yuan bets. They reiterated, however, there was no change to the country’s currency policy.
(3) On Tuesday, OPEC+ and Allies Meet
OPEC and its allies, the OPEC+ grouping, are expected to stick to the gradual easing of oil supply curbs at their Tuesday meeting, pinning hopes on a strong demand recovery.
Since OPEC+ decided to taper cuts by 2.1 million barrels per day in April, oil has extended its 2021 rally and is currently up over 30% and closing in on $70 a barrel.
One factor limiting oil price upside is the prospect of higher Iranian output should its nuclear deal with world powers be revived. If a deal is struck, Iran could add as much as 2 million bpd to supply.
(4) On Tuesday, the Reserve Bank of Australia Meets
The Reserve Bank of Australia meets on Tuesday and focus is on whether it will provide any hawkish hints, given a strong economic rebound and moves from peers towards slowing stimulus.
Few expect Australia to follow neighbor New Zealand, which signaled a potential rate hike in 2022. But investors are seeking clues on the RBA’s asset-purchase plans ahead of its July meeting when it is due to decide whether to expand its quantitative easing program.
Australia’s pluses? A relatively low COVID-19 caseload and rising commodity prices. China’s yuan at a three-year highs and signs of Beijing’s comfort with the exchange rate bodes well for commodity exports too. The risk? A weaker Australian dollar versus the yuan, potentially spelling higher inflation.
(5) On Tuesday, We Get Eurozone Flash Inflation Reading
Tuesday’s Eurozone flash inflation is sure to grab attention as the next European Central Bank meeting nears.
Inflation in the bloc is approaching its 2% target — the fastest in years — thanks to higher spending and base effects stemming from the 2020 oil price crash. Strong data could spark excitement or fear that a new era of inflation is dawning.
Not so fast, others argue. ECB Chief Economist Philip Lane, for one, has pushed against the inflation-is-back narrative, stressing labour markets will take years to return to pre-crisis levels and that stimulus is still needed to secure the recovery.
The data could pave the way for a lively June ECB meeting.
Top Zacks #1 Rank Stocks
With a global semiconductor chip shortage, let’s examine the top 3 large-cap chip stocks in our Zacks Rank system, at the moment.
(1) ASML Holding: This is a $665 stock, and the market cap is $280B. They are a semiconductor equipment-wafer fabrication player. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of F.
(2) Lam Research: This is a $645 stock, and the market cap is $92B. They (once again!) are a semiconductor equipment-wafer fabrication player. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of D.
(3) MKS Instruments: This is a $186 stock, and the market cap is $10.4B. They are in the electronics-manufacturing machinery industry. I see a Zacks Value score of D, a Zacks Growth score of B and a Zacks Momentum score of C.
In light of the industries I wrote, this should be clear to you. Actual chipmakers are not benefitting, in the sense of rising earnings estimates. Companies further back in the value chain are extracting the most value out of the chip shortage.
Added to that insight, the Zacks Value scores are F, F and D. In sum, this chip shortage story is also likely priced in. The 3 stocks could see some distribution shortly.
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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.