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Alpha & Omega Semiconductor, Rite Aid, PayPal, Discover Financial and American Express highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – July 7, 2021 – Zacks Equity Research Shares of Alpha & Omega Semiconductor Limited (AOSL - Free Report) as the Bull of the Day, Rite Aid Corporation as the Bear of the Day. In addition, Zacks Equity Research provides analysis on PayPal Holdings, Inc. (PYPL - Free Report) , Discover Financial Services (DFS - Free Report) and American Express Company (AXP - Free Report) .
The semiconductor shortage has been well documented. Look no further than your local car lot to understand the extent. From the trade war with China to COVID-related shutdowns, the supply chain disruption has had lasting economic effects. While there have been many reasons to lament the situation, few have looked on the bright side. The brightest side of them all is the semiconductor industry. With a backlog of orders, this industry is set for several quarters of continuing profits.
Today's Bull of the Day is a stock in this industry, Alpha & Omega Semiconductor. Alpha and Omega Semiconductor Limited designs, develops, and supplies power semiconductor products for computing, consumer electronics, communication, and industrial applications. The company offers power discrete products, including metal-oxide-semiconductor field-effect transistors (MOSFET), SRFETs, XSFET, electrostatic discharge, protected MOSFETs, high and mid-voltage MOSFETs, and insulated gate bipolar transistors.
The stock is a Zacks Rank #1 (Strong Buy) in the Electronics – Semiconductors industry which ranks in the Top 43% of our Zacks Industry Rank. In addition to the favorable rank, the stock enjoys a Zacks Value Style Score of B, Growth of A, and Momentum of D to help it round out with a VGM Composite Score of B.
Over the last sixty days, two analysts have increased their earnings estimates for the current year and next year. The bullish moves have pushed up our Zacks Consensus Estimates for the current year from $2.35 to $2.72 while next year's number is up from $2.35 to $2.86. That puts current year EPS Growth up at 209.09%.
Next year's growth is forecast to come in much lower, down at 5.15%. I suspect that number is going to increase a bit, keeping the momentum from this year's big jump higher. Those EPS numbers are coming on revenue growth of 39.73% for the current year and 5.62% for next year.
Today's Bear of the Day is a stock that has seen earnings estimate revisions go in the wrong direction, down. That means that analysts all over Wall Street have been changing how they feel about this stock. That does not mean that the death knell is tolling. Rather, it is just something that long-term investors should take note of if they haven't already. This could be a small blip, or it could be the start of something worse.
Today's Bear of the Day is Rite Aid. For a while there, it seemed that Rite Aid was destined to merge with Walgreens, forever changing the fate of the company. After the merger failed, Rite Aid was left to fend for itself. In a world with ever-increasing competition from online giants and retail locations, it could not have come at a worse time.
Rite Aid is a Zacks Rank #5 (Strong Sell). The reason for the bearish rank is the series of negative earnings revisions coming from analysts. Over the last thirty days, two analysts have cut estimates for the current year while one has followed suit for next year. The bearish revisions have cut our Zacks Consensus Estimates for the current year from $1.70 per share profit to an 80-cent loss. Next year's numbers have been slashed from a 14-cent profit to a 22-cent loss. Not the trend you want to see over the long run.
The Retail – Pharmacies and Drug Stores industry ranks in the Bottom 48% of our Zacks Industry Rank. There are other stocks within the same industry which have more favorable ranks.
Additional content:
3 Outperforming Payment Companies: More Room to Run?
The payment industry was undergoing a rapid transformation to digital mode, even before the pandemic had hit mankind last year. But this global health emergency kind of fueled the digital/online/remote payment trends as these emerged as the only option for all the at-home shoppers to make purchases through.
Thus this big change in the payment habits of shoppers seems a permanent fixture in their lives. Benefits such as convenience, flexibility and security that come along with digital payment methods actually lured customers to embrace this transition with open hands.
Digital payments are a direct outcome of technological percolation and e-commerce growth, which also grew by leaps and bounds during the pandemic. E-commerce will continue to see secular growth for the foreseeable future.
Per a Research and Markets report, the global e-commerce market is estimated to witness a CAGR of 22.9% from 2020 to 2027, driven by factors like the increasing penetration of the Internet as well as the rising usage of smartphones as mentioned in a GlobeNewswire article.
This should also bear a positive impact on the digital payment industry. According to Research and Markets, the transaction value for the Global Digital Payments Market was $5.44 trillion in 2020, which is projected to be worth $11.29 trillion by 2026, witnessing a CAGR of 11.21% during the forecast period of 2021-2026.
The advent of 5G will further redefine digital payment owing to higher speed of internet connectivity, low latency (the amount of time information takes to go from one piece of kit in the network to another) and enhanced security. These features will improve consumer experience and drive digital payments.
Here we present three stocks, which have already outperformed markets in the first half of 2021 and are well-equipped to propel further growth for the remainder of the year as well.
PayPal Holdings will come to your mind at once if you want to make payments instantly with a single touch on the PayPal button of your mobile. This easy-to-use feature attracts customers and merchants.
Founded in 2000, the company has consistently grown ever since by revolutionizing the way money can move easily on a real-time basis. Permeation of technology, booming e-commerce, acquisitions and organic growth led to business expansion over the years.
Last year was a landmark period year for the company with revenues gaining 21% as businesses of all sizes digitized their operations in the wake of the pandemic. The company processed $936 billion in total payment volume (TPV) during 2020 and has a goal to reach $1 trillion a year. At the end of 2020, the company had 377 million users. It has its sights set on to net in 1 billion users one day.
Recently, the company unveiled new products like Pay in 4,its buy now, pay later solution, and its cryptocurrency service, which will drive business. PayPal also expanded Xoom, its remittance business, into more countries to make it more widely available. Its new dedicated crypto unit will focus on increasing the utility of digital currencies.
PayPal is also adding banking and stock trading to its bouquet of services. The company aims to become a one-stop shop for all consumer financial needs. Recently, it rolled out PayPal Zettle, which will aid small businesses in accepting payments in person as well as via the online mode. This will drive seller momentum, which is crucial to PayPal as it is the key catalyst for its total payment volume.
It is tagged as one of the safest and most secure online payment systems. This cognizance by customers will take it a long way in the future.
Its solid balance sheet with low leverage and an ability to generate free cash flow further reinstate our bullish view of the company.
The Zacks Consensus Estimate for its revenues is pegged at 20% growth for 2021 and 2022. Earnings per share are likely to grow 22% in 2021 and 24% in 2022.
Discover Financial is a payment processor and also loans money through its own bank. The company generates revenues from the interest on its credit card balances, which accounts for its interest income. Its non-interest income is generated from its card processing business.
In 2020, the company suffered weak interest rates and a decline in net interest margin, which resulted from lower card balances due to higher defaults and credit losses. Revenues were down 7.4% in 2020.
As the economy reopens, consumer spending and prudent expansion of credit should drive profitable loan growth going forward. Several factors, such as expanding sales volume, improving trends in categories like retail and restaurants plus rising credit standards should aid loan growth, which will further boost net interest margin.
The Zacks Consensus Estimate for 2021 for revenues stands at a growth rate of 272.2%.
The stock has rallied 27% in the past six months and is sure to display a further uptrend. The stock carries a Zacks Rank #2 (Buy), at present.
American Express is in a transition phase during 2021 after suffering clutched consumer spending in 2020. The company took a hit from revenue declines last year when its products, namely credit and charge cards, personal loans, business loans and working capital loans showed no takers as consumers constrained their budgets and many businesses wound up.
A large chunk of AmEx's customers consists of small businesses, which were worst hit by the pandemic. Now that things are looking up and the small business owners are getting on their feet, the company's products are likely to see a surge in demand. Moreover, it targets premium consumers who have the propensity to spend about three times more than that of their rival networks.
The company's business is picking up as growth is evident from an increase in demand for new cards. In the first quarter of 2021, it issued 2 million new cards for the first time since the beginning of the pandemic. The company is experiencing progress in four strategic areas, such as pending volumes returning to the pre-pandemic levels, customer additions, retention of current customers and growth in merchants.
The green shoots started appearing in the March quarter when the company confirmed that the overall spending on AmEx cards improved sequentially from the last two quarters of 2020. The company's non-U.S. volume, which lagged a bit due to renewed lockdowns in certain countries, is likely to be restored soon.
Pent-up demand for travel is already being felt and will further gather steam as the fear of coronavirus recedes. AmEx's Platinum Travel Credit Card provides an array of unbeatable luxury travel experiences to attract travelers.
The company refurbished its Platinum Travel Card recently to urge consumers to spend more on its cards as travel resumes gradually. For 2022 and 2023, the company's sales are expected to gain 9% and 13%, respectively.
The stock has gained 38% in the past six months and is sure to grow further. The stock carries a Zacks Rank #3 (Hold), at present.
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.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
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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Alpha & Omega Semiconductor, Rite Aid, PayPal, Discover Financial and American Express highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – July 7, 2021 – Zacks Equity Research Shares of Alpha & Omega Semiconductor Limited (AOSL - Free Report) as the Bull of the Day, Rite Aid Corporation as the Bear of the Day. In addition, Zacks Equity Research provides analysis on PayPal Holdings, Inc. (PYPL - Free Report) , Discover Financial Services (DFS - Free Report) and American Express Company (AXP - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
The semiconductor shortage has been well documented. Look no further than your local car lot to understand the extent. From the trade war with China to COVID-related shutdowns, the supply chain disruption has had lasting economic effects. While there have been many reasons to lament the situation, few have looked on the bright side. The brightest side of them all is the semiconductor industry. With a backlog of orders, this industry is set for several quarters of continuing profits.
Today's Bull of the Day is a stock in this industry, Alpha & Omega Semiconductor. Alpha and Omega Semiconductor Limited designs, develops, and supplies power semiconductor products for computing, consumer electronics, communication, and industrial applications. The company offers power discrete products, including metal-oxide-semiconductor field-effect transistors (MOSFET), SRFETs, XSFET, electrostatic discharge, protected MOSFETs, high and mid-voltage MOSFETs, and insulated gate bipolar transistors.
The stock is a Zacks Rank #1 (Strong Buy) in the Electronics – Semiconductors industry which ranks in the Top 43% of our Zacks Industry Rank. In addition to the favorable rank, the stock enjoys a Zacks Value Style Score of B, Growth of A, and Momentum of D to help it round out with a VGM Composite Score of B.
Over the last sixty days, two analysts have increased their earnings estimates for the current year and next year. The bullish moves have pushed up our Zacks Consensus Estimates for the current year from $2.35 to $2.72 while next year's number is up from $2.35 to $2.86. That puts current year EPS Growth up at 209.09%.
Next year's growth is forecast to come in much lower, down at 5.15%. I suspect that number is going to increase a bit, keeping the momentum from this year's big jump higher. Those EPS numbers are coming on revenue growth of 39.73% for the current year and 5.62% for next year.
Bear of the Day:
Today's Bear of the Day is a stock that has seen earnings estimate revisions go in the wrong direction, down. That means that analysts all over Wall Street have been changing how they feel about this stock. That does not mean that the death knell is tolling. Rather, it is just something that long-term investors should take note of if they haven't already. This could be a small blip, or it could be the start of something worse.
Today's Bear of the Day is Rite Aid. For a while there, it seemed that Rite Aid was destined to merge with Walgreens, forever changing the fate of the company. After the merger failed, Rite Aid was left to fend for itself. In a world with ever-increasing competition from online giants and retail locations, it could not have come at a worse time.
Rite Aid is a Zacks Rank #5 (Strong Sell). The reason for the bearish rank is the series of negative earnings revisions coming from analysts. Over the last thirty days, two analysts have cut estimates for the current year while one has followed suit for next year. The bearish revisions have cut our Zacks Consensus Estimates for the current year from $1.70 per share profit to an 80-cent loss. Next year's numbers have been slashed from a 14-cent profit to a 22-cent loss. Not the trend you want to see over the long run.
The Retail – Pharmacies and Drug Stores industry ranks in the Bottom 48% of our Zacks Industry Rank. There are other stocks within the same industry which have more favorable ranks.
Additional content:
3 Outperforming Payment Companies: More Room to Run?
The payment industry was undergoing a rapid transformation to digital mode, even before the pandemic had hit mankind last year. But this global health emergency kind of fueled the digital/online/remote payment trends as these emerged as the only option for all the at-home shoppers to make purchases through.
Thus this big change in the payment habits of shoppers seems a permanent fixture in their lives. Benefits such as convenience, flexibility and security that come along with digital payment methods actually lured customers to embrace this transition with open hands.
Digital payments are a direct outcome of technological percolation and e-commerce growth, which also grew by leaps and bounds during the pandemic. E-commerce will continue to see secular growth for the foreseeable future.
Per a Research and Markets report, the global e-commerce market is estimated to witness a CAGR of 22.9% from 2020 to 2027, driven by factors like the increasing penetration of the Internet as well as the rising usage of smartphones as mentioned in a GlobeNewswire article.
This should also bear a positive impact on the digital payment industry. According to Research and Markets, the transaction value for the Global Digital Payments Market was $5.44 trillion in 2020, which is projected to be worth $11.29 trillion by 2026, witnessing a CAGR of 11.21% during the forecast period of 2021-2026.
The advent of 5G will further redefine digital payment owing to higher speed of internet connectivity, low latency (the amount of time information takes to go from one piece of kit in the network to another) and enhanced security. These features will improve consumer experience and drive digital payments.
Here we present three stocks, which have already outperformed markets in the first half of 2021 and are well-equipped to propel further growth for the remainder of the year as well.
PayPal Holdings will come to your mind at once if you want to make payments instantly with a single touch on the PayPal button of your mobile. This easy-to-use feature attracts customers and merchants.
Founded in 2000, the company has consistently grown ever since by revolutionizing the way money can move easily on a real-time basis. Permeation of technology, booming e-commerce, acquisitions and organic growth led to business expansion over the years.
Last year was a landmark period year for the company with revenues gaining 21% as businesses of all sizes digitized their operations in the wake of the pandemic. The company processed $936 billion in total payment volume (TPV) during 2020 and has a goal to reach $1 trillion a year. At the end of 2020, the company had 377 million users. It has its sights set on to net in 1 billion users one day.
Recently, the company unveiled new products like Pay in 4,its buy now, pay later solution, and its cryptocurrency service, which will drive business. PayPal also expanded Xoom, its remittance business, into more countries to make it more widely available. Its new dedicated crypto unit will focus on increasing the utility of digital currencies.
PayPal is also adding banking and stock trading to its bouquet of services. The company aims to become a one-stop shop for all consumer financial needs. Recently, it rolled out PayPal Zettle, which will aid small businesses in accepting payments in person as well as via the online mode. This will drive seller momentum, which is crucial to PayPal as it is the key catalyst for its total payment volume.
It is tagged as one of the safest and most secure online payment systems. This cognizance by customers will take it a long way in the future.
Its solid balance sheet with low leverage and an ability to generate free cash flow further reinstate our bullish view of the company.
The Zacks Consensus Estimate for its revenues is pegged at 20% growth for 2021 and 2022. Earnings per share are likely to grow 22% in 2021 and 24% in 2022.
In the first six months, the stock has gained 27.9% and the way it is chasing growth, it will continue to fly high. The stock carries a Zacks Rank #3 (Hold) , at present. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Discover Financial is a payment processor and also loans money through its own bank. The company generates revenues from the interest on its credit card balances, which accounts for its interest income. Its non-interest income is generated from its card processing business.
In 2020, the company suffered weak interest rates and a decline in net interest margin, which resulted from lower card balances due to higher defaults and credit losses. Revenues were down 7.4% in 2020.
As the economy reopens, consumer spending and prudent expansion of credit should drive profitable loan growth going forward. Several factors, such as expanding sales volume, improving trends in categories like retail and restaurants plus rising credit standards should aid loan growth, which will further boost net interest margin.
The Zacks Consensus Estimate for 2021 for revenues stands at a growth rate of 272.2%.
The stock has rallied 27% in the past six months and is sure to display a further uptrend. The stock carries a Zacks Rank #2 (Buy), at present.
American Express is in a transition phase during 2021 after suffering clutched consumer spending in 2020. The company took a hit from revenue declines last year when its products, namely credit and charge cards, personal loans, business loans and working capital loans showed no takers as consumers constrained their budgets and many businesses wound up.
A large chunk of AmEx's customers consists of small businesses, which were worst hit by the pandemic. Now that things are looking up and the small business owners are getting on their feet, the company's products are likely to see a surge in demand. Moreover, it targets premium consumers who have the propensity to spend about three times more than that of their rival networks.
The company's business is picking up as growth is evident from an increase in demand for new cards. In the first quarter of 2021, it issued 2 million new cards for the first time since the beginning of the pandemic. The company is experiencing progress in four strategic areas, such as pending volumes returning to the pre-pandemic levels, customer additions, retention of current customers and growth in merchants.
The green shoots started appearing in the March quarter when the company confirmed that the overall spending on AmEx cards improved sequentially from the last two quarters of 2020. The company's non-U.S. volume, which lagged a bit due to renewed lockdowns in certain countries, is likely to be restored soon.
Pent-up demand for travel is already being felt and will further gather steam as the fear of coronavirus recedes. AmEx's Platinum Travel Credit Card provides an array of unbeatable luxury travel experiences to attract travelers.
The company refurbished its Platinum Travel Card recently to urge consumers to spend more on its cards as travel resumes gradually.
For 2022 and 2023, the company's sales are expected to gain 9% and 13%, respectively.
The stock has gained 38% in the past six months and is sure to grow further. The stock carries a Zacks Rank #3 (Hold), at present.
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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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
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.