For Immediate Release
Chicago, IL – July 8, 2021 – Zacks Equity Research Shares of Deere & Company (
DE Quick Quote DE - Free Report) as the Bull of the Day, Beyond Meat, Inc. ( BYND Quick Quote BYND - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Palo Alto Networks, Inc. ( PANW Quick Quote PANW - Free Report) , CrowdStrike Holdings, Inc. ( CRWD Quick Quote CRWD - Free Report) and Zscaler, Inc. ( ZS Quick Quote ZS - Free Report) . Here is a synopsis of all five stocks:
Those just might be the two most important words in business – especially in an environment of strong economic activity, but also inflationary pressures. The firms that are adept at providing the goods and services that their customers demand are seeing rising revenues as the US rapidly emerges from Covid-19 shutdown, but if their costs are rises faster than the prices they receive, that won’t translate to increased net profit results.
And ultimately, net profits are the thing investors should care about most.
If you’ve been to the grocery store lately, you’re familiar with the idea that food prices are rising. Many of the input costs of producing grains, meat, fruit, and vegetables are rising - and pulling up prices at the checkout aisle. The food supply in the US is a complicated ecosystem. When the prices of corn and soybeans rise, so do the cost of both finished products and meat from the animals that need to be fed before they’re brought to market.
And if you’ve driven across the fertile breadbasket of our country lately, you’ve probably seen more green and yellow pieces of equipment that you could count. Illinois-based
Deere and Company has been the leading manufacturer of innovative farm equipment for over 180 years.
What you can’t see behind the recognizable exterior of those implements is that they’re hugely advanced in terms of technology. What still pretty much looks like a standard tractor or combine on the outside has a staggering amount of technology beneath the surface that helps farmers increase yields and spend less hours in the field.
“You’ve Got to Make the Hay While the Sun is Shining.”
...And the sun is definitely shing on Deere right now. It’s basic Economics 101. As the prices of those finished agricultural products rise, the people and businesses that produce our food have both additional cash flow to spend on new equipment and the economic need to maximize the efficiency of their operations so that they can sell the greatest possible quantity of goods to the market.
Deere develops and manufactures the equipment that helps farmers add directly to their own bottom line. Demand has literally never been stronger. It also means that when the price of raw materials to make that advanced machinery rise, Deere is able to pass along price increases to it’s customers, preserving gross margins.
It’s one of those companies that makes you look twice at the financial data and future estimates - because you literally can’t believe your eyes at the first glance. Companies with $39 billion in annual revenues from selling hard goods don’t often grow those revenues at a double-digit annual pace, but Deere does.
Next, take a look at net earnings. They’re going to be almost $18/share in fiscal 2021, more than double what they were last year. And just in case you think that’s an aberration, the consensus forecast is for more than $20/share in net earnings
With 10 recent upward earnings estimate revisions, Deere and Company enjoys a Zacks Rank #1 (Strong Buy).
Even with a $350 share price, Deere remains a strong value stock with a 19.5X P/E Ratio, 15% lower than the average of the S&P 500. It also pays a reliable annual dividend yield of just over 1%. That may not sound all that glamorous, but in an environment in which 10-year Treasury Notes only pay 1.3%, it’s a very solid yield from a stock that's also enjoying excellent earnings growth.
At a golden moment for the US economy, investors would be wise to consider adding this quintessentially American company to their portfolios.
With the prices of beef and chicken reaching new highs, you might expect that the fortunes of a company that makes plant-based meat substitutes would be soaring, yet unfortunately that’s not the case for
After a meteoric rise that saw Beyond Meat shares rally more than 900% in the first three months as a public company in 2019, those shares fell back to earth and have mostly trended sideways over the past two years, never quite living up to the potential of the company’s extraordinary promise.
It’s a great story. Los Angeles-based Beyond makes products that have the taste and texture of ground beef, meatballs, sausage links and breakfast sausage patties. Made primarily from pea, potato and rice proteins, vegetable lipids and fruit juices, Beyond created products that not only taste like the meat products they replace, they brown up during cooking and even “bleed” a bit when sliced or bitten into just like the real thing.
More importantly, their production does not contribute to greenhouse gasses being released into the environment the way that traditional ranching does. Consumers could feel as though they were contributing to climate change relief while also enjoying something awfully close to their favorite hamburger or breakfast sandwich. Beyond products also contain no GMOs, soy or gluten.
Sold in grocery store refrigerator cases as well as in national quick-service chains like Dunkin Brands, consumers debated how much they liked the ersatz meat, but also quickly discerned that the Beyond products nutritional composition meant they weren’t any healthier for human consumption that the genuine met products they were intended to replace.
To create the appearance and texture of the real thing, a Beyond burger patty contains just as much total and saturated fat as one made from ground chuck, though the fat comes from vegetable sources. For taste, Beyond used a strategy that’s been employed by chefs around the world for millennia – salt.
The Beyond hamburger patty contains about 5 times as much sodium as a quarter pound of 80 % lean ground beef (380mg vs 75mg) and a comparable number of calories. It also contains 5g of carbs - while the ground beef patty contains zero.
Finally, the Beyond products aren’t inexpensive, costing just as much or more than the beef and pork they replace. That has hurt the company’s efforts to partner with fast-food chains who manage food costs down to fractions of a cent – and also sell millions of servings of their popular items daily, greatly multiplying the effect of more costly ingredients.
Beyond Meat currently doesn’t turn a net profit and missed the Zacks Consensus Earnings Estimate significantly in each of the last 4 quarters with larger than expected losses.
Widening loss forecasts for 2021 ($1.08/share) and 2022 ($0.29/share) contribute to a Zacks Rank #5 (Strong Sell).
Despite just $500-600 million in annual sales, BYND currently enjoys a market cap of greater than $9 billion with no prospect of net profits in sight.
Though I don’t personally have any dietary pr3ferences or restrictions that would keep me from eating traditional meat products, I went out of my way to try as many Beyond products as possible and I found them to be quite tasty. I especially like the idea of eating a more environmentally sustainable “meat.”
As an investment however, it’s hard to recommend the stock at these price levels. In the very competitive food industry, better ranked and more reasonably valued alternatives like Bloomin Brands or Papa Johns are a much tastier alternative.
Additional content: Cyber Attacks Aid Prospects of These 3 Security Stocks
Cybersecurity is gaining prominence due to the rising number of ransomware attacks in 2021. Notably, ransomware infects a computer to encrypt files or systems. Typically, the victim has to cough up a ransom amount for data retrieval.
The latest victim is software vendor Kaseya and the ransomware attack on it has reportedly affected 800-1500 businesses globally.
Kaseya’s IT management solutions are used by local and state governments, and agencies as well as small- and medium-sized businesses globally. Per Reuters, the ransomware attack forced hundreds of Supermarkets to close operations due to inoperative cash registers in Sweden, while schools and kindergartens went offline in New Zealand.
Markedly, the U.S. President Joe Biden on Jul 3 said that his administration is not certain about the identity of the hackers. However, federal agencies have been directed to look into the matter.
Reportedly, REvil has taken responsibility for the attack and demanded $70 million to restore data. This is the same group that attacked meat supplier JBS USA in May, crippling its North American and Australian IT systems.
JBS USA paid $11 million as ransom, which, per Bloomberg, was in bitcoin.
Another notable ransomware attack in the same month was on the Colonial Pipeline, which operates the largest fuel pipeline in the United States. The company reportedly paid $5 million ransom to hacker group DarkSide to restore services.
Ransomware to Hurt More, Attack Rate to Increase
The number of ransomware attacks has grown at an alarming rate and is expected to be more than 65,000 this year, which is “a conservative number” according to John Chambers, former CEO of Cisco and founder of JC2 Ventures. He estimates almost
100,000 attacks in 2021, with each one costing companies $170,000 on average.
Moreover, according to Sophos, the average cost of a ransomware attack has increased from an average of $761,106 in 2020 to $1.85 million in 2021. In addition, the number of organizations that paid the ransom increased from 26% in 2020 to 32% in 2021, although only 8% managed to get back all of their data.
Further, according to Cybersecurity Ventures’ latest projections, ransomware attack damage costs will be roughly
$265 billion annually by 2031 compared with an estimated $20 billion in 2021. Additionally, frequency of ransomware attack is projected to increase to every two seconds compared with every 11 seconds in 2021. Growing Number of DDoS Attacks: A Key Concern
Apart from ransomware, growing number of distributed denial of service (DDoS) attacks has been a major concern.
According to F5 Networks data, between January 2020 and March 2021,
DDoS attacks increased 55% and complexity increased with 54% incidents using multiple attack vectors. Markedly, the technology sector was the most targeted, receiving 27% of all DDoS attacks in the past 15 months. Cybersecurity Spending to Aid Prospects
Per Gartner’s latest projections, spending on information security and risk management technology and services is likely to
increase 12.4% to hit $150.4 billion in 2021 against growth of 6.4% in 2020. Spending on cloud security is estimated to grow the fastest, followed by data security. Besides, cybersecurity has been identified as the top priority for new spending, according to Gartner’s 2021 CIO Agenda survey.
Here we discuss three stocks that are anticipated to benefit from an increase in cybersecurity spending to thwart ransomware and DDoS attacks.
Palo Alto Networks : This Zacks Rank #2 (Buy) stock has been benefiting from continued deal wins and increasing adoption of its next-generation security platforms, attributable to the rise in remote work environment and need for stronger security. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
The company is currently focused on cloud-based protection services. Palo Alto Networks has taken various key steps to address the need for integrated security, as more and more organizations are shifting to the cloud. The Prisma Cloud platform has been largely successful, boasting more than 1,800 customers, including 70% of the Fortune 100.
The Zacks Consensus Estimate for fiscal 2021 is currently pegged at $5.99 per share, up 2% over the past 60 days.
CrowdStrike Holdings : This Zacks Rank #3 (Hold) company is riding on portfolio strength, mainly the Falcon platform’s 10 cloud modules. Furthermore, the company’s next-generation antivirus, EDR, and device-control products are well poised to gain amid the thriving remote work culture.
Additionally, acquisitions have played an important part in driving its growth trajectory. The buyout of high-performance cloud log management technology provider, Humio, has fortified its Extended Detection and Response (XDR) capabilities. Further, Preempt Security’s acquisition boosts CrowdStrike’s Zero Trust security capabilities. It also fortifies the company’s Falcon platform’s capabilities to offer protection against identity-based attacks and insider threats.
The Zacks Consensus Estimate for fiscal 2022 currently stands at 40 cents per share, having moved 29% north over the past 60 days.
Another Zacks Rank #3 stock,
Zscaler’s efforts to strengthen its cloud security capabilities, amid the remote-working wave and digital transformations, are driving growth. The launch of Zscaler Cloud Protection, a portfolio of solutions that enhances protection for cloud workloads on any cloud platform, is a key catalyst.
Apart from this, Zscaler’s Zero Trust Exchange platform detects the most sophisticated attacks, ransomware, and other unethical movements in the cloud. Also, the company’s Edge cloud for policy enforcement, multi-tenancy, proxy for SSL or TLS inspection and zero-trust network access is well poised to gain adoption amid the thriving remote work culture.
The consensus mark for fiscal 2021 currently stands at 47 cents per share, up 17.5% over the past 60 days.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
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