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Penske Automotive, Autohome, Bank of America, Eastern Bankshares and Veritex highlighted as Zacks Bull and Bear of the Day

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For Immediate Release

Chicago, IL – December 17, 2021 – Zacks Equity Research Shares of Penske Automotive Group, Inc. (PAG - Free Report) as the Bull of the Day, Autohome Inc. (ATHM - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Bank of America Corporation (BAC - Free Report) , Eastern Bankshares, Inc. (EBC - Free Report) and Veritex Holdings, Inc. (VBTX - Free Report) .

Here is a synopsis of all five stocks:

Bull of the Day:

I understand that the market’s nasty volatility has most of us bewildered. Where can we hide? Where is the easy money? The real deal remains the same. Over the long run, stocks with the strongest earnings trends will benefit investors. One way to uncover these stocks is to lean on the Zacks Rank. Stocks in the good graces of our Zacks Rank have the strongest earnings trends. That means that we give you cheat codes of how to beat the market.

Today’s Bull of the Day is one of these stocks. It’s Zacks Rank #1 (Strong Buy) Penske Automotive Group. Penske Automotive Group, Inc., a diversified transportation services company, operates automotive and commercial truck dealerships. The company operates through four segments: Retail Automotive, Retail Commercial Truck, Other, and Non-Automotive Investments. It operates dealerships under franchise agreements with various automotive manufacturers and distributors. The company engages in the sale of new and used motor vehicles, and related products and services comprise vehicle and collision repair services, as well as placement of finance and lease contracts, third-party insurance products, and other aftermarket products; and wholesale of parts.

The reason for the favorable ranks lies in the recent earnings estimate revisions coming from analysts. Over the last sixty days, six analysts have increased their earnings estimates for the current year and next year. The bullish sentiment has pushed up our Zacks Consensus Estimates from $12.58 to $14.71 for the current year while next year’s numbers are up from $11.04 to $13.50.

That means, the company expects a contraction in earnings next year. That is likely a function of the company believing this year’s supply shortage will come to an end.

Bear of the Day:

I am going to go out on a limb and say that you did not need me to know that Chinese Internet stocks were in trouble. The strange part to me is that this should have been the topic du jour during the last Presidential term. I mean, we literally had a trade war. I thought that war had subsided. Apparently, we have got it all wrong. It has only gotten worse for stocks like this. Is there an end to it all?

Today’s Bear of the Day is a Chinese internet stock. That might make it seem like a pariah. I am talking about Zacks Rank #5 (Strong Sell) AutoHome. Autohome Inc. operates as an online destination for automobile consumers in the People's Republic of China. The company, through its websites and, and its mobile applications and mini apps, delivers interactive content and tools to automobile consumers. It provides media services, including automaker advertising services and regional marketing campaigns, and leads generation services comprised of dealer subscription services, advertising services for individual dealers, and used automobile listing and other platform-based services.

There are many reasons to be worried about this stock. Obviously, the fact that it is a Chinese internet stock is a big one. The other is that, over the last thirty days, two analysts have cut their earnings estimates for the current year while three have dropped their numbers for next year.

The negative moves have cut our Zacks Consensus Estimates for the current year from $3.84 to $3.40 while next year’s number is off from $4.23 to $3.62.

Additional content:

3 Bank Stocks to Buy as Fed Sees 3 Rate Hikes in 2022

The Federal Reserve recently said that it will end its pandemic-era asset purchases next year to counter the surge in inflation. Also, in all likelihood, the Fed is expected to hike interest rates three times in 2022 to cope with elevated inflation.

Lest we forget, prices of essential goods and services are now at their highest level in decades. Nonetheless, with the Fed set to raise rates in the near term, we expect bank stocks to benefit. This calls for investing in stocks like Bank of AmericaEastern Bankshares and Veritex.

Fed’s Rate Hike Outlook

On Dec 15, the Fed decided to slowly do away with its accommodative monetary policy to boost the economy ravaged by the coronavirus outbreak last year. Notably, 12 Fed officials out of 18 thought that the current economic conditions warrant a minimum of three-quarter point rate increases next year. That’s more than September’s number of nine officials thinking it’s appropriate to hike rates next year.

To top it, 11 Fed officials think that there may be three more rate hikes in 2023, which would eventually lift the benchmark lending rate to a range of 1.5% to 1.75%. At present, the rate is in the range of 0% to 0.25%. Many opine that the Fed may begin hiking rates most probably by next June. At the same time, the Fed is anticipated to phase out its bond-buying program by March. Nevertheless, the Fed’s initiative to hike rates and initiate a more aggressive monetary policy is to counter the threat of a surge in inflation.

US Inflation Getting Worse

Fed officials, at the moment, think that inflation would come in at 2.6% next year. That’s more than 2.2% they had projected in September. In fact, Fed officials acknowledged that they were surprised by the sustained increase in prices of goods and services. In their policy statement, the Fed officials banished the word “transitory” and admitted that inflation certainly went past their 2% target “for some time.”

In reality, consumer prices in the United States saw the highest yearly rise in November since 1982. Citing a MarketWatch article, the consumer price index (CPI) soared 6.8% year over year in November, added the Bureau of Labor Statistics. This exceeded analysts’ expectations of an increase of 6.7%. It’s worth pointing out that inflation has now been more than 5% for the sixth successive month, quoting the MarketWatch article.

3 Bank Stocks to Buy Right Away

With an overwhelming Fed official seeing an interest rate hike next year with more to follow, bank stocks are undoubtedly poised to gain. This is because a higher interest rate increases the spread between what banks make by funding longer-term assets, including loans, with shorter-term liabilities, thereby boosting bank profits. We have, thus, highlighted three bank stocks that are worth a buy now.

Bank of America provides a wide range of banking and finance-related services. In the United States, Bank of America is one of the largest financial holding companies. Bank of America’s initiative to improve its digital capabilities and expand its foothold are surely improving its financials. Anyhow, the company currently has a solid balance sheet and a strong liquidity position.

Bank of America, at present, boasts a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has moved up 1.8% over the past 60 days. Bank of America’s expected earnings growth rate for the next five-year period is a solid 7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Eastern Bankshares provides banking services to generally small business houses and retail customers. Eastern Bankshares also provides various investment and insurance-related services through its bank branches.

Currently, Eastern Bankshares has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 6.9% over the past 60 days. Eastern Bankshares’ expected earnings growth rate for the next five-year period is a steady 10.8%.

Veritex is known for providing banking services to both corporate and individual customers. Vertex provides loans and an array of online banking services to customers.

Presently, Veritex has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 1.5% over the past 60 days. Veritex’s expected earnings growth rate for the next year is a superb 15%.

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