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Welcome to Episode #317 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey is going solo to dive into the Zacks Rank and how investors and traders can use it to find winning stocks.
Analysts Cut Target’s Earnings Estimates
There’s a lot of volatility in 2022’s stock market. Many stocks are in the red. Some companies, like Target (TGT - Free Report) , have warned not just once, but twice, in the last few weeks about the year.
Target shares have sunk over 30% in the last month. And analysts have been cutting full year earnings estimates. Even before the second warning on June 7, Target’s full year Zacks Consensus Estimate had fallen $11.08 from $14.55 in the last month.
That’s a decline of 18.3% as Target made $13.56 last year.
But what if you were able to find companies going in the opposite direction of Target? Where earnings estimates were on the rise, instead of being cut?
Using the Zacks Industry Rank to Find Momentum
Zacks has a list of the top ranked, Zacks #1 Strong Buy stocks. But instead of looking at individual names, why not look at the industries themselves to find momentum?
Anyone who is paying attention this year already knows that energy earnings are on the rise thank to high oil and natural gas prices.
The Oil & Gas – E&P- United States industry is in the top 7% of Zacks Ranked industries. It is 18 out of 252 industries.
That industry has 41 companies. 16 are Zacks Strong Buys. 8 are Zacks Buys. 15 are Zacks Holds. And 1, and only 1, is a Zacks #5 (Strong Sell).
Evolution Petroleum is a small cap producer with a market cap of just $247 million. There is only one analyst covering it on Zacks.com and that analyst lowered 2022’s estimate in the last 60 days.
It was enough for Evolution Petroleum to fall to a Strong Sell.
But Evolution Petroleum is up 45% year-to-date. It’s still cheap with a forward P/E of 8.4 as earnings are expected to rise 855% this year.
The Zacks Rank is a short-term recommendation of 1 to 3 months. Be sure to watch Evolution Petroleum for changes in the earnings estimates in the next few weeks.
Metal Products and Auto Retailers
While many have a good idea that earnings estimates are being revised higher for energy companies, what about for Metal Products-Fasteners and Automotive- Retail and Wholesale?
America’s CarMart just reported strong earnings on May 23, 2022. 2 estimates have been raised for this fiscal year in the last 30 days pushing up the Zacks Consensus to $12.03 from $11.29.
America’s CarMart is a Zacks Rank #1 (Strong Buy) and is in the Automotive Retail and Wholesale industry which has 9 stocks.
Automotive Retail and Wholesale is in the top 8% of Industry Rank. It is ranked 20 out of 252 industries.
Shares jumped 24% in the last month but are still cheap at 9x.
AutoNation is also a Zacks Rank #1 (Strong Buy) auto retailer. 2 estimates have been raised in the last 30 days pushing up the Zacks Consensus Estimate for 2022 to $23.20 from $22.13.
That’s earnings growth of 28% as AutoNation made just $18.14 last year.
AutoNation is dirt cheap even though shares are up 4.2% on the year. It has a forward P/E of just 5.3.
Are AutoNation and America’s CarMart hidden gems?
What Else do you Need to Know About Using the Zacks Rank to Find Top Stocks?
Tune into this week’s podcast to find out.
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How to Use the Zacks Rank to Find Top Stocks
Welcome to Episode #317 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey is going solo to dive into the Zacks Rank and how investors and traders can use it to find winning stocks.
Analysts Cut Target’s Earnings Estimates
There’s a lot of volatility in 2022’s stock market. Many stocks are in the red. Some companies, like Target (TGT - Free Report) , have warned not just once, but twice, in the last few weeks about the year.
Target shares have sunk over 30% in the last month. And analysts have been cutting full year earnings estimates. Even before the second warning on June 7, Target’s full year Zacks Consensus Estimate had fallen $11.08 from $14.55 in the last month.
That’s a decline of 18.3% as Target made $13.56 last year.
But what if you were able to find companies going in the opposite direction of Target? Where earnings estimates were on the rise, instead of being cut?
Using the Zacks Industry Rank to Find Momentum
Zacks has a list of the top ranked, Zacks #1 Strong Buy stocks. But instead of looking at individual names, why not look at the industries themselves to find momentum?
Anyone who is paying attention this year already knows that energy earnings are on the rise thank to high oil and natural gas prices.
The Oil & Gas – E&P- United States industry is in the top 7% of Zacks Ranked industries. It is 18 out of 252 industries.
That industry has 41 companies. 16 are Zacks Strong Buys. 8 are Zacks Buys. 15 are Zacks Holds. And 1, and only 1, is a Zacks #5 (Strong Sell).
1. Evolution Petroleum (EPM - Free Report)
Evolution Petroleum is a small cap producer with a market cap of just $247 million. There is only one analyst covering it on Zacks.com and that analyst lowered 2022’s estimate in the last 60 days.
It was enough for Evolution Petroleum to fall to a Strong Sell.
But Evolution Petroleum is up 45% year-to-date. It’s still cheap with a forward P/E of 8.4 as earnings are expected to rise 855% this year.
The Zacks Rank is a short-term recommendation of 1 to 3 months. Be sure to watch Evolution Petroleum for changes in the earnings estimates in the next few weeks.
Metal Products and Auto Retailers
While many have a good idea that earnings estimates are being revised higher for energy companies, what about for Metal Products-Fasteners and Automotive- Retail and Wholesale?
Both are in the top 10% in industry rank.
2. Park-Ohio (PKOH - Free Report)
Park-Ohio is in the Metal Products-Fastener industry on Zacks.com. It’s also at the top of the Zacks Ranked Industries. It is 1 out of 252 industries.
There is only one company in the industry and Park-Ohio is it.
Park-Ohio was founded in 1907 and is an industrial supply chain logistics and manufacturing business with 7,000 employees worldwide.
Shares are down 15% year-to-date but have staged a huge rally over the last month, gaining 84%.
2 estimates were revised higher for 2022 in the last month. Earnings are expected to rise 262% year-over-year.
Park-Ohio trades at just 8.3x. Is it a hidden gem?
3. America’s CarMart (CRMT - Free Report)
America’s CarMart just reported strong earnings on May 23, 2022. 2 estimates have been raised for this fiscal year in the last 30 days pushing up the Zacks Consensus to $12.03 from $11.29.
America’s CarMart is a Zacks Rank #1 (Strong Buy) and is in the Automotive Retail and Wholesale industry which has 9 stocks.
Automotive Retail and Wholesale is in the top 8% of Industry Rank. It is ranked 20 out of 252 industries.
Shares jumped 24% in the last month but are still cheap at 9x.
4. AutoNation (AN - Free Report)
AutoNation is also a Zacks Rank #1 (Strong Buy) auto retailer. 2 estimates have been raised in the last 30 days pushing up the Zacks Consensus Estimate for 2022 to $23.20 from $22.13.
That’s earnings growth of 28% as AutoNation made just $18.14 last year.
AutoNation is dirt cheap even though shares are up 4.2% on the year. It has a forward P/E of just 5.3.
Are AutoNation and America’s CarMart hidden gems?
What Else do you Need to Know About Using the Zacks Rank to Find Top Stocks?
Tune into this week’s podcast to find out.