For Immediate Release
Chicago, IL – September 8, 2022 – 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: Avis Budget Group Inc. (
CAR Quick Quote CAR - Free Report) , Marathon Petroleum Corp. ( MPC Quick Quote MPC - Free Report) , Pilgrim's Pride Corp. ( PPC Quick Quote PPC - Free Report) , United Rentals Inc. ( URI Quick Quote URI - Free Report) and Unum Group ( UNM Quick Quote UNM - Free Report) . Here are highlights from Wednesday’s Analyst Blog: Shrug Off Market Gyrations with These Top 5 Value Stocks
Severe volatility has returned on Wall Street after an impressive summer rally from mid-June to mid-August. U.S. stock markets have entered September with a series of serious near-term concerns. As a result, we are witnessing extreme volatility similar to the first half of this year.
At this stage, it would be prudent to pick value stocks with a favorable Zacks Rank to cushion the portfolio as well as make some gains from the upside potential. These stocks could prove to be valuable once the rally resumes. Five of them are
Avis Budget Group Inc., Marathon Petroleum Corp., Pilgrim's Pride Corp., United Rentals Inc. and Unum Group. Inflation, Imminent Rate Hike and Other Concerns
September is historically known as the worst-performing month on Wall Street. The situation is more complicated this year. Inflation continues to be at a 40-year high despite an increase in the Fed Fund rate from almost zero to 2.5% from March to July. Furthermore, the central bank has started to systematically reduce the size of its $9 trillion balance sheet from June.
Fed Chairman Jerome Powell and various other top Fed officials with voting rights have indicated that the rigorous rate hike will continue until inflation is at least down to near the Fed's 2% target rate. As a result, market participants are highly concerned about a recession in the U.S. economy in the near future.
Per CME FedWatch, at present, 74% of the market respondents are expecting a 75 basis-point rate hike in the September FOMC. Thereafter, there is a 72.3% probability of a rate hike of 50 basis points in the November FOMC and a 71% probability of another 25 basis-point rise in the December FOMC.
The second-quarter 2022 earnings results were better than expected despite the margin squeeze. However, we are seeing a significant drop in earnings projection for the third quarter. As of Sep 2, our estimate projected 1.4% growth in earnings per share, well below the 7.6% improvement projected on Jun 1.
On Sep 6, the yield on the benchmark 10-Year U.S. Treasury Note jumped to 3.345%, its highest since Jun 16. The yield on the short-term 2-Year U.S. Treasury Note stood at 3.499%. The inversion of yields between 10-Year and 2-Year Treasury Notes continues for four-straight month. Several economists and financial experts consider this situation as an indication of a near-term recession.
Our Top Picks
At this juncture, investors should be prepared to minimize fluctuations in their portfolio and consequently rebalance it with suitable financial assets to maintain stability. We have narrowed our search to five value stocks. Each of our picks carries a Zacks Rank #1 (Strong Buy) and a
Value Score of A. You can see . the complete list of today's Zacks #1 Rank stocks here Avis Budget Group provides car and truck rentals, car sharing, and ancillary services to businesses and consumers. The ability of CAR to cater to a wide range of mobility demands helps it expand and strengthen its global foothold through organic growth.
Avis Budget Group operates through distinct global brands that focus on different market segments and complement other brands in their respective regional markets. Fleet expansion and technology enhancement efforts by CAR are likely to enhance its offerings.
The forward P/E of Avis Budget Group for the current financial year is 3.4X, lower than the industry average of 14.8X. CAR has a PEG ratio of 0.2, lower than the industry average of 1.3. Avis Budget Group has expected earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.9% over the last 60 days.
Marathon Petroleum is poised for further price gains based on a slew of positives. MPC's $21 billion sales of its Speedway retail business provided it with a much-needed cash infusion. The deal also comes with a 15-year fuel supply agreement under which Marathon Petroleum will supply 7.7 billion gallons of gasoline per year to 7-Eleven, thus ensuring a steady revenue stream.
MPC's exposure to more stable cash flows from the logistics segment diversifies the earnings stream and offers a buffer against the volatile refining business. Consequently, Marathon Petroleum is primed for significant capital appreciation and is viewed as a preferred downstream operator to own now.
The forward P/E of Marathon Petroleum for the current financial year is 4.7X, lower than the industry average of 6.2X. MPC has a PEG ratio of 0.3, lower than the industry average of 0.5. Marathon Petroleum has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 4.4% over the last 60 days.
Pilgrim's Pride is engaged in the production, processing, marketing and distribution of fresh, frozen, and value-added chicken products in the United States, the United Kingdom, Europe, and Mexico. Overall domestic demand is likely to remain solid during 2022 in the U.S. market.
PPC's foodservice business also witnessed improvements on the back of a sustained recovery in commercial and noncommercial segments. Apart from this, Pilgrim's Pride continues to prioritize capital spending plans during 2022 to optimize its product mix and solidify partnerships with key customers.
The forward P/E of Pilgrim's Pride for the current financial year is 6.6X, lower than the industry average of 8.1X. PPC has a PEG ratio of 0.2, lower than the industry average of 1.9. Pilgrim's Pride has an expected earnings growth rate of 82% for the current year. The Zacks Consensus Estimate for current-year earnings improved 11.6% over the last 60 days.
United Rentals is benefiting from the U.S. administration's increased focus on infrastructural improvement. URI has been gaining from better fleet productivity on broad-based rental demand in construction and industrial verticals.
Better fleet productivity on broad-based rental demand in non-residential construction and industrial verticals, higher total and rental revenues and stronger pricing aided United Rentals' second-quarter 2022 results. During the period, rental revenues grew 26.2% from a year ago. Adjusted gross margin expanded 360 basis points.
The forward P/E of United Rentals for the current financial year is 9.2X, lower than the industry average of 12X. URI has a PEG ratio of 0.5, lower than the industry average of 1.0. United Rentals has an expected earnings growth rate of 43.8% for the current year. The Zacks Consensus Estimate for current-year earnings improved 2.3% over the last 30 days.
Unum Group's conservative pricing and reservation practices have contributed to overall profitability. The sustained increase in premiums is being fueled by high persistency levels in core business lines and strong sales volume along with solid benefits experience.
Continued rollout of dental products and geographic expansion have been paying off for UNM as its acquired dental insurance businesses are growing in the United States and the U.K. UNM has continually enhanced shareholders' value. Unum Group expects 2022 premiums to grow about 2%. Adjusted operating EPS is expected to grow 15-20%.
The forward P/E of Unum Group for the current financial year is 6.3X, lower than the industry average of 14.5X. UNM has a PEG ratio of 0.8 lower than the industry average of 1.4. Unum Group has an expected earnings growth rate of 38.6% for the current year. The Zacks Consensus Estimate for current-year earnings improved 5.4% over the last 30 days.
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. 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.