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The Zacks Analyst Blog Highlights Nutanix, International Seaways, STORE Capital, Lancaster Colony and Altus Power

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For Immediate Release

Chicago, IL – September 26, 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: Nutanix Inc. (NTNX - Free Report) , International Seaways Inc. (INSW - Free Report) , STORE Capital Corp. , Lancaster Colony Corp. (LANC - Free Report) and Altus Power Inc. (AMPS - Free Report) .

Here are highlights from Friday’s Analyst Blog:

Top 5 Stocks with Double-Digit Returns in the Past Month

Wall Street has been witnessing extreme volatility since the beginning of 2022 barring a two-month summer rally. In order to combat galloping inflation, the Fed has adopted an ultra-hawkish monetary stance unseen since 1990. Rigorous hiking of the benchmark interest rate and the adoption of a tighter monetary policy have resulted in a rise in U.S. currency value.

On Sep 21, the Fed raised the benchmark interest rate by 75 basis points in the third successive FOMC meeting. With this, the Fed Fund rate jumped to the range of 3-3.25% from a mere 0-0.25% in early March. Market participants are now adjusting the cost of an imminent recession in the U.S. economy into stock markets’ valuation.

Despite this grim scenario, a handful of stocks have provided double-digit returns in the past month. The Dow, the S&P 500 and the Nasdaq Composite – have tumbled 10.8%, 11.1% and 12.9%, respectively, in the same period.

At this juncture, investment in stocks with a favorable Zacks Rank should be prudent going forward. Five such stocks are — Nutanix Inc.International Seaways Inc., STORE Capital Corp., Lancaster Colony Corp. and Altus Power Inc.

A Grim Scenario

The Fed has hiked the interest rate by 3% so far in 2022. A large section of economists and financial experts were expecting the September FOMC meeting to be the last one for a 75 basis point rate hike. However, the Fed has raised the median of the Fed Fund rate to 4.4% in September from 3.4% in June.

This means that the range of the benchmark lending rate at the end of 2022 will be 4.25-4.5%, indicating a 75 basis-point and 50 basis-point interest rate hike in November and December, respectively.

Market participants were expecting a rate cut in 2023, which is out of the question now as the central bank has projected that the median benchmark interest rate will reach 4.6% in 2023. This means another 50 basis-point rate hike throughout 2023. The first rate cut is not expected before 2024 as the Fed is expecting inflation to come down to its target rate of 2% in 2025.

As interest rate is surging in the United States, global investors are trying to hold U.S.-dollar denominated assets to get higher returns. Consequently, the ICE U.S. Dollar Index (DXY), which measures the greenback’s strength against a basket of six major currencies, has skyrocketed in 2022.

As of Sep 21, the DXY closed at 111.81, marking its 52-week high. The index is currently at its 20-year high. With respect to the U.S. dollar, – the British pound is at a 37-year low, the Japanese yen is at a 20-year low and the euro is at a 20-year low.

Further, currencies of several major emerging economies have fallen to their historic-low levels against the U.S. dollar. Investors are concerned that a rising dollar will hurt the sales of U.S. multinational companies as their products will be more expensive in the international markets.

Fear of a Recession

The yields of U.S. government bonds have soared. As of Sep 22, the yield on the benchmark 10-Year U.S. Treasury Note closed at 3.709%, its highest since April 2011. The yield on the short-term 2-year U.S. Treasury Note closed at 4.137%. The yield on the long-term 30-Year U.S. Treasury Note closed at 3.635%.

The yields of 2-year and 10-Year Notes have inverted for the last two months. After the last round rate hike, the yields on 10-Year and 30-Year Notes have also inverted. Economists generally consider this situation as a sign of an imminent recession.

Investment analysts have estimated that there exists a 75% probability of the U.S. economy entering a recession either in the last quarter of 2022 or in the first quarter of 2023. The U.S. GDP has contracted in the first two quarters of 2022.

Our Top Picks

We have narrowed our search to five stocks that have popped in the past month. These stocks have strong potential for the rest of 2022 and have seen positive earnings estimate revisions in the last 30 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Nutanixis benefiting from the solid adoption of its Hybrid cloud solutions and an expanding clientele. The adoption rate of NTNX’s AHV hypervisor has been strong as customers continue to opt for it as a low-cost alternative to other vendor offerings.

Further, a healthy pipeline of big deals is a tailwind. NTNX’s transition to software-only sales will boost its margins over the long-run. Nutanix is expected to benefit from the growth prospects of the hyper-converged infrastructure market, over the long term.

Nutanix has an expected earnings growth rate of more than 100% for the current year (ending July 2023). The Zacks Consensus Estimate for current-year earnings of this Zacks Rank #2 company has improved more than 100% over the last 30 days. The stock price of NTNX has jumped 19.5% in the past month.

International Seaways is a tanker company. INSW provides energy transportation services for crude oil and petroleum products. International Seaways owns and operates a fleet which includes ULCC, eight VLCCs, eight Aframaxes/LR2s, 12 Panamaxes/LR1s and 20 MR tankers. INSW operates in two segment - Crude Tankers and Product Carriers.

International Seaways has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings of this Zacks Rank #1 company has improved 4.1% over the last 30 days. The stock price of INSW has climbed 17.4% in the past month.

STORE Capital is an internally managed net-lease real estate investment trust. STOR is engaged in the acquisition, investment and management of Single Tenant Operational Real Estate (STORE properties).

STORE Capital provides net-lease solutions principally to middle-market and larger companies that own STORE Properties. STOR invests in single-tenant real estate such as chain restaurants, supermarkets, health clubs, and education, retail, service, and distribution facilities.

STORE Capital has an expected earnings growth rate of 21.3% for the current year. The Zacks Consensus Estimate for current-year earnings of this Zacks Rank #2 company has improved 1.3% over the last 30 days. The stock price of STOR has surged 12.4% in the past month.

Lancaster Colony is a manufacturer and marketer of specialty food products for the retail and foodservice markets. LANC's wholly-owned subsidiaries, including T. Marzetti Company, produce and market high-quality national and regionally-branded food products throughout the United States for the retail and foodservice markets.

Most of their products sold through the retail channel are marketed under LANC's popular brand names, such as Marzetti, New York Brand Bakery, Sister Schubert's and Flatout. Lancaster Colony's production plants across the United States make an expanded family of quality food products found every day on the dinner tables of millions of consumers, as well as in well-known restaurant chains nationwide.

Lancaster Colony has an expected earnings growth rate of 38.3% for the current year (ending June 2023). The Zacks Consensus Estimate for current-year earnings of this Zacks Rank #1 company has improved 54.4% over the last 30 days. The stock price of LANC has appreciated 11.7% in the past month.

Altus Power is engaged in creating a clean electrification ecosystem. AMPS serves its commercial, public sector and community solar customers with locally-sited solar generation, energy storage and EV-charging stations.

Altus Power has an expected earnings growth rate of 3more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings of this Zacks Rank #2 company has improved 41.5% over the last 30 days. The stock price of AMPS has advanced 11.5% in the past month.

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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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