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Nextracker and Archer Daniels Midland have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – February 9, 2024 – Zacks Equity Research shares Nextracker Inc (NXT - Free Report) as the Bull of the Day and Archer Daniels Midland (ADM - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corporation (NVDA - Free Report) , CME Group Inc. (CME - Free Report) and BlackRock, Inc. (BLK - Free Report) .
Zacks Rank #1 (Strong Buy) stockNextracker Inc specializes in solar tracking solutions for solar power plants. Nextracker’s technology helps solar panels follow the sun’s movement throughout the day, optimizing their angle to maximize energy capture. By continuously adjusting the orientation of solar panels, Nextracker’s system ensures that panels receive the maximum amount of sunlight, increasing the overall efficiency and output of solar power plants. The company’s unique technology helps generate more electricity from solar energy, making it a key player in improving the performance and sustainability of solar energy projects.
Interest Rates are a Headwind for Solar Stocks, but Nextracker Bucks the Trend
Over the past couple of years, the solar industry has been suffering from higher interest rates. Higher interest rates pose challenges for the solar industry due to increased financing costs. Solar projects require substantial upfront investments, and when interest rates rise, borrowing becomes more expensive. The elevated cost of capital can diminish the profitability of solar ventures and thus slow business in the industry to a standstill.
“During a Gold Rush, Sell Shovels”
During the California Gold Rush, some of the most successful ventures were companies such as LeviStrauss (LEVI) that didn’t mine for gold but instead supplied gold miners with the supplies they needed. The gold rush example is not a one-off – throughout history, parallel businesses have often benefited more dramatically than the underlying trend.
The same is occurring with NXT. While most solar companies are seeing stagnant earnings, NXT’s unique product energized quarterly EPS by a robust 231% year-over-year. The results are even more impressive when you consider the current backdrop. Just ask yourself, “What will happen to NXT if interest rate cuts occur in 2024 like the market expects?”
A Solution to the Solar Efficiency Problem?
Gross margin is a financial metric representing the difference between a company’s revenue and the direct costs of producing goods or services, expressed as a percentage of revenue. NXT’s gross margin of 41.02% over the trailing twelve months is nearly double that of its sub-industry (33.24).
How is NXT able to be so efficient?
· Unique product: You can charge more when you have a unique product.Also, NXT’s business has fewer labor expenses when compared to normal solar companies.
· Solves the efficiency problem: Though worldwide solar usage has increased dramatically in recent years, efficiency remains a significant obstacle for the space. Solar companies can now use Nextracker’s technology to help solar panels stay aligned with the sun for extended periods, optimizing energy production and making solar power more efficient and cost-effective.
New Innovative, Fast-Growing Businesses Attract Institutional Investors
2023 marked the weakest IPO market since 2016. In recent years, fewer IPOs have emerged stateside because private market capital raises are increasing (there is no need to go public in many cases), and the complexity and red tape involved in going public is more difficult than ever.
While the lack of new issues is a net negative for investors, the trend is a positive for a company like NXT. Nextracker gives deep-pocketed institutional investors a means of gaining IPO exposure. Furthermore, unlike most recent IPOs, NXT’s business is far from saturated and is growing like a weed.
Outperformance Despite Weak Solar Backdrop
Even before rates jumped, investors began to discount cuts in the future as stubborn inflation loomed. As a result, the Invesco Solar ETF (TAN), a proxy for the solar industry, cratered from a high of ~$126 in January 2021 to a low of $40 this week.
However, you wouldn’t know that by looking at a comparison chart of NXT versus the solar industry. NXT shares are up a healthy 83% over the past year, while the Zacks Solar Industry is lower by 52%. If NXT can buck the trend in such a poor solar environment, the stock will likely explode should the solar industry turn around.
Post-Earnings Drift Potential
Post-earnings drift refers to the tendency of a stock’s price to continue moving in the same direction as its initial price change following the release of the company’s earnings report.
Last Thursday, NXT spiked ~25% on volume four times the average – remember, power and distance are correlated in the stock market.
Bottom Line
Nextracker stands out as a Zacks Rank #1 (Strong Buy) stock specializing in solar tracking solutions for power plants. While the solar industry faces challenges from higher interest rates, Nextracker defies the trend with its unique technology, significantly boosting quarterly earnings.
Zacks Rank #5 (Strong Sell) stock Archer Daniels Midland is a global food processing and commodities trading company that operates in various segments such as agriculture, nutrition, and transportation. The company is involved in sourcing, processing, and distributing agricultural products, including grains, oilseeds, and other raw materials. ADM’s diverse business encompasses food ingredients, animal feeds, biofuels, and industrial products.
Accounting Investigation is a Potential Red Flag
On January 22nd, shares of Archer Daniels Midland cratered nearly 25% after news broke that the US Attorney’s Office in Manhattan had launched an investigation into the accounting practices at Archer Daniels Midland’s nutrition segment.
The CFO of the company has already been placed on leave and has preemptively lowered earnings guidance. Though the investigation is ongoing, the CFO leave news doesn’t pass the smell test. Furthermore, investors must ask themselves, “With thousands of stocks to invest in, why should I invest in a company under investigation for its accounting practices?”
Are Americans Waking up to the Dangers of Seed Oils?
Seed oils, such as soybean oil, corn oil, and sunflower oil, have been criticized for several reasons regarding their adverse impact on health. These seed oils have an imbalance between omega-6 and omega-3 fatty acids that can contribute to inflammation. Inflammation is linked to various chronic diseases, including heart disease, diabetes, and certain inflammatory conditions. Furthermore, the plant-based protein (or meat alternative) craze appears to be nearing its end. ADM has seen persistently lower demand for its plant-based products. Beyond Meat,a pure play on the plant-based industry, is down by more than 64%, proving that this macro industry downtrend may have legs and may never recover.
Sales and EPS Growth Rates are Expected to Slow
Competition is heating up in several of ADM’s main segments from companies like Swiss-based Bunge Globaland Cargill. As a result, Zacks Consensus Estimates suggest that ADM will suffer negative earnings and sales growth in 2024.
Chronic Relative Underperformance
On Wall Street, the only scoreboard that counts is price performance. Beyond ADM’s many fundamental issues, the company does not perform much better from this perspective. Over the past year, shares have lagged the S&P 500 Index’s 20.8% gain and lost 34.6%.
For investors, few feelings are worse than investing in a chronically underperforming stock. Until ADM exhibits some semblance of a trend reversal, investors should avoid shares.
Additional content:
3 Stocks to Buy on Bitcoin's Latest Dip
The cryptocurrency market had a solid 2023 and the rally gathered further momentum in December, which led to a great beginning this year. On Jan 10, the crypto space witnessed a historic event as the U.S. Securities and Exchange Commission (SEC), in a major reform, approved the creation of 11 spot Bitcoin (BTC) exchange-traded funds (ETFs).
The decision was widely expected and largely responsible for the December Bitcoin rally. Following the approval, Bitcoin prices soared further, rallying past $47,000. However, Bitcoin, the world’s most popular cryptocurrency, has been on the decline since then.
By the end of January, Bitcoin price had fallen sharply and was hovering around $39,000. However, some of the loss has been pared, and Bitcoin traded just above $43,000 on Feb 7.
Nevertheless, Bitcoin still holds a lot of potential and the Federal Reserve’s upcoming rate cuts are likely to boost the cryptocurrency market. The Federal Reserve said that a rate cut in March is unlikely, but multiple rate cuts are happening this year for sure. Markets are pricing in at least three 25-basis point rate cuts in 2024.
Lower interest rates generally have a positive influence on growth-oriented sectors, such as technology, consumer discretionary industries and cryptocurrencies.
Also, the SEC’s latest decision is going to boost the crypto space in the long term as it will push cryptocurrencies into mainstream finance.
Also, the next Bitcoin halving, projected in the first half of this year, is expected to reduce the mining reward for new blocks by half. This event historically enhances scarcity, posing a greater challenge for miners to acquire net Bitcoins and potentially leading to an increase in Bitcoin's value due to decreased supply.
Our Choices
NVIDIA Corporation is a major player in the semiconductor industry and has been one of the standout success stories of 2023. As a leading designer of graphic processing units (GPUs), the value of the NVDA stock tends to surge in a thriving crypto market. This is primarily due to the crucial role that GPUs play in data centers, artificial intelligence, and the mining or production of cryptocurrencies.
NVIDIA’s expected earnings growth rate for the current year is 268.3%. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 60 days. Currently, NVIDIA has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CME Group Inc. ’s options give the buyer of the call/put the right to buy/sell cryptocurrency futures contracts at a specific price at some future date. CME offers Bitcoin and ether options based on the exchange's cash-settled standard and micro-Bitcoin and Ethereum futures contracts.
CME Group’s expected earnings growth rate for the current year is 15.9%. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 60 days. CME presently has a Zacks Rank #2.
BlackRock, Inc. is one of the world’s largest investment managers and is publicly owned. BLK was one of the first companies from the traditional market to join the Bitcoin ETF race back in June 2023.
BlackRock’s expected earnings growth rate for the current year is 5%. The Zacks Consensus Estimate for current-year earnings has improved 5% over the last 60 days. BlackRock presently carries a Zacks Rank #2.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
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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Nextracker and Archer Daniels Midland have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – February 9, 2024 – Zacks Equity Research shares Nextracker Inc (NXT - Free Report) as the Bull of the Day and Archer Daniels Midland (ADM - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corporation (NVDA - Free Report) , CME Group Inc. (CME - Free Report) and BlackRock, Inc. (BLK - Free Report) .
Here is a synopsis of all five stocks.
Bull of the Day:
Zacks Rank #1 (Strong Buy) stockNextracker Inc specializes in solar tracking solutions for solar power plants. Nextracker’s technology helps solar panels follow the sun’s movement throughout the day, optimizing their angle to maximize energy capture. By continuously adjusting the orientation of solar panels, Nextracker’s system ensures that panels receive the maximum amount of sunlight, increasing the overall efficiency and output of solar power plants. The company’s unique technology helps generate more electricity from solar energy, making it a key player in improving the performance and sustainability of solar energy projects.
Interest Rates are a Headwind for Solar Stocks, but Nextracker Bucks the Trend
Over the past couple of years, the solar industry has been suffering from higher interest rates. Higher interest rates pose challenges for the solar industry due to increased financing costs. Solar projects require substantial upfront investments, and when interest rates rise, borrowing becomes more expensive. The elevated cost of capital can diminish the profitability of solar ventures and thus slow business in the industry to a standstill.
“During a Gold Rush, Sell Shovels”
During the California Gold Rush, some of the most successful ventures were companies such as Levi Strauss (LEVI) that didn’t mine for gold but instead supplied gold miners with the supplies they needed. The gold rush example is not a one-off – throughout history, parallel businesses have often benefited more dramatically than the underlying trend.
The same is occurring with NXT. While most solar companies are seeing stagnant earnings, NXT’s unique product energized quarterly EPS by a robust 231% year-over-year. The results are even more impressive when you consider the current backdrop. Just ask yourself, “What will happen to NXT if interest rate cuts occur in 2024 like the market expects?”
A Solution to the Solar Efficiency Problem?
Gross margin is a financial metric representing the difference between a company’s revenue and the direct costs of producing goods or services, expressed as a percentage of revenue. NXT’s gross margin of 41.02% over the trailing twelve months is nearly double that of its sub-industry (33.24).
How is NXT able to be so efficient?
· Unique product: You can charge more when you have a unique product.Also, NXT’s business has fewer labor expenses when compared to normal solar companies.
· Solves the efficiency problem: Though worldwide solar usage has increased dramatically in recent years, efficiency remains a significant obstacle for the space. Solar companies can now use Nextracker’s technology to help solar panels stay aligned with the sun for extended periods, optimizing energy production and making solar power more efficient and cost-effective.
New Innovative, Fast-Growing Businesses Attract Institutional Investors
2023 marked the weakest IPO market since 2016. In recent years, fewer IPOs have emerged stateside because private market capital raises are increasing (there is no need to go public in many cases), and the complexity and red tape involved in going public is more difficult than ever.
While the lack of new issues is a net negative for investors, the trend is a positive for a company like NXT. Nextracker gives deep-pocketed institutional investors a means of gaining IPO exposure. Furthermore, unlike most recent IPOs, NXT’s business is far from saturated and is growing like a weed.
Outperformance Despite Weak Solar Backdrop
Even before rates jumped, investors began to discount cuts in the future as stubborn inflation loomed. As a result, the Invesco Solar ETF (TAN), a proxy for the solar industry, cratered from a high of ~$126 in January 2021 to a low of $40 this week.
However, you wouldn’t know that by looking at a comparison chart of NXT versus the solar industry. NXT shares are up a healthy 83% over the past year, while the Zacks Solar Industry is lower by 52%. If NXT can buck the trend in such a poor solar environment, the stock will likely explode should the solar industry turn around.
Post-Earnings Drift Potential
Post-earnings drift refers to the tendency of a stock’s price to continue moving in the same direction as its initial price change following the release of the company’s earnings report.
Last Thursday, NXT spiked ~25% on volume four times the average – remember, power and distance are correlated in the stock market.
Bottom Line
Nextracker stands out as a Zacks Rank #1 (Strong Buy) stock specializing in solar tracking solutions for power plants. While the solar industry faces challenges from higher interest rates, Nextracker defies the trend with its unique technology, significantly boosting quarterly earnings.
Bear of the Day:
Zacks Rank #5 (Strong Sell) stock Archer Daniels Midland is a global food processing and commodities trading company that operates in various segments such as agriculture, nutrition, and transportation. The company is involved in sourcing, processing, and distributing agricultural products, including grains, oilseeds, and other raw materials. ADM’s diverse business encompasses food ingredients, animal feeds, biofuels, and industrial products.
Accounting Investigation is a Potential Red Flag
On January 22nd, shares of Archer Daniels Midland cratered nearly 25% after news broke that the US Attorney’s Office in Manhattan had launched an investigation into the accounting practices at Archer Daniels Midland’s nutrition segment.
The CFO of the company has already been placed on leave and has preemptively lowered earnings guidance. Though the investigation is ongoing, the CFO leave news doesn’t pass the smell test. Furthermore, investors must ask themselves, “With thousands of stocks to invest in, why should I invest in a company under investigation for its accounting practices?”
Are Americans Waking up to the Dangers of Seed Oils?
Seed oils, such as soybean oil, corn oil, and sunflower oil, have been criticized for several reasons regarding their adverse impact on health. These seed oils have an imbalance between omega-6 and omega-3 fatty acids that can contribute to inflammation. Inflammation is linked to various chronic diseases, including heart disease, diabetes, and certain inflammatory conditions. Furthermore, the plant-based protein (or meat alternative) craze appears to be nearing its end. ADM has seen persistently lower demand for its plant-based products. Beyond Meat,a pure play on the plant-based industry, is down by more than 64%, proving that this macro industry downtrend may have legs and may never recover.
Sales and EPS Growth Rates are Expected to Slow
Competition is heating up in several of ADM’s main segments from companies like Swiss-based Bunge Globaland Cargill. As a result, Zacks Consensus Estimates suggest that ADM will suffer negative earnings and sales growth in 2024.
Chronic Relative Underperformance
On Wall Street, the only scoreboard that counts is price performance. Beyond ADM’s many fundamental issues, the company does not perform much better from this perspective. Over the past year, shares have lagged the S&P 500 Index’s 20.8% gain and lost 34.6%.
For investors, few feelings are worse than investing in a chronically underperforming stock. Until ADM exhibits some semblance of a trend reversal, investors should avoid shares.
Additional content:
3 Stocks to Buy on Bitcoin's Latest Dip
The cryptocurrency market had a solid 2023 and the rally gathered further momentum in December, which led to a great beginning this year. On Jan 10, the crypto space witnessed a historic event as the U.S. Securities and Exchange Commission (SEC), in a major reform, approved the creation of 11 spot Bitcoin (BTC) exchange-traded funds (ETFs).
The decision was widely expected and largely responsible for the December Bitcoin rally. Following the approval, Bitcoin prices soared further, rallying past $47,000. However, Bitcoin, the world’s most popular cryptocurrency, has been on the decline since then.
By the end of January, Bitcoin price had fallen sharply and was hovering around $39,000. However, some of the loss has been pared, and Bitcoin traded just above $43,000 on Feb 7.
Nevertheless, Bitcoin still holds a lot of potential and the Federal Reserve’s upcoming rate cuts are likely to boost the cryptocurrency market. The Federal Reserve said that a rate cut in March is unlikely, but multiple rate cuts are happening this year for sure. Markets are pricing in at least three 25-basis point rate cuts in 2024.
Lower interest rates generally have a positive influence on growth-oriented sectors, such as technology, consumer discretionary industries and cryptocurrencies.
Also, the SEC’s latest decision is going to boost the crypto space in the long term as it will push cryptocurrencies into mainstream finance.
Also, the next Bitcoin halving, projected in the first half of this year, is expected to reduce the mining reward for new blocks by half. This event historically enhances scarcity, posing a greater challenge for miners to acquire net Bitcoins and potentially leading to an increase in Bitcoin's value due to decreased supply.
Our Choices
NVIDIA Corporation is a major player in the semiconductor industry and has been one of the standout success stories of 2023. As a leading designer of graphic processing units (GPUs), the value of the NVDA stock tends to surge in a thriving crypto market. This is primarily due to the crucial role that GPUs play in data centers, artificial intelligence, and the mining or production of cryptocurrencies.
NVIDIA’s expected earnings growth rate for the current year is 268.3%. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 60 days. Currently, NVIDIA has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CME Group Inc. ’s options give the buyer of the call/put the right to buy/sell cryptocurrency futures contracts at a specific price at some future date. CME offers Bitcoin and ether options based on the exchange's cash-settled standard and micro-Bitcoin and Ethereum futures contracts.
CME Group’s expected earnings growth rate for the current year is 15.9%. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the last 60 days. CME presently has a Zacks Rank #2.
BlackRock, Inc. is one of the world’s largest investment managers and is publicly owned. BLK was one of the first companies from the traditional market to join the Bitcoin ETF race back in June 2023.
BlackRock’s expected earnings growth rate for the current year is 5%. The Zacks Consensus Estimate for current-year earnings has improved 5% over the last 60 days. BlackRock presently carries a Zacks Rank #2.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
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https://www.zacks.com
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
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.