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The Zacks Analyst Blog Highlights The Progressive, Toyota Motor, Iron Mountain, Vulcan Materials and Vipshop
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For Immediate Release
Chicago, IL – April 15, 2024 – 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: The Progressive Corp. (PGR - Free Report) , Toyota Motor Corp. (TM - Free Report) , Iron Mountain Inc. (IRM - Free Report) , Vulcan Materials Co. (VMC - Free Report) and Vipshop Holdings Ltd. (VIPS - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Sticky Inflation to Delay Rate Cuts? 5 Low-Beta Picks
U.S. inflation rate remains stubborn despite a restrictive monetary policy and an extremely high interest rate regime in the last 24 months. On Apr 10, the Department of Labor reported that the consumer price index (CPI) for March rose 0.4% sequentially and 3.5% year over year. The consensus estimate was for a gain of 0.3% sequentially and 3.4% year over year. The metric for February was for a rise of 0.4% sequentially and 3.2% year over year.
Core CPI (excluding volatile food and energy items) for March rose 0.4% sequentially and 3.8% year over year. The consensus estimate was for a gain of 0.3% sequentially and 3.7% year over year. The metric for February was for a rise of 0.4% sequentially and 3.8% year over year. The super-core CPI (excluding volatile food and energy items along with shelter and rent costs) climbed 4.8% in March, marking its highest percentage gain in 11 months.
Early Rate Cut Expectations Evaporate
In its December FOMC meeting, the Fed had indicated three rate cuts of 25 basis points each in 2024. Market participants expected the first rate cut to happen in March. However, the sticky inflation rate pushed investors’ expectations to June. In late February, CME FedWatch showed a nearly 80% probability for the first rate cut in June.
However, following the release of the March CPI data, the CME FedWatch shows just a 17% chance of a rate cut in June. The majority of the respondents are now expecting the first reduction of the benchmark lending rate to happen in September. What is more important is that 14% of respondents are expecting no rate cut in 2024.
Fed Indicates Rate Cut With Caution
The minutes of the Fed’s March FOMC meeting showed that the central bank voted in favor of holding short-term interest rate unchanged. Fed officials were concerned that even after dwindling to a great extent from its peak in June 2022, the inflation rate is yet to show any convincing evidence that it is moving gradually to the targeted level of 2%.
The minutes stated, “Participants generally noted their uncertainty about the persistence of high inflation and expressed the view that recent data had not increased their confidence that inflation was moving sustainably down to 2%.”
On Apr 3, in a speech at Stanford University, Fed Chairman Jerome Powell reiterated that the central bank will start reducing the Fed fund rate at some point of time this year. However, he also cautioned that the time of the rate cut will depend on upcoming economic data, especially inflation data.
In the last couple of weeks, as many as 15 Fed officials said that they were in no hurry to initiate a rate cut, though the majority of these officials still believe that at least one rate cut of 25 basis points will happen this year.
Low-Beta Dividend-Paying Stocks
Volatility returned on Wall Street in April after an impressive rally in the last 15 months. At this stage, investment in low-beta dividend-paying stocks with a favorable Zacks Rank may be the best option.
If markets regain momentum, the favorable Zacks Rank of these stocks will capture the upside potential. However, if the downtrend continues, low-beta stocks will minimize portfolio losses and dividend payments will act as a regular income stream.
Our Top Picks
We have narrowed our search to five low-beta (beta >0 <1) stocks that are regular dividend payers. These companies have strong growth potential for 2024 and have seen positive earnings estimate revisions in the past 60 days. Each of our picks carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Progressive Corp. continues to gain on higher premiums, given its compelling product portfolio, leadership position and strength in both Vehicle and Property businesses. Focus on becoming a one-stop insurance destination, catering to customers opting for a combination of home and auto insurance, augurs well for PGR’s growth.
Policies in force and retention ratio should remain healthy. Competitive pricing to retain current customers and address customer needs with new offerings should continue to drive policy life expectancy.
Progressive has an expected revenue and earnings growth rate of 14.6% and 62.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1% over the past seven days. PGR has a beta of 0.35 and a current dividend yield of 0.20%.
Toyota Motor Corp. put up a stellar show in the fiscal third quarter of 2024. A robust lineup of trucks and sport utility vehicles is set to fuel TM’s sales volumes. Its electric vehicle (EV) push is a major tailwind. TM aims to generate 40% of its global sales from EVs by 2025 and 70% by 2030. It aims to expand global sales of BEVs to 1.5 million units in 2026.
Upbeat projections for profit and revenues for fiscal 2024 spark optimism. Revenues and operating income for the current fiscal are projected to be ¥43.5 trillion and ¥4.9 trillion, indicating a year-over-year surge of 18% and 79.8%, respectively. TM’s commitment to maximizing shareholders’ value via dividends and buybacks is also praiseworthy.
Toyota Motor has an expected revenue and earnings growth rate of 3.1% and 0.5%, respectively, for the current year (ending March 2025). The Zacks Consensus Estimate for current-year earnings has improved 12% over the past 60 days. TM has a beta of 0.69 and a current dividend yield of 1.45%.
Iron Mountain Inc. is well-poised to benefit from its stable and resilient core storage and records management business. Despite stiff competition from industry peers and elevated interest rates, healthy revenue management and volume trends are likely to continue benefiting IRM, positioning it well for long-term growth.
For 2024, we expect a year-over-year increase of 11.3% in storage rental revenues. A recurring revenue business model and a well-diversified tenant base assure steady cash flows. IRM’s accretive buyouts and expansion efforts into fast-growing businesses, like that of the data center, bode well for growth. We project a year-over-year increase of 10.9% in adjusted EBITDA in 2024. A healthy balance sheet will likely support IRM’s growth endeavors. We expect an 11.4% year-over-year increase in total revenues for 2024.
Iron Mountain has an expected revenue and earnings growth rate of 10.9% and 7.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the past 30 days. IRM has a beta of 0.94 and a current dividend yield of 3.44%.
Vulcan Materials Co. is likely to benefit from consistent strategic execution, the strong performance of the aggregate-led business, large industrial projects demand and the improving single-family residential market. VMC observed modest growth in the public sector during the second half of 2023.
VMC expects demand to accelerate in 2024, with trailing 12-month highway starts surpassing $100 billion and record-level 2024 state budgets. Owing to these tailwinds, VMC expects its 2024 adjusted EBITDA expectations to be in the range of $2.15-$2.3 billion, up from $2.01 billion reported in a year ago period.
Vulcan Materials has an expected revenue and earnings growth rate of 1.3% and 19.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.6% over the past 60 days. VMC has a beta of 0.83 and a current dividend yield of 0.70%.
Vipshop Holdings Ltd. is an online discount retailer for brands. VIPS offers branded products to consumers in China through flash sales on its vipshop.com website. VIPS offers a wide selection of various famous branded discount products including apparel for women, men and children, fashion goods, cosmetics, home goods and other lifestyle products, through its website.
Vipshop Holdings has an expected revenue and earnings growth rate of 4.1% and 7.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the past 30 days. VIPS has a beta of 0.41 and a current dividend yield of 2.41%.
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.
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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The Zacks Analyst Blog Highlights The Progressive, Toyota Motor, Iron Mountain, Vulcan Materials and Vipshop
For Immediate Release
Chicago, IL – April 15, 2024 – 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: The Progressive Corp. (PGR - Free Report) , Toyota Motor Corp. (TM - Free Report) , Iron Mountain Inc. (IRM - Free Report) , Vulcan Materials Co. (VMC - Free Report) and Vipshop Holdings Ltd. (VIPS - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Sticky Inflation to Delay Rate Cuts? 5 Low-Beta Picks
U.S. inflation rate remains stubborn despite a restrictive monetary policy and an extremely high interest rate regime in the last 24 months. On Apr 10, the Department of Labor reported that the consumer price index (CPI) for March rose 0.4% sequentially and 3.5% year over year. The consensus estimate was for a gain of 0.3% sequentially and 3.4% year over year. The metric for February was for a rise of 0.4% sequentially and 3.2% year over year.
Core CPI (excluding volatile food and energy items) for March rose 0.4% sequentially and 3.8% year over year. The consensus estimate was for a gain of 0.3% sequentially and 3.7% year over year. The metric for February was for a rise of 0.4% sequentially and 3.8% year over year. The super-core CPI (excluding volatile food and energy items along with shelter and rent costs) climbed 4.8% in March, marking its highest percentage gain in 11 months.
Early Rate Cut Expectations Evaporate
In its December FOMC meeting, the Fed had indicated three rate cuts of 25 basis points each in 2024. Market participants expected the first rate cut to happen in March. However, the sticky inflation rate pushed investors’ expectations to June. In late February, CME FedWatch showed a nearly 80% probability for the first rate cut in June.
However, following the release of the March CPI data, the CME FedWatch shows just a 17% chance of a rate cut in June. The majority of the respondents are now expecting the first reduction of the benchmark lending rate to happen in September. What is more important is that 14% of respondents are expecting no rate cut in 2024.
Fed Indicates Rate Cut With Caution
The minutes of the Fed’s March FOMC meeting showed that the central bank voted in favor of holding short-term interest rate unchanged. Fed officials were concerned that even after dwindling to a great extent from its peak in June 2022, the inflation rate is yet to show any convincing evidence that it is moving gradually to the targeted level of 2%.
The minutes stated, “Participants generally noted their uncertainty about the persistence of high inflation and expressed the view that recent data had not increased their confidence that inflation was moving sustainably down to 2%.”
On Apr 3, in a speech at Stanford University, Fed Chairman Jerome Powell reiterated that the central bank will start reducing the Fed fund rate at some point of time this year. However, he also cautioned that the time of the rate cut will depend on upcoming economic data, especially inflation data.
In the last couple of weeks, as many as 15 Fed officials said that they were in no hurry to initiate a rate cut, though the majority of these officials still believe that at least one rate cut of 25 basis points will happen this year.
Low-Beta Dividend-Paying Stocks
Volatility returned on Wall Street in April after an impressive rally in the last 15 months. At this stage, investment in low-beta dividend-paying stocks with a favorable Zacks Rank may be the best option.
If markets regain momentum, the favorable Zacks Rank of these stocks will capture the upside potential. However, if the downtrend continues, low-beta stocks will minimize portfolio losses and dividend payments will act as a regular income stream.
Our Top Picks
We have narrowed our search to five low-beta (beta >0 <1) stocks that are regular dividend payers. These companies have strong growth potential for 2024 and have seen positive earnings estimate revisions in the past 60 days. Each of our picks carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Progressive Corp. continues to gain on higher premiums, given its compelling product portfolio, leadership position and strength in both Vehicle and Property businesses. Focus on becoming a one-stop insurance destination, catering to customers opting for a combination of home and auto insurance, augurs well for PGR’s growth.
Policies in force and retention ratio should remain healthy. Competitive pricing to retain current customers and address customer needs with new offerings should continue to drive policy life expectancy.
Progressive has an expected revenue and earnings growth rate of 14.6% and 62.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1% over the past seven days. PGR has a beta of 0.35 and a current dividend yield of 0.20%.
Toyota Motor Corp. put up a stellar show in the fiscal third quarter of 2024. A robust lineup of trucks and sport utility vehicles is set to fuel TM’s sales volumes. Its electric vehicle (EV) push is a major tailwind. TM aims to generate 40% of its global sales from EVs by 2025 and 70% by 2030. It aims to expand global sales of BEVs to 1.5 million units in 2026.
Upbeat projections for profit and revenues for fiscal 2024 spark optimism. Revenues and operating income for the current fiscal are projected to be ¥43.5 trillion and ¥4.9 trillion, indicating a year-over-year surge of 18% and 79.8%, respectively. TM’s commitment to maximizing shareholders’ value via dividends and buybacks is also praiseworthy.
Toyota Motor has an expected revenue and earnings growth rate of 3.1% and 0.5%, respectively, for the current year (ending March 2025). The Zacks Consensus Estimate for current-year earnings has improved 12% over the past 60 days. TM has a beta of 0.69 and a current dividend yield of 1.45%.
Iron Mountain Inc. is well-poised to benefit from its stable and resilient core storage and records management business. Despite stiff competition from industry peers and elevated interest rates, healthy revenue management and volume trends are likely to continue benefiting IRM, positioning it well for long-term growth.
For 2024, we expect a year-over-year increase of 11.3% in storage rental revenues. A recurring revenue business model and a well-diversified tenant base assure steady cash flows. IRM’s accretive buyouts and expansion efforts into fast-growing businesses, like that of the data center, bode well for growth. We project a year-over-year increase of 10.9% in adjusted EBITDA in 2024. A healthy balance sheet will likely support IRM’s growth endeavors. We expect an 11.4% year-over-year increase in total revenues for 2024.
Iron Mountain has an expected revenue and earnings growth rate of 10.9% and 7.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the past 30 days. IRM has a beta of 0.94 and a current dividend yield of 3.44%.
Vulcan Materials Co. is likely to benefit from consistent strategic execution, the strong performance of the aggregate-led business, large industrial projects demand and the improving single-family residential market. VMC observed modest growth in the public sector during the second half of 2023.
VMC expects demand to accelerate in 2024, with trailing 12-month highway starts surpassing $100 billion and record-level 2024 state budgets. Owing to these tailwinds, VMC expects its 2024 adjusted EBITDA expectations to be in the range of $2.15-$2.3 billion, up from $2.01 billion reported in a year ago period.
Vulcan Materials has an expected revenue and earnings growth rate of 1.3% and 19.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.6% over the past 60 days. VMC has a beta of 0.83 and a current dividend yield of 0.70%.
Vipshop Holdings Ltd. is an online discount retailer for brands. VIPS offers branded products to consumers in China through flash sales on its vipshop.com website. VIPS offers a wide selection of various famous branded discount products including apparel for women, men and children, fashion goods, cosmetics, home goods and other lifestyle products, through its website.
Vipshop Holdings has an expected revenue and earnings growth rate of 4.1% and 7.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the past 30 days. VIPS has a beta of 0.41 and a current dividend yield of 2.41%.
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 >>
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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.