For Immediate Release
Chicago, IL – November 29, 2016 – Zacks Equity Research highlights Container Store (NYSE:(TCS - Free Report) – Free Report) as the Bull of the Day and EPAM Systems (NYSE:(EPAM - Free Report) – Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Applied Materials (NASDAQ:(AMAT - Free Report) –Free Report),Burlington Stores (NYSE:(BURL - Free Report) –Free Report) and SYNNEX Corp. (NYSE:(SNX - Free Report) – Free Report).
Here is a synopsis of all five stocks:
Bull of the Day:
The Container Store (NYSE:(TCS - Free Report) – Free Report) is a retailer that opened 10 new stores in 2015 but pulled back on new openings for 2016. The company is also looking at smaller square foot stores in 2017. Investors like to see growing stores and growing store size to drive sales ever higher, but this stock was able to post an excellent beat and raise quarter. TCS is Zacks Rank #1 (Strong Buy) and is Bull of the Day.
Why I Like It
This is a small-cap stock, and small caps have been running lately.
A good recent earnings history when compared to the Zacks Consensus Estimate.
Recent jump higher in earnings estimates.
The company posted a beat and raise quarter on November 9.
Follow Brian Bolan on twitter at @BBolan1 and on StockTwits at the same address.
The Recent Numbers
I like to do a review of the most recent quarter for stocks that I highlight as Bulls of the Day. TCS reported the September 2016 quarter on November 9 and beat on the bottom then guided higher.
The company posted EPS of $0.07 when the Zacks Consensus Estimate was calling for $0.04. Revenue came in $1M below expectations for a 0.7% negative revenue surprise. As a result, the stock was bid up by more than 4.3% in the session following the report.
The company issued guidance for EPS of $0.20-$0.30 when the Zacks Consensus Estimate was calling for $0.23. At the time, the Wall Street estimate was calling for $0.19.
The Container Store is a retailer of storage and organization products in the United States. As of May 9, 2016, it operated 79 store locations with an average of 25,000 square feet each. The Container Store was founded in 1978 and is headquartered in Coppell, Texas.
Bear of the Day :
EPAM Systems (NYSE:(EPAM - Free Report) – Free Report) recently beat the Zacks Consensus Estimate but is now a Zacks Rank #5 (Strong Sell) and is the Bear of the Day. Let's take a look at why this is the case.
EPAM Systems, Inc. provides software engineering solutions and technology consulting services worldwide. The company was founded in 1993 and is headquartered in Newtown, Pennsylvania.
EPAM beat the Zacks Consensus Estimate of $0.54 by $0.02 for a positive earnings surprise of 3.7%. Revenue came in at $298M while the Zacks Consensus Estimate was looking for $297M.
Along with the beat came news of the CFO leaving. This is the second CFO to leave the company in the last few years, something that Wall Street doesn't like to see.
The Zacks Consensus Estimate has been falling over the last few months. The FY16 estimate stood at $2.19 in April and then fell to $2.09 in September. The estimate currently states at $2.06.
The move lower was mainly due to lowered guidance on the most recent earnings release.
The decline in estimates is the main reason this is a Zacks Rank #5 (Strong Sell) and the Bear of the Day.
A Bull and an Elephant in the Room: Global Week Ahead
This Global Week Ahead trades mostly on Friday’s U.S. nonfarm payroll report.
A strong November jobs print can be the catalyst for a fresh bull market leg to early 2017. Leading to that key jobs data, other headline prints will be ADP private payrolls and the Chicago PMI on Wednesday.
Equity traders will also keep a close eye on how U.S. holiday sales performed across Thanksgiving week, Black Fridayand Cyber Monday. During the week, Black Friday sales data add unique color. A raft of shopping data captures post-election U.S. consumer confidence.
For example, the National Retailers Federation provides a poll. This offers dollar amounts spent and breakdowns on both ‘cyber spending’ and bricks and mortar spending.
The International Council of Shopping Centers (ICRC) publishes regular weekly data on shopping. This will be releasedon Wednesday.
As for headwinds, the S&P Case-Shiller house price index comes out Tuesday. This peculiar index is constructed with a 2-month lag. It won’t capture the effect of higher 30-year fixed mortgage rates that have unfolded.
U.S. housing data may well deteriorate in the winter months, in response to the jack-up in rates.
The other renewed risk to the U.S. bull market? It comes from the sweep-up in the U.S. dollar.
This is the big elephant in the room!
The broad U.S. trade-weighted dollar index has elevated to a level last seen in early 2002. That’s 14 years ago! The U.S. dollar’s run should widen the U.S. trade deficit down the road, and not far down that road.
Heedless of 2 building headwinds – U.S. housing or the U.S. dollar strength -- a December interest rate hike by the Fed is a done deal. Fed fund futures have 100% odds on a DEC rate hike.
Barring a massive jobs face-plant this Friday, unseen financial chaos, or U.S. political upheaval from the vote recount, the Fed hikes 25 bps on Dec. 14 th.
Top Zacks #1 Rank (STRONG BUY) stock picks—
I list them in order of market capitalization.
(#1) Applied Materials (NASDAQ:(AMAT - Free Report) – Free Report): This is a big $35 billion market-cap stock in the hot semiconductor equipment-wafer fabrication space. The Zacks VGM score is A, with a B in Value and an A in Growth.
Applied Materials develops, manufactures, markets and services semiconductor wafer fabrication equipment and related spare parts for the worldwide semiconductor industry.
Customers for these products include semiconductor wafer manufacturers and semiconductor integrated circuit manufacturers, who either use the ICs they manufacture in their own products, or sell them to other companies.
These ICs are the key components in most advanced electronic products such as computers, telecommunications devices, automotive engine management systems and electronic games.
(#2) Burlington Stores (NYSE:(BURL - Free Report) – Free Report): This is a discount retail store chain with about $6.3 billion in market cap. The Zacks VGM score is A, too. The stock price has run up fast recently. It might be worth waiting for a nice pullback on this one.
Burlington Stores, Inc. operates as an off-price apparel and home product retailer. It provides its customers with a selection of fashionable branded product in women's ready-to-wear apparel, menswear, youth apparel, baby products, footwear, accessories, home goods and coats.
The Company operates within the United States and Puerto Rico. Burlington Stores, Inc. is headquartered in Burlington, NJ.
(#3) SYNNEX Corp. (NYSE:(SNX - Free Report) – Free Report): This is a business software services company and the stock is a $4.7 market cap. It also has a Zacks long-term VGM score of A, earned by A’s in both growth and value.
SYNNEX Corp is a global IT supply chain services company offering a comprehensive range of services to original equipment manufacturers and software publishers, or (OEMs), and reseller customers worldwide. The company offers product distribution, related logistics services and contract assembly.
SYNNEX distributes IT systems, peripherals, system components, software and networking equipment for OEM suppliers such as HP, IBM, Intel, Microsoft Corporation and Seagate.
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About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
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