For Immediate Release
Chicago, IL – June 29, 2017 – 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 Big 5 Sporting Goods Corporation (NASDAQ: (BGFV - Free Report) – Free Report ), Burlington Stores Inc (NYSE: (BURL - Free Report) – Free Report ), Home Bancorp, Inc. (NASDAQ: (HBCP - Free Report) – Free Report ), Prologis Inc (NYSE: (PLD - Free Report) – Free Report ) and Sequential Brands Group Inc (NASDAQ: (SQBG - Free Report) – Free Report ).
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Here are highlights from Wednesday’s Analyst Blog:
5 Ultra-Safe Stocks for a Rocky Second Half of 2017
Increased investing in big tech stocks in the first half of this year has raised overvaluation concerns, while Senate Republicans’ delay to pass the healthcare bill raised doubts about whether the Trump administration can put its much awaited pro-business policies into action.
In fact, a new discouraging International Monetary Fund (IMF) report poured cold water on the entire Trump agenda. IMF believes that Trump’s economic agenda is being derailed due to the political chaos surrounding Trumpcare and has also cast doubt on Trump administration’s GDP projections. The report was more of a social political advice it had once reserved for emerging market economies, which doesn’t paint a very pretty picture.
The decline in bond yields and drop in commodity prices raised concerns of limited growth in the second half of this year. With the markets apprehending a healthy pullback after a strong run, investing in stocks that are immune to market gyrations seems judicious.
Tech Stocks Slide Again, Questions About Bubbles Arise
Double-digit gains among the biggest Internet stocks on the Wall Street have driven the technology sector to record highs in the first half of this year. The industry almost recouped the losses suffered during the dot-com bubble between 2000 and 2002. The tech sector lost a massive 80% in Oct 2002, spiraling down from the peak attained in Mar 2000.
Such a rise, however, has raised a lot of questions about lofty valuations, and whether investors still have faith in the fast-growing tech sector. The tech-heavy Nasdaq, which is up more than 14% this year, has been trading below its Jun 8 record close over the last two weeks, a clear indication that investors are hesitant to push the index higher.
The Nasdaq 100, in fact, had fallen 2.3% in the last two trading sessions, marking the steepest decline since Jun 9 and 12. The benchmark’s 50-day moving average, a key technical level, was also breached at the close on Jun 27 for the first time in seven months. The decline came as the European Union slammed a record $2.7 billion fine on Alphabet Inc (GOOGL) for violating antitrust rules (read more: Tech Rout Shifts Spotlight from Growth to Value: 5 Top Picks ).
Health Care Vote Delayed Due to Lack of Support
A setback for Trump’s healthcare agenda pulled back the Dow Jones almost 100 points on Jun 27. The Senate Republicans will hold off voting on a healthcare reform bill until the Jul 4 recess. Trump has repeatedly said that he wants to repeal and replace Obamacare before moving on to his other business-friendly policies.
Wall Street has gained momentum since Trump’s election in November, largely on hopes that his pro-growth agenda, including massive tax cuts and deregulation will boost the broader markets. But, Senate Republicans were compelled to delay the healthcare vote due to lack of support, with Trump’s administration seeing few legislative successes. Moreover, the failure to repeal Obamacare will leave an estimated 22 million people without health insurance by 2026, according to the Congressional Budget Office. Art Hogan, chief market strategist at Wunderlich Securities, pointed out that “If the Senate can conjure up enough votes to pass this, then we might get some more legislation done this year”, but, “barring that, it might be a slog of a summer”.
Some of the Republican senators who have rejected the bill in its current form include Jerry Moran, Collins, Rand Paul, Dean Heller, Rob Portman and Shelley Moore. Portman and Moore had issued a joint statement that the current bill does not do enough to counter the opioid epidemic that has devastated their states (read more: Republicans Present Healthcare Bill: Top 5 Gainers ).
IMF Cuts Growth Outlook, Casts Doubt on Trump’s GDP Projections
Trump’s pro-growth polices also got a thumbs down from the IMF. Given the uncertainty surrounding policies like tax reforms, the IMF said that there are “larger than usual” risks to the U.S. economy. IMF trimmed its projections for U.S. economic growth to 2.1% this year from the earlier 2.3%.
Trump, in the meanwhile, is promising to increase U.S. economic growth to 3% a year during his first term. However, the IMF says that 3% goal is “an extremely optimistic growth assumption”. With the U.S. jobs market nearing full employment levels, sharp rise in baby boomers retiring and slow gains in productivity, IMF believes it will be an uphill task to boost growth to 3%. IMF also warned that lower and middle class Americans will bear the brunt of Trump’s budget cuts in the near term.
Slew of Warning Signs Emerge
Fading hopes for tax reform and fiscal stimulus measures also compelled Bank of America Corp (BAC) to cut its U.S. economic growth forecast for next year to 2.1% from 2.5%, per the June edition of its U.S. Economic Weekly report. At the same time, yields on the 10-year Treasury Note are declining, flattening the yield curve, a sign that economic growth is weakening heading into next year, as per observation by Thomas Lee of Fundstrat Global Advisors.
Tumbling oil prices, in the meantime, is definitely bad news for energy companies. But, what’s alarming is that the S&P 500 in the second quarter is expected to get a vast portion of its gains from energy stocks, which are already beginning to be affected by the slide in oil prices. Along with oil prices, prices of other industrial commodities, such as iron ore, are also falling. These may be indicative of weakening demand in the near future.
5 Safe Bets for the Second Half
As stocks may face major turmoil in the second half of 2017, investors should build a strategy on low-risk assets and a combination of parameters that lead to better returns. The best way to go about doing this is by creating a portfolio of low-beta stocks, which are inherently less volatile than the markets they trade in. In this case, a low beta ranges from 0 to 1. These stocks also boast a Zacks Rank #1 (Strong Buy) or 2 (Buy). Given the current valuations, investors could benefit from investing in such stocks.
Big 5 Sporting Goods Corporation (NASDAQ:(BGFV - Free Report) – Free Report ) is a sporting goods retailer in the western United States. The company has a beta of 0.03 and a Zacks Rank #1.
Big 5 Sporting Goods has a price-to-earnings (P/E) ratio of 10.78, below the industry’s 15.50, implying that the stock is quite a bargain. The company’s projected growth rate for the current year is 50.4%, more than the Retail - Miscellaneous industry’s increase of 14.7%.
Burlington Stores Inc (NYSE:(BURL - Free Report) – Free Report ) is a retailer of branded apparel. The company has a beta of 0.53 and a Zacks Rank #2.
Burlington Stores has a (P/E) ratio of 22.35, below the industry’s 51.30. The company’s projected growth rate for the current year is 22.8%, more than the Retail - Discount Stores industry’s increase of 8.9%.
Home Bancorp, Inc. (NASDAQ:(HBCP - Free Report) – Free Report ) operates as the holding company for Home Bank, National Association that provides various banking products and services in Louisiana. It has a beta of 0.15 and a Zacks Rank #2.
Home Bancorp has a (P/E) ratio of 16.40, below the industry’s 23.10. The company’s projected growth rate for the current year is 12.8%, more than the Banks - Southeast industry’s increase of 11.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Prologis Inc (NYSE:(PLD - Free Report) – Free Report ) is a real estate investment trust (REIT) company. The company has a beta of 0.95 and a Zacks Rank #2.
Prologis has a (P/E) ratio of 21.33, below the industry’s 33.0. The company’s projected growth rate for the current year is 7.1%, better than the REIT and Equity Trust - Other industry’s increase of 0.5%.
Sequential Brands Group Inc (NASDAQ:(SQBG - Free Report) – Free Report ) owns a portfolio of consumer brands in the fashion, home, athletic and lifestyle categories. The company has a beta of 0.78 and a Zacks Rank #2.
Sequential Brands has a (P/E) ratio of 7.63, below the industry’s 15.7. The company’s projected growth rate for the next year is 25.8%, higher than the Shoes and Retail Apparel industry’s increase of 12.9%.
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