Back to top

The Zacks Analyst Blog Highlights: American Axle & Manufacturing Holdings, Vishay Intertechnology, SMART Global Holdings, United Rentals and Lam Research

Read MoreHide Full Article

For Immediate Release

Chicago, IL – November 15, 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 American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) , Vishay Intertechnology, Inc. (VSH - Free Report) , SMART Global Holdings, Inc. (SGH - Free Report) , United Rentals, Inc. (URI - Free Report) and Lam Research Corp. (LRCX - Free Report) .

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Tuesday’s Analyst Blog:

Buy These 5 Value Picks as Wall Street Braces for a Dip

 U.S. stocks managed to arrest a two-day slide on Monday, even managing to close the session with meager gains. Though Monday’s gains came on the back of encouraging deal news, investors will continue to wait for further progress on the new tax policy.

However, experts believe that the likelihood of such reforms being implemented within this year is extremely unlikely. Further, the era of low interest rates which had fueled much of the markets’ gains is coming to an end worldwide with central banks rolling back their easy money policies.

Given this background, constant warnings about the exorbitant valuations of U.S. stocks may not seem as unrealistic as they did before. Some of these are rather bleak, going so far as to predict a decade long period of losses. However, the uncertainty created by the hurdles to the tax reform process and upcoming rate hikes means that it would make for a smart move to shore up your portfolios with some great value stock picks.

Investors Remain Uneasy About Tax Cut Prospects

The first weekly decline in two months was triggered on Nov 9 by the introduction of the Senate Republicans’ version of a tax cut legislation that entails the deferment of corporate tax cuts for a year. Such a delay raised concerns about President Trump’s ability to pass laws, leading the Dow to snap a seven-session streak of gains which itself was a product of tax cut hopes.

Of course, the market does have other catalysts and Monday’s gains came on the back of encouraging deal news. But investors will continue to await further progress on the new tax policy. However, experts believe that the likelihood of such reforms being implemented within this year is extremely unlikely.

Further, the version of the legislation introduced by the Senate Republicans is widely different from the one introduced in the House. This is likely to lead to several rounds of negotiations which in turn would raise market volatility.

Central Banks Prepare to Wind down Stimulus

An end to the monetary stimulus packages which central banks across the world have put in place is another factor which will soon come into play. Markets have been boosted by an extended phase of soft interest rates over several years now and their gradual removal can only reduce the level of impetus they enjoy. While the Fed prepares to raise rates in December, the ECB will begin slashing the level of its bond purchases from this month.

One section of market watchers believe that U.S. investors have already come to terms with such a move. But given the events of the past week, a rate hike at this time could make things tougher for stocks. The Fed and the ECB are only likely to tighten monetary conditions further going ahead, which makes it imperative for investors to choose their stocks carefully.

U.S. Valuations Already at Record Level

Over the last few months, investors have received several warnings about the pricey nature of U.S. stocks. The latest of these comes from John Hussman who claims that valuations for U.S. stocks have already hit an all-time high. Using his valuation metric of choice, the ratio of market capitalization to gross value added, Grossman claims that stocks are pricier than they were in 2000 and 1929, years which heralded unprecedented market downturns.

Hussman believes that overstretched valuations, caused by an almost 300% Bull Run, will lead to a market drop of almost 63%. This would then lead to an entire decade of losses for the bourses. The underlying reason for the crash would be the prevailing belief among investors that only risky assets can provide good returns.

Such a feeling has become popular during an extended period of extremely low interest rates, thinks Hussman. While most market watchers would characterize such dire conclusions as a tad extreme, they would be hard put to dismiss them outright, given the events dampening investor sentiment in the recent past.

Our Choices

Concerns about the ability of the Trump administration to push through tax cuts have been weighing on stocks recently. Even though markets have edged up during the last trading session, such fears are likely to dampen investor sentiment going forward.

Further, central banks across the world are preparing to wind down monetary stimulus measures. Given such a backdrop it makes sense to bet on value stocks to protect your hard earned profits. Our selection is also backed by a good Zacks Value Score and Zacks Rank.

We narrowed down our choices with the help of our new Style Score system.

Our research shows that stocks with a Value Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) offer the best investment opportunities in the value investing space. You can see the complete list of today's Zacks #1 Rank stocks here.

American Axle & Manufacturing Holdings, Inc. is a leading supplier of driveline and drivetrain systems, modules and components for the light vehicle market.

American Axle has a Value Style Score of A. The forward price-to-earnings ratio (P/E) for the current financial year (F1) is 4.98, lower than the industry average of 13.66. The stock has a price to earnings growth ratio (PEG) of 0.62, lower than the industry average of 1.45.

Vishay Intertechnology, Inc. is a leading international manufacturer and supplier of discrete passive electronic components and discrete active electronic components, particularly resistors, capacitors, inductors, diodes and transistors.

Vishay Intertechnology has a Value Style Score of A. The stock has a P/E (F1) of 15.32x, lower than the industry average of 17.75. It has a PEG ratio of 0.74, lower than the industry average of 0.96.

SMART Global Holdings, Inc. is a designer, manufacturer and supplier of electronic subsystems to OEMs.

SMART Global Holdings has a Value Style Score of A. The stock has a P/E (F1) of 9.87x, lower than the industry average of 21.67. It has a PEG ratio of 0.66, lower than the industry average of 1.62.

United Rentals, Inc. is the largest equipment rental company in the world, with an integrated network of 880+ rental locations in 49 states and 10 Canadian provinces.

United Rentals has a Value Style Score of B. The stock has a P/E (F1) of 13.95x, lower than the industry average of 19.62. It has a PEG ratio of 0.89, lower than the industry average of 1.58.

Lam Research Corp. supplies wafer fabrication equipment and services to the semiconductor industry.

Lam Research has a Value Style Score of B. The stock has a P/E (F1) of 14.36x, lower than the industry average of 15.08. It has a PEG ratio of 0.97, lower than the industry average of 1.10.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.

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 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.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.

Follow us on Twitter: https://twitter.com/zacksresearch

Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com/

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.



More from Zacks Press Releases

You May Like