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The Zacks Analyst Blog Highlights: American Express, Moody's, Southwest Airlines, Delta Air Lines and General Motors
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For Immediate Release
Chicago, IL – Feb 27, 2018 – 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 Express Company (AXP - Free Report) , Moody's Corporation (MCO - Free Report) , Southwest Airlines Co. (LUV - Free Report) , Delta Air Lines, Inc. (DAL - Free Report) and General Motors Company (GM - Free Report) .
Buffett Prefers Stocks Over Bonds: 5 Recommendations
The Oracle of Omaha, Warren Buffett, published his annual letter on Feb 24 for shareholders of his company Berkshire Hathaway. He remained bullish on U.S. stocks over the long term. Inflationary pressure is also brewing, looming concern. This will affect bonds more than stocks because of their lower returns.
Corporate America, in the meantime, has received a massive permanent tax break, which will further boost profits. Changes to the tax law has already provided a windfall to Berkshire Hathaway, whose market value rose 21.9% in 2017, edging past the S&P 500’s return of 21.8%.
Given the positives, investing in Berkshire’s largest stock holdings seems judicious. These companies have reliable business models that have stood the test of time.
Buffett’s Annual Letter to Shareholders: Stay Invested in Stocks
The world’s third richest man, Buffett urged investors to ignore gyrations in the equity market, guidance from market pundits with fancy credentials and resist the temptation to scoop up bonds. He added that investors with long-term goals like pension funds and savings-minded individuals will make a “terrible mistake” if they measure their investment “risk” by their portfolio’s ratio of bonds to stocks.
As the investor’s investment horizon increases a diversified portfolio of equities do better than bonds. Lest we forget, the S&P 500 that mirrors a huge cross-section of American businesses has returned an average of 10% per year, while long-term government bonds have returned 5% to 6%.
Treasury Yields Rise
Treasury yields are scaling record highs after a significant rise in wage growth sparked fears of inflation and led investors to believe that the Federal Reserve will hike rates more times than anticipated.
The labor market has come a long way since the Great Recession, with wages growing at the fastest pace in January in more than eight-and-a-half years. Average hourly wages increased 9 cents, or 0.3%, to $26.74. This helped the average year-on-year hourly earnings to rise to 2.9%, the highest since June 2009.
Minimum wages have been raised in 18 states in January, which had a positive impact on 4.5 million workers, per the Economic Policy Institute (read more: Wages See Fastest Growth Since 2009: Top 5 Gainers).
A rise in bond yields, in the meantime, might tempt investors to take money away from equities and invest in bonds. But Buffett cautioned that long-term bonds tend to generate less return than stocks and with rising inflation, bonds can really become a dumb investment. Needless to say, rising inflation erodes the value of the principal on fixed income securities.
Buffet Thanks New Tax Code for Big Gains
Buffett told investors that Berkshire got a lift from the new tax code. He wrote that Berkshire made a $65.3 billion net gain in 2017, which increased the per-share book value of both Class A and Class B stock by 23%. However, only $36 billion came from the company’s operations. The rest came from the new U.S. tax code, which slashed corporate taxes and in turn boosted profit margins.
The House of Representatives passed the biggest overhaul of the U.S. tax code in 30 years. The headline-grabbing move lowered the corporate tax rate from 35% to 21%, while any income brought back from overseas is taxed 8% to 15.5%, instead of the current 35% (read more: GOP Passes Landmark Tax Bill: Best & Worst for Stocks).
5 of Berkshire’s Largest Stock Holdings to Buy Now
As mentioned above, Buffett prefers investing in stocks rather than bonds. And why not? Berkshire has registered big gains last year with its stock holdings totaling a solid $170.5 billion in value. Thus, investing in Berkshire's largest stock positions wouldn’t be a bad proposition.
American Express Company provides charge and credit payment card products and travel-related services to consumers and businesses. The Zacks Consensus Estimate for its current-year earnings climbed 10% in the last 60 days. The stock has yielded a superb return of 15.6% in the last six months. The company is expected to return 21.8% this year, higher than the industry’s projected return of 10%.
Moody's Corporation provides credit ratings; and credit, capital markets, and economic related research, data, and analytical tools. The Zacks Consensus Estimate for its current-year earnings jumped 15.7% in the last 60 days. The stock has given a stellar return of 27.9% in the last six months. The company is expected to return 24.1% this year, compared with the industry’s estimated return of 10%.
Southwest Airlines Co. operates a passenger airline that provides scheduled air transportation services in the United States and international markets. The Zacks Consensus Estimate for its current-year earnings increased 9.6% in the last 60 days. The stock has given a steady return of 10.1% in the last six months. The company is expected to return 42.9% this year, compared with the industry’s estimated return of 13.4%.
Delta Air Lines, Inc. provides scheduled air transportation for passengers and cargo in the United States and internationally. The Zacks Consensus Estimate for its current-year earnings advanced 15.9% in the last 60 days. The stock has given a healthy return of 14.5% in the last six months. The company is expected to return 28.6% this year, higher than the industry’s estimated return of 13.4%.
General Motors Company, together with its subsidiaries, designs, builds, and sells cars, trucks, crossovers, and automobile parts. The Zacks Consensus Estimate for its current-year earnings increased 7.9% in the last 60 days. The stock, which is part of the Automotive - Domestic industry, has given a superb return of 14.9% in the last six months and is expected to continue the winning run in the near term.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks 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 >>.
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.
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: American Express, Moody's, Southwest Airlines, Delta Air Lines and General Motors
For Immediate Release
Chicago, IL – Feb 27, 2018 – 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 Express Company (AXP - Free Report) , Moody's Corporation (MCO - Free Report) , Southwest Airlines Co. (LUV - Free Report) , Delta Air Lines, Inc. (DAL - Free Report) and General Motors Company (GM - Free Report) .
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Monday’s Analyst Blog:
Buffett Prefers Stocks Over Bonds: 5 Recommendations
The Oracle of Omaha, Warren Buffett, published his annual letter on Feb 24 for shareholders of his company Berkshire Hathaway. He remained bullish on U.S. stocks over the long term. Inflationary pressure is also brewing, looming concern. This will affect bonds more than stocks because of their lower returns.
Corporate America, in the meantime, has received a massive permanent tax break, which will further boost profits. Changes to the tax law has already provided a windfall to Berkshire Hathaway, whose market value rose 21.9% in 2017, edging past the S&P 500’s return of 21.8%.
Given the positives, investing in Berkshire’s largest stock holdings seems judicious. These companies have reliable business models that have stood the test of time.
Buffett’s Annual Letter to Shareholders: Stay Invested in Stocks
The world’s third richest man, Buffett urged investors to ignore gyrations in the equity market, guidance from market pundits with fancy credentials and resist the temptation to scoop up bonds. He added that investors with long-term goals like pension funds and savings-minded individuals will make a “terrible mistake” if they measure their investment “risk” by their portfolio’s ratio of bonds to stocks.
As the investor’s investment horizon increases a diversified portfolio of equities do better than bonds. Lest we forget, the S&P 500 that mirrors a huge cross-section of American businesses has returned an average of 10% per year, while long-term government bonds have returned 5% to 6%.
Treasury Yields Rise
Treasury yields are scaling record highs after a significant rise in wage growth sparked fears of inflation and led investors to believe that the Federal Reserve will hike rates more times than anticipated.
The labor market has come a long way since the Great Recession, with wages growing at the fastest pace in January in more than eight-and-a-half years. Average hourly wages increased 9 cents, or 0.3%, to $26.74. This helped the average year-on-year hourly earnings to rise to 2.9%, the highest since June 2009.
Minimum wages have been raised in 18 states in January, which had a positive impact on 4.5 million workers, per the Economic Policy Institute (read more: Wages See Fastest Growth Since 2009: Top 5 Gainers).
A rise in bond yields, in the meantime, might tempt investors to take money away from equities and invest in bonds. But Buffett cautioned that long-term bonds tend to generate less return than stocks and with rising inflation, bonds can really become a dumb investment. Needless to say, rising inflation erodes the value of the principal on fixed income securities.
Buffet Thanks New Tax Code for Big Gains
Buffett told investors that Berkshire got a lift from the new tax code. He wrote that Berkshire made a $65.3 billion net gain in 2017, which increased the per-share book value of both Class A and Class B stock by 23%. However, only $36 billion came from the company’s operations. The rest came from the new U.S. tax code, which slashed corporate taxes and in turn boosted profit margins.
The House of Representatives passed the biggest overhaul of the U.S. tax code in 30 years. The headline-grabbing move lowered the corporate tax rate from 35% to 21%, while any income brought back from overseas is taxed 8% to 15.5%, instead of the current 35% (read more: GOP Passes Landmark Tax Bill: Best & Worst for Stocks).
5 of Berkshire’s Largest Stock Holdings to Buy Now
As mentioned above, Buffett prefers investing in stocks rather than bonds. And why not? Berkshire has registered big gains last year with its stock holdings totaling a solid $170.5 billion in value. Thus, investing in Berkshire's largest stock positions wouldn’t be a bad proposition.
We have selected five sound stocks from the table that flaunt a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Express Company provides charge and credit payment card products and travel-related services to consumers and businesses. The Zacks Consensus Estimate for its current-year earnings climbed 10% in the last 60 days. The stock has yielded a superb return of 15.6% in the last six months. The company is expected to return 21.8% this year, higher than the industry’s projected return of 10%.
Moody's Corporation provides credit ratings; and credit, capital markets, and economic related research, data, and analytical tools. The Zacks Consensus Estimate for its current-year earnings jumped 15.7% in the last 60 days. The stock has given a stellar return of 27.9% in the last six months. The company is expected to return 24.1% this year, compared with the industry’s estimated return of 10%.
Southwest Airlines Co. operates a passenger airline that provides scheduled air transportation services in the United States and international markets. The Zacks Consensus Estimate for its current-year earnings increased 9.6% in the last 60 days. The stock has given a steady return of 10.1% in the last six months. The company is expected to return 42.9% this year, compared with the industry’s estimated return of 13.4%.
Delta Air Lines, Inc. provides scheduled air transportation for passengers and cargo in the United States and internationally. The Zacks Consensus Estimate for its current-year earnings advanced 15.9% in the last 60 days. The stock has given a healthy return of 14.5% in the last six months. The company is expected to return 28.6% this year, higher than the industry’s estimated return of 13.4%.
General Motors Company, together with its subsidiaries, designs, builds, and sells cars, trucks, crossovers, and automobile parts. The Zacks Consensus Estimate for its current-year earnings increased 7.9% in the last 60 days. The stock, which is part of the Automotive - Domestic industry, has given a superb return of 14.9% in the last six months and is expected to continue the winning run in the near term.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker 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 >>.
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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.