For Immediate Release
Chicago, IL – August 29, 2018 – Zacks Equity Research Urban Outfitters, Inc. (URBN - Free Report) as the Bull of the Day, American Airlines Group Inc. (AAL - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onAppFolio, Inc. (APPF - Free Report) , Cypress Semiconductor (CY - Free Report) and NetApp, Inc. (NTAP - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Shares of Urban Outfitters, Inc. have surged roughly 30% over the past six months, which crushes its industry’s 10% gain. Luckily for investors who might have missed out on this ride, the lifestyle and clothing retailer that also owns Anthropologie and Free People looks poised to continue to climb.
Urban was able to stand out last week amid a fantastic second quarter for retailers that saw industry giants Walmart and Target post impressive quarterly financial results. The Philadelphia-based company reported Q2 earnings that soared 90% from $0.44 per share in the year-ago period to hit $0.84 share, which also topped our $0.76 per share Zacks Consensus Estimate.
Urban not only delivered better-than-expected earnings results for the fifth straight quarter, the trendy retailer also saw its quarterly revenues jump 13.7% to a record $992.5 million—also easily surpassing our $977 million estimate. “All three brands delivered double-digit retail segment ‘comp’ sales and lower markdown rates to drive these results,” CEO Richard Hayne said in a statement.
Investors will notice that shares of URBN have gone on a pretty wild ride over the last five years. Yet, Urban’s stock price has skyrocketed roughly 120% over the last year on the back of positive momentum driven by its ability to adapt more quickly to new styles, some of which happen to fall directly in its wheelhouse—including a wave of late 80's and early 90's trends.
Shares of URBN have cooled down since the start of 2018, but are still up roughly 30%, which outpaces the S&P 500’s 9% jump. Plus, Urban stock was trading roughly $7 below its 52-week high of $52.50 as of Tuesday’s close at $45.41 per share.
Bear of the Day:
American Airlines Group Inc. has seen its stock price plummet 24% over last the six months, and things don’t look like they are going to get much better for the airline powerhouse.
Second Quarter Overview
American’s adjusted Q2 earnings of $1.63 per share came in above our Zacks Consensus Estimate by 4 cents, but they marked a massive decline from the year-ago period’s $2.04 per share. The airline pointed to higher fuel costs as one of the biggest reasons it saw its quarterly earnings slip.
AAL’s operating income also fell from $1.60 billion in the second quarter of 2017 to $1.03 billion. American’s Q2 revenues did climb by roughly 3.6% to reach $11.64 billion, which still missed our quarterly estimate.
American, like United, Delta and other airlines, reported strong quarterly passenger totals, but the companies weren’t able to raise their prices quickly enough to make up for what was a roughly 55% increase in fuel costs from a year ago—39.6% for American specifically.
The company also lowered its guidance for its third-quarter capacity growth rate by roughly 0.6% and its Q4 capacity by around 1%. Investors should note that American still expects its Q3 capacity to jump 3.3%, while the firm projects its fourth-quarter capacity to be up 1.6%
Investors will see that shares of AAL are up just around 4% over the last three years, which lags the S&P 500 by over 40%. The past 12 months have been even less kind to American stock, with shares down nearly 9%. Since the start of 2018, AAL stock has plummeted over 21%—against the S&P’s roughly 8.6% climb.
3 Tech Stocks for Growth Investors to Buy Now
By their very nature, growth investors are primarily focused on finding companies whose earnings and revenue are expected grow at a rate that outpaces the market. This investment strategy comes with its fair share of risks, but it also brings the exciting possibility of outsized returns—an end goal that every investor desires.
Over the past several years, Wall Street’s most exciting growth stocks have emerged from the technology sector. From industry innovators like Amazon and Netflix to exciting foreign stocks such as Alibaba, tech-focused growth investors have been rewarded with massive profits recently.
Strong earnings and impressive sales imply that the technology sector’s hot streak could continue throughout 2018—despite recent market-wide volatility. That means that growth investors searching for the next great market-beating stock might want to keep their focus on tech companies.
Luckily, we can pair the proven Zacks Rank with our innovative Style Scores system, which includes a “Growth” category, to find strong growth tech stocks. Investors should note that our Growth category values earnings and sales growth, as well as improvements to a company’s financial statements—including strong cash flows and great return on equity.
With all of this said, check out these three tech stocks for growth investors to consider now:
1. AppFolio, Inc.
AppFolio offers cloud-based software solutions for the property management and legal industries. The company’s AppFolio Property Manager is a leading solution for property management, while its MyCase application is ideal for practitioners and small law firms. Currently, the stock is a Zacks Rank #2 (Buy).
AppFolio recently surged into profitability, which is something that investors tend to reward. This fiscal year, current estimates are calling for earnings growth of 93% and net sales growth of 28%. The company is also improving its cash position, generating quadruple-digit cash flow growth and operating with a net margin of nearly 11%.
The firm has also proven to be an efficient one, with Return on Equity of 20% crushing its industry average. AppFolio should be able to use this, and its solid margins, to capitalize on its new business opportunities. APPF has also displayed the strength of small caps recently, adding about 100% over the past six months.
2. Cypress Semiconductor
Cypress Semiconductor makes chips designed for the automotive, industrial, home automation and appliances, consumer electronics and medical products industries. It has emerged as a leader in the Internet of Things industry after shelling out $550 million for Broadcom’s IoT business in 2016. Cypress’ “WICED” IoT platform is part of one of the largest such portfolios in the industry.
While semiconductor stocks have been volatile at times this year, we believe there is still plenty of growth opportunity in secular trends like IoT. This should give Cypress a unique opportunity to keep expanding, even as cyclical industry concerns persist.
According to our latest consensus estimates, analysts expect to finish the current fiscal year with EPS growth of nearly 51% over the prior year. Cypress also has a long-term projected annual EPS growth rate in excess of 16% right now. Meanwhile, CY is holding a Zacks Rank #2 (Buy).
3. NetApp, Inc.
NetApp specializes in hybrid cloud solutions; in other words, it provides data-based services which simplify the management of applications cloud and on-premises environments. NetApp’s products and solutions are in high demand as enterprises around the world continue modernizing and adapting to cloud technology. The stock sports a Zacks Rank #1 (Strong Buy) and sports promising growth characteristics.
Notably, NetApp has an “A” grade for Growth in our Style Scores system. Earnings are projected to improve by more than 27% in 2018, and that growth is expected to continue to the tune of 14% on a long-term, annualized basis. NetApp is also notching cash flow growth of about 25% right now.
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