For Immediate Release
Chicago, IL – October 8, 2018 – Zacks Equity Research highlights RingCentral (RNG - Free Report) as the Bull of the Day, Lumber Liquidators (LL - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Donaldson Company (DCI - Free Report) , CONSOL Coal (CCR - Free Report) and Aspen Technology (AZPN - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
RingCentral provides a cloud-based communications system that allows businesses of all sizes to manage telephone contacts in a simple and cost-efficient way.
Their flagship service, RingCentral Office, allows businesses to maintain multiple telephone numbers and/or extensions without purchasing or maintaining any equipment or hiring additional staff. Customer calls can be forwarded automatically to any phone number, including mobile numbers and voice communications and messages are managed according to easy to use parameter settings for rule-based call routing and answering.
Time-based hoice allow calls to be routed differently based on whether or not they are received during business hours and 24-hour emergency options are available.
Especially for small business owners, RingCentral services can take the place of several employees, ensuring that customer communications are routed quickly and accurately to the appropriate party. In most cases, RingCentral’s role is invisible to the customer – they simply get the correct person or department right away, reducing the wait times and frustrations of many automated call systems.
Even a sole-proprietor service business can manage communications as well as large companies using nothing more than a laptop and a smartphone – along with RingCentral apps and services.
Founded in 1999, RingCentral avoided venture capital financing for the first seven years, “bootstrapping” its impressive growth with its own revenues.
RingCentral’s services are sold on a subscription basis, which makes their revenues “sticky.” Once a business establishes service, acquires phone numbers - which are then distributed to their own customers - and sets up a hierarchy for call management, they tend to continue using RingCentral indefinitely because the cost of changing everything would tend to drastically outweigh the continued cost of the subscription.
Subscription revenues in Q2 increased 32% year over year to $146 million.
Bear of the Day:
Founded in 1994 to sell surplus building supplies, Lumber Liquidators transformed itself two years later into what would become the nation’s largest seller of hardwood and laminate flooring. Recognizing that traditional home improvement stores lacked in inventory, selection and prices, Lumber Liquidators forged relationships directly with mills and was able to provide consumers a wide range of flooring choices at low prices.
Riding a booming housing market and the general popularity of home improvement projects – including house “flipping” – Lumber Liquidators became a household name in flooring. Profits soared and shares prices topped $119 in 2013, but have suffered mightily since then, recently closing below $14/share. The share price has declined more than 50% in 2018 alone.
A widely publicized news story in 2015 culminating in a 60 minutes expose contributed to the decline as most of Lumber Liquidators Chinese-sourced products were found to contain high levels of formaldehyde, a cancer-causing chemical. Many customers ripped up installed flooring to avoid the health risks.
Though the company insisted its products were safe, the public relations damage was done just as big-box home improvement stores.
Zacks October Market Strategy: Trade Deals and Fragile Finance
The following is an excerpt from Zacks Chief Strategist John Blank’s full Oct Market Strategy report To access the full PDF, click here
Let’s cover the entire waterfront in this month’s Zacks Market Strategy summary.
What’s my reasoning for doing that?
There exist a very wide range of themes underpinning this market’s trading, going forward.
Reflecting on how they may intertwine in the near future would be a great help.
A. What Do I Think of the U.S.-Mexico-Canada trade deal (USMC)?
The details are all quite reasonable and do-able. I expect it will be ratified.
I noted Dow Industrial type stocks jumped on the news. I doubt the U.S. stock markets digest this directly, long-term. But it is bullish, as it reduces the uncertainty caused by the idea of destroying NAFTA.
Much of the trade negotiation detail was in the Trans-Pacific Partnership (TPP) agreement ripped up in the early days of the new administration.
Along with signs of a formal agreement by Japan, Europe and the U.S. to start to address ‘a third party’ (aka China) directly, we have the outlines of what is going on.
This new Canada-Mexico-USA trade deal -- and the 3-region agreement to address China -- is basically the TPP plus Europe (without calling it that). Fortress North America is born.
Having written that, any deal with the Chinese – precipitated by this strategy –may be 10 years off.
B. Is it time to buy non-U.S. stocks?
What to make of the basic problem(s)?
Under heavy stimulus, U.S. growth gets hotter, just as non-U.S. growth gets a weaker pulse.
That dynamic needs to change first.
Only then should investors begin to “Overweight” international indexes.
C. What does the Fed note as a source of fragility?
As credit has expanded relative to the size of the economy, banks have increasingly had to rely on wholesale funding relative to their deposit base.
This is a source of fragility.
Wholesale funding is highly runnable, meaning that large pools of funds can vanish overnight, thereby leaving banks in search of liquidity and making the financial system more vulnerable.
D. Zacks October Sector/Industry/Company Telescope
October shows us a domestic cyclical lift is in play.
There is oddly also a strong set of signals (Railroads, Trucking and Energy) that the global manufacturing economy is doing fine too. Contrarians should make note of this.
a) Railroads & Trucking stayed hot
b) Energy is back to an Attractive play, with WTI oil prices breaking $70 a barrel now
c) The Obamacare HMO play is still very much alive too
d) There is an obvious trade war loser now. It is Consumer Staples
(1) Industrialsrise to Very Attractive. The very best is Pollution Control and Business Products. Railroads & Trucking are strong too.
Top Stock: Donaldson Company
Donaldson Company, Inc. is a leading worldwide provider of filtration systems and replacement parts.
(3) Energyis now Attractive. The leader is Coal and Oil & Gas Integrated.
Top Stock: CONSOL Coal
CONSOL Coal Resources LP manages and develops active thermal coal operations. The company engages in underground mines and related infrastructure that produce high- BTU bituminous thermal coal. It primarily sells its coal to electric utilities in the United States.
CONSOL Coal Resources LP, formerly known as CNX Coal Resources, is based in Canonsburg, Pennsylvania.
(4) Info Techis back to Attractive. But the leader is Computer-Office Equipment. Semis are now Market Weight.
Top Stock: Aspen Technology
Aspen Technology Inc. is a recognized expert and leading provider of award-winning asset optimization software and services.
AspenTech's integrated aspenONE solutions enable manufacturers to reduce costs, increase capacity and optimize operational performance end-to-end throughout the engineering, plant operations and supply chain management processes, resulting in millions of dollars in cost savings.
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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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