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The Zacks Analyst Blog Highlights: Tilray, Raytheon, Boyd Gaming, Altria Group and Simply Good Foods

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For Immediate Release

Chicago, IL – October 8, 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 Tilray, Inc. (TLRY - Free Report) , Raytheon Company (RTN - Free Report) , Boyd Gaming Corporation (BYD - Free Report) , Altria Group, Inc. (MO - Free Report) and The Simply Good Foods Company (SMPL - Free Report) .

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Here are highlights from Friday’s Analyst Blog:

Get Over Marijuana: Indulge in These 4 “Sin Stocks” Instead

A spike in government bond yields has compelled a reassessment of risky assets like stocks. Try placing your bets on stocks that not only celebrate good times, but also lift spirits during recessionary periods.

However, it’s advisable to stay away from marijuana stocks as the very nature of their business is questionable. It makes a lot more sense to invest in tried-and-true “sin stocks.” These stocks are a defensive play, with no speculation involved.

Marijuana Rush Mirrors 1990s Dot-Com Bubble

The euphoria over marijuana investments has grown beyond reasonable fundamentals, reminiscent of the ill-fated Internet bubble of 1997. After all, most of the companies involved in the marijuana business have limited revenues. Tilray, Inc., for example, boasts a market cap higher than Macy’s. But, Tilray recorded less than $20 million in revenues during the first half of the year, way less than Macy’s’ $25 billion.

Marijuana trade recently picked up momentum on headlines that PepsiCo was looking at the marijuana space. But headlines can be misleading. The reality is that Pepsi has refused to invest in the marijuana space, causing stocks to tank and momentum investors to lose a lot of money. To hedge risks, it’s always prudent to invest in the old-school “sin stocks,” provided you don’t abhor the idea of putting money into activities considered unethical.

Here’s Why These Stocks Are Sinfully Good

Sin stocks are mostly in the business of making weapons, operating casinos, growing tobacco and providing sugary treats. Their products or services are relatively inelastic and business recession-proof. The very nature of their business ensures a steady stream of consumers, irrespective of market conditions, which eventually lead to higher margins and solid profits. At the same time, these companies produce large amounts of cash with culturally established market positions.

By the way, many choose to steer clear of such companies, making them more prone to undervaluation. This does present a lot of opportunity for others to buy them at a bargain price. But, all vice companies may not be cheaper than the market. However, they are surely less expensive than they should be, given their brand value and growth opportunity. On that positive note, we have highlighted five vice-related stocks that should make good investments.

Raytheon

The U.S. army recently chose Raytheon Company to produce the next-generation air and missile defense radar, which has set the stage for significantly better operating performance. Raytheon, by the way, has a wide array of defense programs in its portfolio. This reduces the risks involved to delays and cancellations. Needless to say, tensions in Syria should drive additional military demand in the near term, something that bodes well for the world’s largest manufacturer of guided missiles.

Raytheon has also increased its payout by more than 40% in the past five years. And we all know that stocks that pay out a healthy yield are less susceptible to market gyrations. Their large customer base, sustainable business model, long track of profitability and strong liquidity allow them to offer sizable yields on a regular basis, regardless of market direction.

The company currently has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current year earnings rose 0.2% in the last 60 days. The company’s expected earnings growth rate for the current year is 30.3% compared with the Aerospace - Defense Equipment industry’s estimated rise of 19.1%.

Boyd Gaming

Recent robust strategic initiatives have currently helped Boyd Gaming Corporation progress leaps and bounds. But, let’s admit that things are looking up for this multi-jurisdictional gaming company, thanks to confident consumers.

U.S. consumer confidence soared to its highest in 18 years in September, per the Conference Board, a business research organization. The consumer confidence index had climbed to 138.4 last month from an upwardly revised 134.7 in August.

Consumers’ optimism was largely driven by robust job growth. The current unemployment rate is now at a nearly two-decade low, while the U.S. economy added jobs for 95 successive months in August, the longest stretch on record.

Coming back to Boyd Gaming, the company currently flaunts a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its current year earnings rose 2.8% in the last 60 days. The company’s expected earnings growth rate for the current year is 41.8% compared with the Gaming industry’s estimated rise of 13.6%.

Altria

Despite a sustained assault on smoking in the United States, long-term investors in Altria Group, Inc. have done extremely well. And that’s because tobacco is largely recession-proof and sales are still strong throughout the world especially in the emerging markets. The company has successfully outperformed the broader Tobacco industry in the last three months (+6% vs -1.7%).

Altria currently possesses a Zacks Rank #2. The company’s expected earnings growth rate for the current year is 18.3% compared with the industry’s estimated growth of 7.3%.

Simply Good Foods

The Simply Good Foods Company develops, markets, and sells ready-to-drink shakes, snacks, and confectionery products in North America and internationally. Even though such products are an area of concern for health advocates, seldom do we can restrain from indulging in such treats. That seems to be the story told by the company’s earnings growth. The company has easily outperformed the broader Food - Confectionery industry in the last three months (+22.2% vs +4.4%).

It currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings rose 5.7% in the last 90 days. The company’s expected earnings growth rate for the next quarter is 35.7% compared with the industry’s estimated rise of 20.3%.

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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/performancefor information about the performance numbers displayed in this press release.



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