For Immediate Release
Chicago, IL – December 28, 2018 – Zacks Equity Research Lockheed Martin (LMT - Free Report) as the Bull of the Day, Texas Roadhouse (TXRH - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Gaming and Leisure Properties, Inc. (GLPI - Free Report) , Americold Realty Trust (COLD - Free Report) and Arbor Realty Trust (ABR - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
With equity markets coming on strong after Monday’s rough session, there are several names which could be today’s Bull of the Day. This one happens to be in the Aerospace – Defense industry which ranks in the Top 37% of our Zacks Industry Rank. I’m talking about Zacks Rank #1 (Strong Buy) Lockheed Martin.
Lockheed Martin Corporation, a security and aerospace company, engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide. It operates through four segments: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS), and Space.
The reason for the favorable Zacks Rank lies in the earnings estimates for the current year and next year. Over the course of the last sixty days, analysts have increased their earnings estimates for both these time periods. The bullish sentiment has pushed up our Zacks Consensus Estimate for the current year from $17.02 to $17.51. Next year’s number has gone from $18.97 to $19.49.
If you look at the Price, Consensus and EPS Surprise Chart, you can see that there’s been divergence between the stock price and the earnings estimates. This divergence could lead to outperformance in Lockheed over the next several months. With price coming down as estimates go up, forward valuations are on the move lower. Currently, Lockheed is trading at 12.92x forward 12-month earnings estimates. Lockheed hasn’t traded at a multiple that low since 2012.
The 52-week high of $363 is a far cry from the current price of $259.79. The 200-day moving average is all the way up at $317.93, providing plenty of topside resistance should the stock stage a serious rally. Before that, the 50-day moving average is at $296.61.
Bear of the Day:
While it may seem tempting to buy everything you can when the market bounces like it has the last couple of days, you have to maintain your discipline. By taking note of the Zacks Rank, you can stop yourself from buying story stocks without the earnings to back it up. Stocks which are Zacks Rank #4 (Sell) and Zacks Rank #5 (Strong Sell) often have earnings estimates which are going lower. Today’s Bear of the Day is one of those stocks. I’m talking about restaurant stock Texas Roadhouse.
Texas Roadhouse, Inc., together with its subsidiaries, operates casual dining restaurants in the United States and internationally. The company operates and franchises Texas Roadhouse and Bubba's 33 restaurants. As of October 29, 2018, it owned and operated approximately 575 restaurants.
Texas Roadhouse is in the Restaurant industry which ranks in the Bottom 36% of our Zacks Industry Rank. It’s also currently a Zacks Rank #5 (Strong Sell). The reason for the unfavorable Zacks Rank lies in the recent negative earnings estimate revisions. Over the last sixty days, ten analysts have dropped their earnings estimates for the current year and next year. The bearish sentiment has cut down the Zacks Consensus Estimate for the current year from $2.33 to $2.19 while next year’s number has come from $2.66 to $2.53. The negative revisions are part of the reason why the stock has come down from over $75 in early September to the $58.73 level it closed at today.
3 Great REITs to Buy Right Now
The stock market’s strong run over the past few years brought attention to high-flying growth stocks, usually from the technology sector, that were consistently outpacing the market. However, fresh volatility within the last few months has shifted some focus back towards other investment strategies, and now it might be time for investors to check out things like real estate investment trusts, or REITs.
REITs are companies that own, operate, or finance real estate properties that produce income, such as apartment complexes or retail locations. These companies are heavily regulated and must meet a number of qualifications to be classified as a REIT, but they do offer investors a few distinct advantages.
First of all, real estate can be a very profitable investment sector when certain economic conditions are present. What’s more, REITs must pay at least 90% of their taxable income in dividends to shareholders, so they are a great option for income investors looking for steady payouts.
The presence of mortgage debt makes this a rate sensitive industry, so investors might not love some REIT choices in this rising rate environment. But many companies offset this through strong funds from operations (FFO) growth—or they stick out from the pack with large amounts of their debt already fixed at a low rate.
Luckily for Zacks readers, the proven Zacks Rank—which emphasizes earnings estimates and estimate revisions—works with REITs just as it would with any other company. We prefer to use FFO as the metric of profitability here, but the trends work the same otherwise. The strongest REITs are going to be those with improving outlooks and great Zacks Ranks.
With that said, check out the REITs that our model says are impressive options right now:
1. Gaming and Leisure Properties, Inc.
Gaming and Leisure Properties is an owner of regional casino properties leased to the likes of Boyd Gaming, Eldorado Resorts, and Penn National. All in all, the company owns 44 gaming properties. CLPI is a Zacks Rank #2 (Buy) stock and yields about 8.4% right now. Analysts expect GLPI to witness long-term annualized FFO growth of 8.7%. The valuation remains attractive at a P/E of 10.3 and PEG of 1.2, and it is a relatively low beta option.
2. Americold Realty Trust
Americold is a REIT focused on owning and operating temperature-controlled warehouses. It boasts the largest network of these sort of facilities in the world, making it a dominant force in global food distribution and retail industries. The company held an upsized IPO at $16 per share earlier this year and has trended higher since then.
COLD is sporting a Zacks Rank #2 (Buy) right now. The stock is trading at about 22.5x earnings, which is a slight premium to the average of its peers but within a reasonable range considering its industry dominance. Plus, Americold offers a dividend yield of 3.0% at current price levels. FFO growth is expected to hit roughly 9.5% in 2019, and about 63% of the company’s debt is fixed rate.
3. Arbor Realty Trust
Arbor Realty is a specialized real estate finance company investing in real estate-related bridge and mezzanine loans, preferred equity, mortgage-related securities and other real estate-related assets. The company is a nice small-cap option for exposure to the U.S. mortgage market.
ABR sports a Zacks Rank #1 (Strong Buy). Analyst estimate trends have been positive, and the Zacks Consensus Estimate for the company’s full-year FFO has gained three cents over the past 60 days. ABR also offers a 10.5% yield based on current prices.
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