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The Zacks Analyst Blog Highlights: Plains GP, Booking Holdings, Azul, Axon Enterprise and Callaway Golf

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For Immediate Release

Chicago, IL –August 6, 2019 – 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: Plains GP Holdings L.P. (PAGP - Free Report) , Booking Holdings Inc. (BKNG - Free Report) , Azul S.A. (AZUL - Free Report) , Axon Enterprise Inc. (AAXN - Free Report) and Callaway Golf Co. (ELY - Free Report) .

Here are highlights from Monday’s Analyst Blog:

5 Must-Buy Stocks This Week on Q2 Earnings Despite Volatility

Wall Street witnessed severe volatility last week (ended Aug 2) following a less than-expected dovish stance taken by the Fed and President Donald Trump’s tweet expressing desire to impose 10% tariff on a new set of $300 billion Chinses goods effective Sep 1. Trump further said that the tariff rate could go up to 25% later if required. These two factors brought an end to the fabulous bull run, which started in early June. 

Consequently, all three major stock indexes ---- the Dow, the S&P 500 and the Nasdaq Composite ---- plunged 2.6%, 3.1% and 3.2%, respectively, for the week. While both the S&P 500 and the Nasdaq Composite witnessed their biggest weekly decline since Dec 21, 2018, the Dow saw the biggest weekly decline since May 31 as well as its second biggest weekly decline for the year so far.

However, second-quarter 2019 earnings results have so far come in better than expected. At this stage, it will be prudent to invest in stocks with a favorable Zacks Rank and positive Earnings ESP. Strong earnings results will likely ensure a northbound move of stock prices of these companies in the near term despite market volatility.

Trade and Fed Let Wall Street Down

As a result of more than a year-long trade war, the United Sates has already levied 25% tariff on $250 billion Chinese exports while China has reciprocated with 25% tariff on $110 billion U.S. goods. So far, the U.S. government has imposed tariff on intermediary goods to be used by U.S. corporates to develop high-tech products.

President Trump posted his tweet on Aug 1, just a day after Fed reduced the benchmark leading rate by 25 basis points to the range of 2-2.25%. Fed Chair Jerome Powell said that this rate cut is to “insure against downside risks,” and there was no signal that this is the start of a lengthy rate cut cycle. This comment significantly dented market participants hope looking for one or two more cuts.

Meanwhile, the U.S. government sources revealed that 68% of the new Chinese goods, which will face the latest tariffs, will be either on consumer goods or auto parts. This is likely to severely dent consumer confidence besides gradually deteriorating business confidence. Several economists believe that the central bank may need to cut rate one or two more times after Trump’s tweet.

Better-Than-Expected Second-Quarter Earnings Results

As of Aug 2, 388 S&P 500 members reported second-quarter earnings results. Total earnings for these 388 index members are up 0.8% from the same period last year on 4.3% higher revenues. Notably, 76.8% companies surpassed EPS estimates while 57.7% beat revenue estimates.

At present, total second-quarter earnings for the S&P 500 Index are expected to be down 0.1% from the prior-year period on 4.5% higher revenues. This is a massive improvement over an earnings decline of 3.4% on 3.9% higher revenues, expected nearly a month ago. Notably, Wall Street had witnessed negative earnings (0.2% earnings decline on 4.5% higher revenues) in the first quarter for the first time since the second quarter of 2016. (Read More: The Earnings Picture is Good Enough)

5 Top Stocks Likely to Gain This Week

We have narrowed down our search to five companies which will release their earnings results this week. Each of these stocks carries a Zacks Rank #1 (Strong Buy) and has a positive Earnings ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.

Our research shows that for stocks with the combination of a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, the chance of an earnings beat is as high as 70%. These stocks are expected to gain after earnings release irrespective of already solid gains year to date.

Plains GP Holdings L.P.owns and operates midstream energy infrastructure in the United States and Canada. It operates through three segments: Transportation, Facilities, and Supply and Logistics. Plains GP Holdings has an Earnings ESP of +32.63% for the current quarter.

The company has an expected earnings growth rate of 540% and 13.7% for the current quarter and year, respectively. The Zacks Consensus Estimate for the current quarter improved 6.7% over the last 30 days.

The company delivered positive earnings surprise in three out of the last four quarters with an average beat of 62.7%. The stock has surged 16.3% year to date. Plains GP Holdings is expected to release earnings results on Aug 6, after the closing bell.

Booking Holdings Inc.provides online travel and related services in Europe, North America, South America, the Asia-Pacific region, the Middle East, and Africa. The company operates Booking.com, which connects travelers with a selection of places to stay. Booking Holdings has an Earnings ESP of +3.77% for the current quarter.

The company has an expected earnings growth rate of 10.3% and 9% for the current quarter and year, respectively. The Zacks Consensus Estimate for the current quarter and year improved 0.2% and 0.01%, respectively, over the last 30 days.

The company delivered positive earnings surprise in two out of the last four quarters with an average beat of 8%. The stock has increased 7.2% year to date. Booking Holdings is expected to release earnings results on Aug 7, after the closing bell.

Azul S.A.provides passenger and cargo air transportation services in Brazil. As of Dec 31, 2018, it operated 821 daily flights to 110 destinations through a network of 220 non-stop routes with a fleet of 125 aircraft. Azul has an Earnings ESP of +55.56% for the current quarter.

The company has an expected earnings growth rate of 181.8% and 26.4% for the current quarter and year, respectively. The Zacks Consensus Estimate for the current year improved 3.6% over the last 30 days.

The company delivered positive earnings surprise in three out of the last four quarters with an average beat of 54.1%. The stock has jumped 49% year to date. Azul is expected to release earnings results on Aug 8, before the opening bell.

Axon Enterprise Inc.develops, manufactures and sells conducted energy weapons (CEWs) worldwide. The company operates through two segments, TASER and Software and Sensors. Axon Enterprise has an Earnings ESP of +10.21% for the current quarter.

The Zacks Consensus Estimate for the current year improved 1% over the last 30 days. The company delivered positive earnings surprise in three out of the last four quarters with an average beat of 66%. The stock has jumped 57.9% year to date. Axon Enterprise is expected to release earnings results on Aug 8, after the closing bell.

Callaway Golf Co.designs, manufactures and sells golf clubs, golf balls, golf bags and other golf-related accessories. The company operates through three segments: Golf Clubs; Golf Balls; and Gear, Accessories and Other. Callaway Golf has an Earnings ESP of +6.40% for the current quarter.

The company delivered positive earnings surprise in the last four quarters with an average beat of 240.7%. The stock has surged 14.9% year to date. Callaway Golf is expected to release earnings results on Aug 8, after the closing bell.

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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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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