For Immediate Release
Chicago, IL – December 17, 2019 – Zacks Equity Research Ichor Holdings (ICHR - Free Report) as the Bull of the Day, Lazard (LAZ - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Canadian Solar (CSIQ - Free Report) , JinkoSolar Holdings (JKS - Free Report) and Enphase Energy (ENPH - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Ichor Holdings is a Zacks Rank #2 (Buy) and it is the Bull of the Day today. Normally we have a Zacks Rank #1 (Strong Buy) but I am going to with this stock for the simple reason that it is running and you need to take a deeper look at why. That is really the whole point of the Bull of the Day article, so let's get right to it.
Ichor Holdings, Ltd. is engaged in the design, engineering and manufacturing of critical fluid delivery subsystems for semiconductor capital equipment. Ichor Holdings, Ltd. is based in Fremont, United States.
I tend to look mostly at the last four quarters and with ICHR the story isn't one that screams "this is a winner" or something like that.
I see a string of three misses ended by a recent beat. So the momentum is with the name, but those other three misses are not what you want to see.
As I focus on the beat, I see that it helped estimates move much higher.
The Zacks Rank is all about the recent revisions in earnings estimates. In ICHR's case, we see estimates moving up across the board.
I see the number for this quarter moving from $0.38 to $0.47. next quarter has an 11 cent move and the full year is looking at a 12 cent move.
The momentum carries into next year as well as I see the Zacks Consensus Estimate moving from $2.08 to $2.34 over the last 60 days.
The valuation on chip stocks is always relatively high, but I like where ICHR is at. 26x forward estimates isn't as high as most other chip names and the price to book of 3.5x should be close enough for value investors to remain interested. I see some topline contraction last quarter, but the 1.3x price to sales also tells me the market still rewards the stock for every incremental dollar in sales.
At the end of the day, as the trade war starts to wind down, this stock could be a big winner. It is consistently hitting new highs and in this market, I am a fan of buying high and selling higher!
Bear of the Day:
Lazardis a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day. Often times, the Bear of the Day will be a stock that is falling, but that is not happening with LAZ. Let's look at why this is the case, and why the stock has the lowest Zacks Rank.
Lazard is one of the world’s major financial advisory and asset management firms. The company is specialized in offering solutions for complex financial and strategic challenges of a diverse set of clients around the world, including corporations, governments, institutions, partnerships and individuals. Founded in 1848 in New Orleans, Lazard currently operates from 43 cities in key business and financial centers across 27 countries throughout Europe, North America, Asia, Australia, the Middle East, and Central and South America.
Lazard is not in trouble by any means, but the key idea here is that the Zacks Rank is all about earnings estimate revisions. That means if the analysts see some trouble ahead they are going to lower their estiamtes. They might also just be correcting their models as they were too bullish.
In any event, esimates for LAZ are falling.
60 days ago, the full year number for 2019 was $3.35, now that number is $3.23.
Next year has seen an even bigger decline, as estimates have fallen from $3.95 to $3.56.
It really speaks to the broader market when a move like that is causing the stock to fall to a Zacks Rank #5 (Strong Sell). It says that there are a lot of stocks with positive earnings estimate revisions and only a small move lower brought this stock to the lowest Zacks Rank.
I see a 12x forward earnings multiple which is good, but a 6x price to book is a little stiff. 1.5x sales is a good level to have, but with revenue contracting you have to look for margins to expand. Lately, margins have not been expanding, so when they turn around, this stock could be worth a deeper look.
Solar Stocks in Spotlight on Phase One U.S.-China Deal
Stock markets across the globe breathed a sigh of relief after progress in trade negotiations between the United States and China on Dec 12, after almost two years of dispute. The U.S. solar industry, which has been witnessing uncertainty following Trump’s imposition of the import tariff on solar products, witnessed an upside post the latest development.
Notably, the solar industry was up 4% on Dec 12, after governments of the two most powerful economies promised to purchase in abundance from each other.
Impact of Tariff on Solar
Imposition of the import tariff on solar products dealt a major blow to the U.S. solar industry. Per a recent report by Solar Energy Industries Association (SEIA), tariffs on imported solar cells and modules have caused 10.5 gigawatts (GW) of solar installations to be cancelled, enough to power 1.8 million homes and reduce 26 million metric tons of carbon emissions. Sadly, solar tariffs are costing the United States more than $10.5 million per day in unrealized economic activity.
Details of the Recent Trade Truce
Per major media reports, President Trump announced cancellation of plans to impose new tariffs on $160 billion worth of Chinese imports as part of the modest interim agreement. The United States has also promised to reduce existing import taxes on about $112 billion in Chinese goods from 15% to 7.5%. In return, per Trump’s tweet, China has agreed to "massive'' purchases of American farm and manufactured products as part of a so-called Phase 1 deal.
In fact, in the next two years, Beijing has committed to buying an extra $200 billion in U.S. agricultural, energy and manufactured goods.
Here’s How the Trade Deal Will Help Solar
Recovering from last year’s disappointing performance, U.S. solar industry has been in the headlines in 2019. Thanks to the robust increase in solar installations coupled with unexpected rapid growth in the states of Florida and Texas, U.S. solar stocks have rallied 66.4% year to date.
Rapidly increasing corporate investments in solar energy have been boosting the U.S. solar industry lately. New solar project announcements have led Wood Mackenzie to increase its forecast for 2020 and 2021 utility-scale installations by 2.5 GW and by 1 GW respectively.
In addition to the aforementioned catalysts, the latest trade truce should boost U.S. solar stocks’ growth. This is because phase one of the trade deal brings possible dilution in import tariff on solar cells and modules from China, along with increase in purchase of U.S. solar products by China in retaliation.
Solar Stocks to Gain
U.S.-based solar stocks along with international solar companies are expected to gain following the latest trade agreement between the two countries and further progress in the coming years. We are focusing on a few solar stocks, carrying a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Further, these companies’ shares gained following the trade truce news on Dec 12.
Canadian Solar: This Canada-based solar panel maker has surpassed the Zacks Consensus Estimate for earnings in the last four quarters, with the average being 82.23%. It boasts a solid long-term earnings growth rate of 32%. The company’s shares gained 2.5% on the day.
JinkoSolar Holdings: For this Chinese solar module manufacturer, the Zacks Consensus Estimate for current-year earnings indicates solid year-over-year improvement of 51.2%. It boasts a solid long-term earnings growth rate of 20%. The company’s shares gained 1.8% on the day.
Enphase Energy: For this U.S.-based solar inverter manufacturer, the Zacks Consensus Estimate for current-year earnings indicates solid year-over-year improvement of 790%. It surpassed the Zacks Consensus Estimate for earnings in the last four quarters, with average surprise of 21.28%. The company’s shares gained 1.7%.
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