For Immediate Release
Chicago, IL – March 25, 2020 – Zacks Equity Research Shares of DHT Holdings (DHT - Free Report) as the Bull of the Day, TripAdvisor (TRIP - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on ServiceNow (NOW - Free Report) , CrowdStrike (CRWD - Free Report) and Nvidia (NVDA - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
DHT Holdings is a Zacks Rank #1 (Strong Buy) that operates a fleet of double-hull oil tankers on international routes. DHT pursues a strategy of stable and visible distribution, while positioning the company to use cash flow to fund future growth opportunities.
Recent events in the crude oil markets has the tanker and storage groups in high demand. In addition, rising estimates and tanker rates make this stock attractive at these levels.
Saudi’s oil pump and COVID-19
Saudi Arabia’s decision to flood the global markets with crude oil sent shockwaves through the energy markets. Both oil and gasoline prices have been cut in half in under a month. Crude oil has gone from above $40 a barrel to $20, while gasoline futures have fallen from $1.50 to $0.50.
The companies that have exposure to energy prices, such as oil services and refiners, have seen tremendous pressure on shares. Some American shale companies likely won’t survive the fundamental change in the industry.
In addition, the global shutdown due to the COVID-19 virus has crushed demand. Oil and gas helps people move and when humans are not moving there is reduced demand for those commodities. Since governments have shut down much of the global economic demand, we see an unprecedented oil glut that is amplifying the situation.
Where to put the oil?
Typically an oil tanker, also known as Very Large Crude Carrier or VLCC, would take crude from point A to point B. But because there is such a large excess of oil and nowhere to take it, these tankers are being hired to just sit and hold the oil. Because of this demand for VLCCs is so high, rates are going though the roof.
Rates have accelerated in March, going from just over $30,000 a day to close to $300,000 a day. While they have fallen from their peak, it looks like a bull market for the VLCCs in 2020. The Saudis seem to half no intention on backing down from pumping and COVID-19 is has yet to peak globally. For this reason, both the supply and demand side will leave the world flooded in oil.
DHT has seen its estimates shoot higher because of the higher demand and rates. For the next quarter, estimates have gone from $0.17 to $0.78 over the last 30 days, a rise of 358%. For fiscal year 2020, estimates have jumped from $1.11 to $1.76, a hike of 59%% over the same time frame. These estimates are coming purely from this extra cash that will be generated from the higher tanker rates.
This could be just the start of a bull market for the tankers as the glut continues to build. While rates might have peaked, DHT and other tankers will generate earnings power. While the cash flow could be used to improve the balance sheet or grow, shareholders should expect big dividends. Even if this high tanker rate environment doesn’t last to the end of the year, the tanker group will have improved fundamentals.
In a stock market that has been dominated by the bears, the tanker group has been a solid bull. DHT has two potential payouts for shareholders. One in the form of dividends derived from higher rates and the other in capital appreciation from improved fundamentals. The tanker group is extremely volatile and investors should be monitoring and change in the VLCC atmosphere.
Bear of the Day:
TripAdvisor is a Zacks Rank #5 (Strong Sell) that is one of the largest travel research companies in the world. The company offers a platform that allows users to share reviews and opinions for hotels, destination attractions and restaurants. All of which are shut down at the moment.
At the beginning of the year, TRIP had a market cap of about $4 billion. This has been cut in half as the company’s source of income, travel has been eliminated by global governments trying to stop the COVID-19 virus from spreading.
When things open back up, it isn’t clear that things will go smooth for TRIP. Permanent damage has likely been done to the hospitality industry and a quarter of lost revenue will create a lot of uncertainty for the company going forward.
Plunging estimates are showing investors there is no reason to be in the stock. The current quarter has seen estimates fall from $0.31 to $0.25 over the last 30 days. The current year has seen a fall from $1.84 to $1.41, a drop of 23%. Every analyst covering the stock has lowered estimates for fiscal year 2020, with 10 revisions lower over the last 60 days.
Previous Earnings Misses
TripAdvisor has had a rough go of it when it comes to EPS. The company has disappointed on earnings three out of the last five quarters. While last quarter saw a surprise to the upside, the upcoming quarters look to be disastrous. Many analysts have recently cut revenue estimates for the company and the sector as a while. Moreover, the US Travel Association has said that as much as $355 Billion in travel revenue will be wiped out this year
The company recently withdrew its 2020 guidance due to COVID-19 and will likely update when the company reports earnings in May.
There is going to be a significant struggle in the travel industry for the rest of the year. Even when the lockdowns are lifted, governments will continue quarantines in certain areas making travel unattractive. Considering the trend from TRIP before the outbreak, I would expect the worse is yet to come. Investors should shy away from any stock in the sector until there is evidence of a turnaround and even solvency.
3 Growth Tech Stocks for Long-Term Investors to Buy
Stocks surged Tuesday on signs that the long-awaited economic stimulus deal might be signed in Washington. On top of that, the Fed on Monday said it would purchase practically unlimited amounts of government debt to help provide liquidity and extend loans to big and small businesses amid the coronavirus economic downturn.
The coronavirus selloff saw the S&P 500 fall 30% in 22 days, which was the fastest ever recorded. Despite Tuesday’s jump, with all three major U.S. indexes up around 7% through morning trading—and the Dow up 8.4%—the uncertainty of the spreading coronavirus and its economic impact creates a rough spot for Wall Street.
With that said, longer-term investors don’t need to attempt to call a bottom, which is often only truly possible in hindsight. Instead, investors can start to take smaller positions in solid companies, with long-term growth prospects.
Today, we break down three growth-focused tech stocks that investors might want to consider buying, or at least putting on their watchlists as the U.S. government tries to help stabilize the market and the economy as the coronavirus spreads.
ServiceNow was founded in 2004, went public in 2012, and was added to the S&P 500 index in November. The firm provides cloud-based services and solutions to its over 6,200 enterprise customers, which includes “nearly 80% of the Fortune 500.” ServiceNow’s tagline is that it “makes work, work better for people.” The digital workflow company topped our Q4 estimates at the end of January and earlier this month it introduced new artificial intelligence features to its business software aimed to help fix practical problems.
Last summer, ServiceNow expanded its partnership with Microsoft to help NOW sell to highly regulated industries and house its full SaaS offerings on MSFT’s Azure cloud—one of Amazon’s biggest rivals. The company has also continued to expand its larger customer base and it closed fiscal 2019 with 892 total customers with over $1 million in annual contract value, up 32%.
Looking ahead, our Zacks estimates call for NOW’s sales to climb 28% in 2020 and another 26.5% in fiscal 2021 to hit $5.59 billion, which would come on top of 2019’s 33% expansion. Meanwhile, its adjusted earnings are projected to soar 29% in both 2020 and 2021 to reach $5.52 a share. NOW is currently a Zacks Rank #3 (Hold) that rocks an “A” grade for Growth in our Style Scores system.
ServiceNow appears to be a solid longer-term buy given its ability to expand as more businesses transform their operations for the digital age. Plus, CFO Gina Mastantuono said last quarter it’s looking to “scale our business to $10 billion in revenue and beyond.” NOW shares have soared in recent years, but they are down about 23% from their 52-week highs. ServiceNow is certainly not a value play, but it is trading at its lowest forward sales multiple in the last 12 months.
CrowdStrike was founded in 2011 and went public in June 2019. The firm focuses on cloud-delivered endpoint protection “built to stop breaches.” CRWD shares have soared over 55% since last Monday and it topped our Q4 fiscal 2020 earnings and revenue estimates on March 19. The cybersecurity firm also provided upbeat guidance amid the ongoing coronavirus economic downturn that has forced many to work remotely.
The firm’s free cash flow came in at $12.5 million, against 2019’s negative $65.6 million. Plus, CrowdStrike has attracted larger clients to its SaaS subscription-based model. Despite CrowdStrike’s recent climb, CRWD stock rests 45% below its 52-week highs. And its strong longer-term earnings revision picture helps it hold a Zacks Rank #1 (Strong Buy) right now. And despite the firm providing conservative, coronavirus-based guidance, it still came in far above Wall Street estimate.
Our Zacks estimates call for the company’s fiscal 2021 revenue to surge 52% to reach $730.06 million, with its 2022 sales set to jump another 28% higher to $936.31 million. Plus, CRWD’s adjusted fiscal year loss is expected to be cut in half from -$0.42 to -$0.21 a share in 2020. Then it is projected to post positive adjusted earnings of +$0.04 in FY22.
In the end, CrowdStrike appears to be somewhat immune to the coronavirus selloff because as firms big and small start to work remotely, their cybersecurity concerns hardly disappear. CrowdStrike also clearly looks poised to grow in the long run as part of the growing cybersecurity industry, which means now might not be the worst time to think about taking a small position in the tech stock trading at $55 a share.
Nvidia is a GPU giant that returned to growth and wowed Wall Street when it easily topped our fourth fiscal 2020 earnings and revenue estimates in mid-February. NVDA’s video game business remains strong as its graphics chips provide more realistic gameplay to the $152 billion global gaming market. Perhaps more importantly, it has expanded its data center business, which is vital in the cloud computing age.
Plus, the company is set to benefit from the expansion of artificial intelligence, IoT, and more.“New NVIDIA computing applications in 5G, genomics, robotics and autonomous vehicles enable us to continue important work that has great impact,” CEO Jensen Huang said in prepared remarks. “We are well positioned for the greatest technology trends of our time.”
Nvidia’s longer-term earnings revisions have soared since it reported to help it earn a Zacks Rank #2 (Buy), alongside an “A” grade for Growth. NVDA’s adjusted fiscal 2021 earnings are projected to jump over 32% on the back of 20.2% higher sales. The company’s 2022 sales are then set to jump 16% higher to lift its EPS figure by over 19%.
NVDA stock has also already showed signs of a comeback after its initial coronavirus selloff. Shares of Nvidia have soared over 25% since Monday, March 16. Yet they still rest over 22% below their 52-week highs. And NVDA pays a dividend, even though its yield rests at only 0.30%.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>
Zacks Investment Research
800-767-3771 ext. 9339
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
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/performance for information about the performance numbers displayed in this press release.