For Immediate Release
Chicago, IL – May 8, 2020 – Zacks Equity Research Shares of SpartanNash (SPTN - Free Report) as the Bull of the Day, Group 1 Automotive (GPI - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Twilio (TWLO - Free Report) , Uber (UBER - Free Report) and Twitter (TWTR - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
With everybody hunkering down at home nowadays, on quarantine while COVID-19 rages, there’s been a shift in consumer spending habits. Rather than spending money on fancy trips and nights out on the town, most people are using the lion’s share of their budgets at the grocery store. That’s helping to provide a solid tailwind for businesses surrounding grocery stores. Today’s Bull of the Day is in the food distribution business, benefiting directly from this new trend.
Today’s Bull of the Day is Zacks Rank #1 (Strong Buy) SpartanNash. SpartanNash Company distributes and retails grocery products. It operates in three segments: Food Distribution, Military, and Retail. The Food Distribution segment offers approximately 52,000 stock-keeping units. The Military segment sells and distributes grocery products to military commissaries and exchanges located in 39 states across the United States and the District of Columbia, Europe, Cuba, Puerto Rico, Honduras, Bahrain, Djibouti, and Egypt.
The reason for the favorable Zacks Rank is the recent bullishness coming from analysts. Over the last sixty days, analysts have increased estimates for the current quarter and current year. The bullish activity has pushed up the current quarter Zacks Consensus Estimate from 22 cents to 38 cents. Current year consensus is up from $1.23 to $1.39. If earnings hit the mark, that would represent 58% year-over-ear EPS growth for the current quarter and 26% growth for the current year.
This positive earnings trend is new for shares of SPTN. This is a stock which struggled as EPS estimates were subdued from early 2017 through mid-2019. The downward trend in EPS estimates pushed the stock down from highs near $40 to lows under $10. While price trends can reverse on a dime, earnings trends take much longer to develop. The new, positive trend began earlier this year. Now that earnings have bottomed out and turned to the upside, it looks like there is a good chance SpartanNash can continue its run off the lows.
Bear of the Day:
You don’t have to be an industry insider to recognize that the auto business is taking a big hit during this quarantine. Dealerships are open, but they are facing insurmountable odds. Putting your Hancock on a sales agreement often times means committing significant financial resources not only upfront but for an extended period of time. That’s just not the sort of thing consumers do when they’ve lost their jobs or are concerned with the future. Low rates and deals help get folks in the door, but there is nothing easy about converting those folks to sales.
It’s no wonder that the Automotive – Retail and Wholesale industry is in the Bottom 1% of our Zacks Industry Rank. Today’s Bear of the Day is a company in that industry, Zacks Rank #5 (Strong Sell) Group 1 Automotive.
The reason for the unfavorable Zacks Rank lies in the series of earnings estimate revisions coming to the downside from analysts all over Wall Street. Over the last thirty days, two analysts have slashed their earnings estimates for the current quarter while four have done so for the current year. The bearish moves have cut current quarter consensus EPS from $3.16 ninety days ago to a loss of $1.96. Current year numbers have come down from $12.05 all the way to $5.97. That would be a contraction of 45.38% year-over-year.
With the industry down near the bottom of our Zacks Industry Rank, there are no stocks with a Zacks Rank higher than a Zacks Rank #3 (Hold).
Why Twilio (TWLO - Free Report) Shares Are Surging
Twilio's AI-powered platform as a service (PaaS) continues to drive exceptional growth in Q1, despite the economic disruption. The company reported March quarter results Wednesday night and blew expectations out of the water on every metric estimated. TWLO shares were up over 25% on open Thursday morning, and they continue to rip higher.
Twilio's unmatched AI capabilities in its remarkable customer engagement platform could mark the end for foreign call centers. Wednesday's results have further illuminated the unique opportunity that TWLO can provide to investors' portfolios for the future.
I have been a believer in TWLO for some time and have consistently pitched these shares as a buy in my editorials. If you were lucky enough to get into this gold mine at any point before today, you are reaping the benefits.
The Rare Tailwind
In previous market downturns high-beta, growth-oriented, tech companies like Twilio would have gotten crushed by the economic uncertainty, but we are living in an entirely different world today. Society has never relied on technology more. Technology is what is allowing us to get through this pandemic, and it is what will thrive in the post-pandemic world.
The pandemic has illuminated the risk and expense associated with outsourcing overseas. US companies are looking for a way to bring their operations abroad back to the homeland, and there is no better or more cost-effective way to do that then automation.
Twilio's unique customer engagement cloud platform can automate call-centers and move this historically outsourced operation back home. The platform will reduce foreign reliance, cut costs, and overall improve enterprises' customer interactions.
In response to the recent pandemic, the company said, "at times, it feels like Twilio was built for the challenges brought about by the COVID-19 crisis. We provide three things the world has needed during this crisis: digital engagement, software agility, and cloud scale."
This business drove its revenues up 57% year-over-year (YoY) mostly organically and now has more than 190,000 active accounts. Twilio was one of the rare company's that provided forward guidance for Q2 earnings, though it did withdraw its full-year guidance. Q2 guidance came in substantially higher than current estimates, which added to some of TWLO's upward momentum. Twilio has beat analysts' estimates every quarter since the company went public in 2016, and I anticipate that this will continue.
We Are Using Twilio More Often Than We Think
Twilio's AI-powered PaaS is trusted by many enterprises that rely heavily on customer satisfaction for continued growth. Companies like Uber, Airbnb, DoorDash, Twitter, and countless others depend on Twilio's smart platform to keep their customers happy.
There is a good chance that you have interacted with this exceptional PaaS at some point in your recent life. Twilio's capabilities are only going to improve, and its adaptation will continue to grow.
Twilio controls a niche cloud market with an enormous addressable market. This pandemic has provided the platform with an opportunity to prove its value, and Twilio has not disappointed.
I would not chase this share price surge today but wait for a marginal pullback. Twilio is proving itself as a reliable long-term investment, and I do not think that we will see these shares come back to $100, but I wouldn't hesitate to buy TWLO at any price below $130.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
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