For Immediate Release
Chicago, IL – October 12, 2020 – Zacks Equity Research Shares of The Kroger Co. KR as the Bull of the Day, Hyatt Hotels Corporation H asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on ResMed Inc. RMD, LHC Group, Inc. LHCG and NovoCure Limited NVCR.
Here is a synopsis of all five stocks:
The new stay home economy has brought tough times for several industries. At the same time, it has created opportunities for profits. All those dollars folks used to spend on going out to restaurants and going on trips has transitioned. By paying attention to stocks which have seen earnings estimates rise in the wake of this shift, investors can be better positioned to make money over the long term. Choosing stocks in the good graces of the Zacks Rank uncovers these stocks.
One such stock is today’s Bull of the Day, The Kroger Co. The Kroger Co. operates as a retailer in the United States. The company operates supermarkets, multi-department stores, marketplace stores, and price impact warehouse stores. Its combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood, and organic produce; and multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products, and toys.
The Retail – Supermarkets industry is in the Top 11% of our Zacks Industry Rank. Kroger itself is a Zacks Rank #1 (Strong Buy). In addition to that favorable ranks, KR enjoys a Zacks Value Style Score of A, Growth of C, and Momentum of B to help it round out with a VGM Composite Score of A.
The reason for the favorable Zacks Rank stems from a barrage of positive earnings estimates coming from analysts. Over the last thirty days, nine analysts have increased their estimates for the current year and next year. The bullish sentiment has increased the Zacks Consensus Estimate for the current year from $2.84 to $3.28, while next year’s number went from $2.57 to $2.69. The $3.28 number for this year represents year-over-year EPS growth of 49.09%. That’s on revenue growth of 8.24%.
It does not take an in-depth analysis to realize that the hotel industry has been under serious pressure during the worldwide COVID pandemic. It could take years for the industry to bounce back. Many hotels are going to go completely out of business. Today’s Bear of the Day gives me a chance to take a closer look at one big name in the hotel industry to see how bad the earnings outlook has been hit.
I’m talking about Hyatt Hotels. Hyatt Hotels Corporation, a hospitality company, develops, owns, operates, manages, franchises, licenses, or provides services to hotels, resorts, and other properties. As of June 30, 2020, its hotel portfolio consisted of approximately 900 hotels in 65 countries.
Currently, Hyatt is a Zacks Rank #5 (Strong Sell). The reason for the negative Zacks Rank is the series of negative revisions coming from analysts. Over the last sixty days, six analysts have cut their earnings estimates for the current year while five have done so for next year. The impact has been rather dramatic and bearish. Current year Zacks Consensus Estimates were cut down from a $3.04 loss to at $4.42 loss. Next year’s number has been cut from a 50-cent loss to a $2.02 loss.
While a $2.02 per share loss is not something long-term investors want to see, it’s important to point out the growth here. Analysts are forecasting EPS growth of 54.36%. Looking at the revenue numbers, current year revenues are slated to come in at $2.32 billion. That is a 53.79% contraction in sales for this year. Next year, that number is forecast to balloon 56.96% to $3.64 billion. The bottom line here is, the stock is down but not out.
The Hotels and Motels industry currently ranks in the Bottom 9% of our Zacks Industry Rank.
3 Large-Cap MedTech Growth Stocks to Buy Amid the Pandemic
The global economy continues to reel under the impact of the coronavirus pandemic. This is reflected in the consistent tumble across several global stock market indices over the past few months and a worsening unemployment scenario.
Despite a temporary market rebound and a drop in unemployment rate around June, investor sentiment remains largely diluted owing to resurgence in fresh COVID-19 cases in several regions of the United States.
Per a report by Fitch Ratings published in September, the global GDP is expected to contract as much as 4.4% in 2020.
Glimpse Into MedTech Scenario
So far, the impact of the pandemic on the MedTech sector has been mixed. In the initial months of the pandemic, global manufacturing and supply chain disruptions as well as deferral of elective medical/surgical procedures wreaked havoc on the MedTech sector, causing many to slash or withdraw their full-year guidance.
However, the industry, being more resilient than others, saw tables turn from the second quarter of the year. Several MedTech players’ second-quarter results highlighted sequential business improvement through April, May and June as elective procedure volumes started picking up pace, albeit slowly. This encouraging trend is expected to have continued through the soon-to-be-reported third quarter.
As a result, lately investor confidence has started improving on several MedTech stocks, thanks to a number of positive developments like the launch of COVID-19 diagnostic tests and strong consumer interest toward digital healthcare options, including remote monitoring technologies.
Best Strategy for MedTech Investors Now
In the midst of a volatile economy, it’s always difficult to ascertain whether the current market trend will persist. Under such situations, it would be prudent to bet on MedTech stocks with a large market cap as these are more adept at thriving than the smaller stocks in this space. Large-cap stocks are usually backed by solid long-term growth potential. Notably, due to the ongoing pandemic-induced panic-selling, prices of many of such stocks have been dragged down, making them trade at cheaper rates.
3 Impressive Stocks to Bet On
The following are a few MedTech companies with market cap of more than $1 billion and Growth Score of A or B. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.
ResMed: In September 2020, this Zacks Rack #2 company introduced its AirTouch N20 nasal mask, the company’s first CPAP nasal mask equipped with a memory foam cushion and softest nasal mask ever. In May 2020, the company launched a cloud-based remote monitoring software for ventilators and Lumis bilevel devices across Europe, via its AirView platform.
The company has a Growth Score of A and a market cap of $24.74 billion.
For the next five years, the company’s earnings growth rate is anticipated at 13.9%, which is favorable compared to the industry’s 13.7%.Over the past year, the company’s shares have outperformed the industry. The stock has gained 33.6% compared with the industry’s 6.2% growth.
LHC Group: In October, this Zacks Rack #2 company finalized two new joint venture (JV) agreements in Georgia and acquired a hospice provider in Colorado, each effective Oct 1. In August, the company signed a definitive JV agreement with University Health Care System to enhance home health and hospice services across eight cities in Georgia and South Carolina.
The company has a Growth Score of A and a market cap of $6.97 billion.
For the next five years, the company’s earnings growth rate is anticipated at 13.1%, which is favorable compared to the industry’s 12.5%. Over the past six months, the company’s shares have outperformed the industry. The stock has gained 58.7% compared with the industry’s 51.9% growth.
NovoCure Limited: This Zacks Rack #2 company exited the second quarter with better-than-expected results. The year-over-year top and bottom-line growth of the company has been encouraging. The company is currently working on strengthening its foothold in the cancer treatment space by developing and commercializing its innovative therapy, Tumor Treating Fields. For investors’ note, Tumor Treating Fields is the company’s proprietary platform technology.
The company has a Growth Score of A and a market cap of $12.84 billion.
For 2021, earnings growth rate is anticipated at 94.4%, which is favorable compared with the industry’s 25.9%.Over the past six months, the company’s shares have outperformed the industry. The stock has gained 84.7% compared with the industry’s 51.9% growth.
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