For immediate release
Chicago, IL – November 12, 2021 – Zacks.com announces the list of stocks featured on the Analysts Blog. Every day, Zacks Equity Research analysts discuss the latest news and events impacting stocks and financial markets. Recent stocks featured in the blog include: The Chemours Company CC, Lenovo Group Limited LNVGY, Ternium SA TX, Earthstone Energy, Inc. ESTE, and LendingClub Corporation LC.
Here are highlights from Thursday’s analyst blog:
Inflation hasn’t hurt sentiment, but should we play it safe?
These conditions are not normal. Bullish races in the markets are usually accompanied by lower inflation rates. And yet the market barely waved when the Ministry of Labor’s Consumer Price Index (CPI) for October showed a price increase of 6.2%, on top of a 5.4% increase. in September, to record the fastest rise in inflation since 1990.
It is true that part of the optimism stems from the fact that wage rates continue to rise while claims for unemployment benefits continue to fall. Thus, companies struggling with higher costs (the BLS Producer Price Index shows 8.6% inflation for October) due to supply chain issues and rising prices for the industry. energy have succeeded in passing these higher costs on to consumers. Until there.
At some point, however, something has to give.
Consumers will not always be flush with the money. In fact, some reports suggest they’ll overspend this holiday season with the attitude of self-indulgence and deal with 2022 later. This could translate into slowing demand next year as higher costs for food and shelter collapse, unless job vacancies remain high and wages continue to rise. And it probably is, based on reviews from companies operating in the workforce industry.
Rising vaccination rates and lower death rates are already increasing optimism in the service sector, which is therefore expected to return / hold on next year. The producer side is constrained by the supply chain, which is expected to normalize by mid-2022, when construction markets are also expected to normalize. Energy prices are high on the Fed’s to-do list. So let’s see how it goes.
We have essentially a few quarters of uncertainty, including a slight impact from the decline in bond purchases which is expected to start next month. While tapering normally has a cooling effect on inflation, the Fed suspects that this time around the increase in inflation is due to the supply chain, so it could have a negative impact on growth. . This means that the reduction will be gradual and slow.
But he could still withdraw money from riskier assets, including speculative stocks and cryptocurrencies.
So what’s the best way to play in this market? We could do a couple of things. First, we could look for safe stocks and second, supplement them with stocks that have very high growth potential. And preferably, look at faster growing industries to increase the chances of success.
The safest stocks are those that have an attractive growth profile, generate strong cash flow, pay a dividend, and always trade at attractive valuations.
An example is the ranking of Zacks # 1 (Strong Buy) Chemours, which belongs to the Chemical – Diversified industry (top 38%). The company is expected to grow 105% this year and 8% next year. Profit estimates for the two years are up 10% and 11% respectively over the past 30 days.
Although heavily impacted by the pandemic, cash flow is rebounding strongly. CC also pays a dividend which pays 3.17%. However, its P / E of 7.78X, P / S of 0.85X and PEG of 0.22 indicate that stocks are undervalued.
# 2 (Buy) ranked Lenovo Group, which belongs to the Computers – Mini-Computers sector (top 27%) is expected to grow 74% this year. Although profit growth is expected to be negative next year, the profit level will be well above 2020 levels. And estimates for both years continue to rise.
The company continues to generate strong cash flow without the negative impact of the pandemic; that’s understandable, because the pandemic has actually been a big boon to the PC market. Its dividend yields 5.80%. And yet, his P / E of 6.62X, P / S of 0.18X and PEG of 0.43 indicate that investors are discounting the potential of the company.
Ternium, which belongs to the Steel – Producers industry, has a Zacks # 2 rank. Profits are expected to increase 534% this year. Although expected to decline next year, estimated profits in 2022 are four times higher than 2020 levels. The company has also generated strong cash flow throughout the pandemic, which is expected to continue given the level of demand. And its dividend pays 5.16%. At the same time, its P / E of 2.13X, P / S of 0.57 and PEG of 0.12 indicate that stocks are cheap relative to the potential they offer.
And the following stocks look good in terms of growth potential in 2022-
Earth Stone Energy is currently expected to grow 150% this year and 97% next year. Over the past 30 days, Zacks’ consensus estimate for 2021 and 2022 has increased by 7% and 19% respectively.
Zacks # 1 ranked Loan Club belongs to the Financial – Miscellaneous services business sector (top 26%). It is expected to increase its profits by 107% to reach an earnings per share of 11 cents this year from the loss of $ 1.53 in 2020. Next year it is expected to rise 1282% to $ 1.52, at as the debilitating effect of the pandemic wears off.
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Ternium (TX): Free Stock Analysis Report
Lenovo Group (LNVGY): Free Stock Analysis Report
LendingClub (LC): Free Stock Analysis Report
Chemours (CC): Free Stock Analysis Report
Earthstone Energy (ESTE): Free Stock Analysis Report
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