Monthly Archives: September 2016

Cal-Maine Foods: Zacks’ Bear of the Day Play

Investing in poultry carries certain risks like, fluctuating volumes, and changing consumer tastes.  The combination of these risks have negatively impacted our Bear of the Day, Cal-Maine Foods (CALMFree Report) .  The company saw lower institutional demand for egg products which caused inventories to increase, and subsequently put pressure on the overall selling price.  To make matters worse, a USDA report showed that there has been an increase in chicks hatched, increasing the total supply which is resulting in more pressure on selling prices.

This Zacks Rank #5 (Strong Sell) company is engaged in the production, cleaning, grading, and packaging of fresh shell eggs for sale to shell egg retailers. The company is the one of the largest producers and distributors of fresh shell eggs in the United States. The company markets its eggs primarily in the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States.

Earnings Release

Cal-Maine Foods reported Q1 17 results on 9-26 where they posted year over year losses in multiple categories; Net sales are down -60.7%, amount of Dozen eggs sold fell by -6.4%, amount of Dozen eggs produced declined by -1.9%, Specialty egg pricing dropped by -20%, Specialty egg volume fell by -4.5%, selling prices fell by -58%, and net income plummeted to $0.64 per diluted share from $2.95 per diluted share in Q1 2016.

Management’s Take

According to Dolph Baker, Chairman and CEO, “Our results for the first quarter of fiscal 2017 reflect a disappointing shell egg market with more challenging market conditions and significantly lower market prices than the first quarter of fiscal 2016. Average customer selling prices dropped 58 percent from the record high levels we experienced a year ago. As the supply of shell eggs moved higher after the disruptions created by the Avian Influenza outbreak in the spring of 2015, market prices declined. Retail demand remained favorable; however, lower institutional demand for egg products and reduced egg exports pushed inventory levels higher and created additional pricing pressures. As cited in recent USDA Chickens and Eggs Reports, the increase in chicks hatched indicates the national laying flock will continue to expand. Based on this report, we expect the shell egg supply will continue to grow through calendar 2016, and then we may begin to see a correction early next year.”

Price and Consensus Earnings Estimates Graph

As you can see in the graph below, the stock price has been declining in 2016, and future earnings expectations are below the current stock price.

CAL-MAINE FOODS Price and Consensus

CAL-MAINE FOODS Price and Consensus | CAL-MAINE FOODS Quote

Declining Estimates

Due to their recent earnings report and previous hurdles facing the company, earnings estimates for Q2 17, Q3 17, FY 17 and FY 18 have all seen declines; Q2 17 dropped from $0.55 to $0.22, Q3 17 fell from $0.83 to $0.75, FY 17 dropped from $1.97 to $1.15, and FY 18 was moved down from $2.75 to $2.45.

Bottom Line

The USDA Chickens and Eggs Report showed that the national “laying flock will continue to expand” which means that Cal-Maine Foods will continue to see pressures on selling prices, volumes, and inventory through the remainder of the 2016 calendar year.

If you are inclined to invest in the Miscellaneous Food/Diversified sector you would be best served by looking into US Food Holdings (USFDFree Report) , and or Tate & Lyle ADR (TATYYFree Report) both of which currently carry a Zacks Rank #1 (Strong Buy).

So Where Are the Profitable Trades?

Be sure to short or avoid this Bear Stock of the Day. Now would you like to see Zacks’ recommendations that have the best profit potential? Starting today, for the next month, you can follow all our private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we’ve called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for all Zacks trades >>

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Finisar Corp: Zacks’ Bull of the Day Play

Upgrade cycles have large impacts on suppliers, and today’s Zacks Bull of the Day, Finisar Corp. (FNSRFree Report) is in the midst of two big ones.  Currently, China is in the middle stages of their fiber optical 100G upgrade cycle, and North America is in the beginning stages up the same metro cycle upgrade.  During the early stages of this upgrade cycle, Finisar has posted record revenues and margins have improved by more than 200 basis points.

This Zacks Rank #1 (Strong Buy) company is a provider of fiber optic subsystems and network test and monitoring systems which enable high-speed data communications over local area networks, or LANs, storage area networks, or SANs, and metropolitan access networks, or MANs. They are focused on the application of digital fiber optics to provide aline of high-performance, reliable, value-added optical subsystems for data networking and storage equipment manufacturers.

Recent Earnings

Finisar reported Q1 17 earnings in the early part of September where they beat both the Zacks Consensus Earnings and Revenue estimates for the second consecutive quarter (they have beaten the earnings estimates for four consecutive quarters).  The company saw year over year gains in the following; Revenues +7.1%, Operating income +100%, Net income +83.2%, and operating margins increased from +4.4% to +8.3%.  On a quarterly basis, the company saw gains in the following; Sales of telecom products +29%, Sales of Datacom products +0.2%, and GAAP gross margins rose to +31.7% from +28.4% last quarter.

Management’s Take

According to Jerry Rawls, CEO, “I am pleased to announce that Finisar achieved record revenues for our first quarter of $341.3 million, an increase of $22.5 million, or 7.1% compared to the prior quarter. This growth was primarily driven by strong demand for 100Gb/s transceivers in CFP, CFP2, CFP4, and QSFP28 form factors. In addition, demand for wavelength selective switches was strong. Our gross margins improved significantly due to favorable product mix and leverage of our vertically integrated manufacturing infrastructure over the larger volume. The combination of revenues being at the higher end of our guidance range and better than expected gross margins resulted in earnings per fully diluted share exceeding the upper end of our guidance range.”

Price and Earnings Consensus Graph

As you can see from the graph below, both earnings estimates, and the stock price have risen significantly in the second half of 2016.

FINISAR CORP Price and Consensus

FINISAR CORP Price and Consensus | FINISAR CORP Quote

Increasing Estimates

Due to the strong quarterly results and future growth expectations estimates for Q2 17, Q3 17, FY 17 and FY 18 have all seen significant upgrades over the past 30 days; Q2 17 improved from $0.21 to $0.38, Q3 17 rose from $0.21 to $0.38, FY 17 jumped up from $0.85 to $1.39, and FY 18 improved from $0.99 to $1.62.

Bottom Line

Over the past two quarters, revenues have more than doubled due a few reasons; China is in the middle stages of their 100G optical metro upgrade cycle with continued growth expected through 2017.  North America is now in the beginning stages of their metro upgrade with companies like Verizon boosting their 100G capability. Lastly, Finisar has enhanced their product mix, and margins have steadily improved over the past two quarters.

Now, which stocks should you sell?

As a Zacks Rank #1 Strong Buy, this Bull of the Day deserves consideration. But today there are 220 Zacks Rank #5 Strong Sells that demand even more urgent attention. If any of these are lurking in your portfolio, they should be removed immediately. Since 1988, such stocks have actually performed more than 11X worse than the S&P 500. See all Zacks Strong Sells and Strong Buys absolutely free >>.

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CF Industries: Zacks’ Bear of the Day Play

CF Industries Holdings Inc. (CFAnalyst Report) is expected to see sharply lower earnings in 2016 as the fertilizer market remains weak. This Zacks Rank #5 (Strong Sell) is forecast to see earnings drop by almost half this year.

CF Industries is one of the largest manufacturers of nitrogen products in the world. It operates nitrogen manufacturing complexes in the US, Canada and the United Kingdom with customers throughout the world.

It also owns a 50% interest in an ammonia facility in the Republic of Trinidad and Tobago.

A Tough 2016

On Aug 3, CF reported second quarter results and, for the fourth quarter in a row, it missed on the Zacks Consensus Estimate as the fertilizer market remained weak.

They haven’t been small misses either.

The second quarter miss was by $0.35. It reported just $0.33 but the analysts were expecting $0.68.

Fertilizer prices in North America continue to be pressured. Wet and cool weather delayed fertilizer applications in the second quarter and a high level of imported products in April and May pressured prices.

Net sales declined to $1.13 billion from $1.3 billion in the second quarter of 2015 due to lower selling prices across all segments.

There continues to be a worldwide oversupply of nitrogen products which is impacting prices.

Estimates Slashed Again

Given the big miss and the weak outlook in the industry, the analysts have been cutting both 2016 and 2017 estimates.

The 2016 Zacks Consensus Estimate has fallen to $1.18 from $1.32 in the past 30 days.

That is down from $2.00 just 90 days ago.

CF Industries made $3.88 in 2015 so that’s an earnings decline of 69.5%.

2017 isn’t looking much better, although the analysts do see a floor in the earnings drop.

They’ve been cutting 2017 estimates as well. The 2017 Zacks Consensus Estimate is now down to $1.29 from $2.27 just 3 months ago.

That’s an earnings increase of 9%, but it’s not much to cheer about given the huge cut in earnings in 2016. It does, however, indicate that the analysts expect some stabilization in fertilizer prices in 2017.

Shares Hit 2-Year Low

Shares continue to sink as the outlook for the fertilizer industry for the rest of the year is negative.

Does this make CF Industries a value stock?

Even with the shares hitting new lows, it’s still trading with a high forward P/E of 19.3. I wouldn’t consider it a value stock just yet.

The rest of the industry is seeing the same thing. There’s no where for investors to hide out. But Potash (POTAnalyst Report) and Agrium (AGUAnalyst Report) have decided to merge. That merger could have implications on the remaining big suppliers like CF Industries and Mosaic (MOSAnalyst Report) .

Want to know more about what is happening in the fertilizer industry?

Check out this podcast discussing if or when there may be a turnaround in this industry.

More Stocks to Sell. Now.

Beyond our Bear Stock of the Day, today’s list of 220 Zacks Rank #5 Strong Sells demand even more urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. Many appear to be sound investments but, since 1988, such stocks have actually performed more than 11X worse than the S&P 500.

See today’s Zacks “”Strong Sells”” absolutely free >>.

Tyson: Zacks’ Bull of the Day Play

Tyson Foods, Inc. (TSNAnalyst Report) is generating stable earnings and sales growth as its core food brands continue to provide stability. This Zacks Rank #1 (Strong Buy) is expected to have record earnings this year.

Tyson Foods is one of the leading food companies producing chicken, beef and pork. But it was its recent acquisition of food giant Hillshire Brands in 2014 that propelled the company into another category and provided earnings stability versus the up and down volatility of poultry and meat prices.

Its brands now include Tyson, Jimmy Dean, Sara Lee, Ball Park, Wright, Aidells, State Fair and Hillshire Farm. Its prepared foods include bacon, breakfast sausages, turkey, lunchmeat, hot dogs, pizza crusts, tortillas and desserts.

It has 400 facilities in the United States and around the world.

Another Big Beat in the Fiscal Third Quarter

On August 8, Tyson reported its fiscal 2016 third quarter results and easily beat the Zacks Consensus Estimate by $0.14.

Earnings were $1.21 versus the consensus of $1.07.

All operating segment results were in or above their normalized operating margin ranges with the Chicken segment being especially strong, seeing a record 13.9% return on sales.

Raised Full Year Guidance

On the back of strong momentum, Tyson raised full year earnings guidance to $4.40 to $4.50 a share, which is 40% higher than a year ago.

It expects record earnings this fiscal year.

As a result, the analyst also raised their estimates. The Zacks Consensus Estimate jumped to $4.52 from $4.35 over the last 60 days, which is slightly higher than the company’s guidance.

The analysts are also bullish on fiscal 2017 as the Zacks Consensus Estimate has jumped to $4.82 from $4.47 over the last 2 months.

That is earnings growth of 6.8%. Tyson believes it can get earnings growth up to the high single digits in fiscal 2017.

Additionally, on Sep 8, at the Consumer Staples Conference, Tyson confirmed its bullish stance.

Shares Near 52-Week Highs

Tyson shares have been trending higher in 2016.

But even though they’re trading near 52-week highs, they still have an attractive valuation. It has a forward P/E of 16.7 which is under the average of the S&P 500.

It has also been returning money to shareholders. In the fiscal third quarter, it spent $425 million to repurchase 6.6 million shares.

It also pays a dividend, currently yielding 0.8%.

For investors looking for a way to invest in the growing food industry, Tyson is one to keep on your short list.

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American Public Education: Zacks’ Bear of the Day Play

American Public Education (APEIFree Report)  is an online provider of higher education focused primarily on serving the military and public service communities.  The company operates through two segments, American Public Education and Hondros College of Nursing. American Public Education was founded in 1991 and is headquartered in Charles Town, West Virginia. The stock is the Bear of the Day after being downgraded to a Zacks Rank #5 (Strong Sell) and after poor earnings outlook earlier in the month.

APEI has a market cap of $300 million and a forward PE of 10. The stock sports Zacks Style Scores of “F” in Momentum after the stock  lost a third of its value after their last earnings report.

Q2 results

The company reported Q2 EPS on August 9thth, with the numbers coming in at $0.41 verse the $0.39expected. Revenues came in above the expected at $76.7 million against the $75 million expected.

While the quarter saw a beat, the outlook was pretty terrible. The company guided Q3 $0.26-31 verse the $0.37 expected. The company also expects revenues to slow 3-6% year over year. Perhaps the worst part was the new course registration, which was down 22% from last year.

Investors sold the stock down 25% on the EPS miss. There has been no relief since as the stock continues lower, down almost 40% since earnings.

So is it time to buy? Looking at estimate revisions, the answer is no.

Estimate Revisions

Over the last 60 days, estimates have been revised lower for all time frames. For fiscal year 2016, the numbers have been taken down 10%, from $2.04 to $1.84. For 2017, estimates are now seen at $1.52, down from $1.97 or 22%.

Investors should look for the stock to continue to come under pressure until estimates turn around. However, with new course registration down so much, the company might continue to see revisions to the downside.

A Better Option

Lincoln Education (LINCFree Report) is a Zacks Rank #1 (Strong Buy) that is a leading and diversified for-profit provider of a career-oriented post-secondary education headquartered in West Orange, New Jersey. It offers bachelor’s degree, associate’s degree, and diploma and certificate programs in automotive technology, skilled trades, healthcare services, hospitality services, and business and information technology areas to recent high school graduates and working adults.

Lincoln has a market cap of $56 million and has expected EPS growth of 10%.

On August 8th, the company beat EPS by a penny and beat on revenue estimates. Revisions to earnings estimates have spiked higher over the last year.

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So Where Are the Profitable Trades?

Be sure to short or avoid this Bear Stock of the Day. Now would you like to see Zacks’ recommendations that have the best profit potential? Starting today, for the next month, you can follow all our private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we’ve called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for all Zacks trades >>

Interface: Zacks’ Bull of the Day Play

Interface (TILEFree Report) is the largest manufacturer of modular carpet for commercial and residential applications. The company offers modular carpets and carpet tiles for use in commercial interiors, including offices, healthcare facilities, airports, educational and other institutions, hospitality spaces, and retail facilities, as well as residential interiors. The company is based in Atlanta, Geogia and employs over 3,300 employees. The stock is Zacks Rank #1 (Strong Buy) and todays Bull of the Day.

Interface has a market cap of $1 Billion with a Forward PE of 14. The stock sports Zacks Style Scores of “B” in both Value and Momentum. In addition, the company also sits in an industry that is ranked 34 out of 265 (Top 13%) in the Zacks Industry Rank.

Q2 Earnings

Interface reported Q2 in late July, seeing $0.32 versus the $0.28 expected. Revenue came slightly above expectations at $248.2 million verse $248 million. Gross margins ticked up to 39.9% verse 38.4% last year.

CEO Daniel Hendrix had some comments on margins: “For the sixth quarter in a row, we posted a triple digit year over year increase in gross margin, which was up 150 basis points to a quarterly record 39.9%. The improvement in gross margin offset nearly all of the 6% decline in revenue, and we kept SG&A expenses in check while continuing to invest in growth platforms such as market development and new product introductions.

Investors applauded the report. Sending TILE up 12% the day after earnings. The stock has since sold off back to pre-earnings levels, putting it at attractive levels. The next earnings report is October 26th and due to rising estimates and its surprise history, there is reason to believe Interface can repeat the move higher.

Surprise History

Last week’s beat was the second straight and the seventh over the last eight quarters. If the company can continue to beat the stock will try to repeat the move it saw in early 2015. This move saw the stock at its current levels, then went all the way to $26, a move of 50% in six months.

Relative Strength in the Sector

In addition to individual performance, the sector offers a great way to play housing. Suntrust points out that the STRH Building Products Index has outperformed the home builders and the S&P 500 in 2016.  Suntrust expects this to continue and has a $22 price target for TILE.

Estimates

Since the company reported estimates have been revised higher across all timeframes. Over the last 60 days, estimates for the current quarter are up 10%, from $0.29 to $0.32. For fiscal year 2016, estimates have gone 7.4% higher, from $1.08 to $1.16.

As the earnings approach keep an eye on what estimates are doing to give clues to how the quarter might pan out.

In Summary

Tile isn’t the most exciting company, but it offers a way into the hot building products secor with a nice setup. Entry over the $16 level allows for a good risk/reward opportunity. A trade can be executed here above $16 with a stop $14 (2016 lows) and a target of $22, or 37%.

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INTERFACE INC A (TILE) – FREE report >>

Build-A-Bear: Zacks’ Bear of the Day Play

Today’s Bear of the Day is Zacks Rank #5 (Strong Sell) Build-A-Bear (BBWSnapshot Report) . Build-A-Bear Workshop, Inc. operates as a specialty retailer of plush animals and related products. The company operates in three segments: Direct-to-Consumer, International Franchising, and Commercial. Its merchandise comprises approximately 30 styles of stuffed animals; clothing, shoes, and accessories for the stuffed animals; and other toy and novelty items. The company operates its stores under the Build-A-Bear Workshop brand name; and sells its products through its e-commerce Websites, buildabear.com and buildabear.co.uk. As of January 2, 2016, it operated 329 owned stores in the United States, Canada, the United Kingdom, Ireland, and Denmark; and 77 franchised stores in Europe, Asia, Australia, Africa, the Middle East, and Mexico. The company has strategic relationships with Disney, DreamWorks Animation, and Hasbro. Build-A-Bear Workshop, Inc. was founded in 1997 and is headquartered in St. Louis, Missouri.

A quick look at our price, consensus and EPS surprise chart paints a perfect picture of why this stock has the rank is does. After several years of positive earnings estimate revisions and growth in bottom line EPS, the company has seen earnings stagnate since 2015. A couple of huge earnings misses did little to help the bull case here. This year alone estimates have come down sharply for FY2016 and FY2017 earnings.

Over the last sixty days, 2 analysts have dropped their earnings estimates for the current year while only one has increased their number. The bearish sentiment has dropped the Zacks Consensus Estimate from 89 cents to 83 cents for the current year. A big chunk of that is due to current quarter estimates coming down from 22 cents to 11 cents. Last quarter the company reported a loss of 28 cents, in line with analyst estimates.

Investors looking for other names in the same industry should check out Zacks Rank #1 (Strong Buy) Itochu Corp (ITOCYSnapshot Report) or Zacks Rank #2 (Buy) Big 5 Sporting (BGFVAnalyst Report) .

More Stocks to Sell. Now.

Beyond our Bear Stock of the Day, today’s list of 220 Zacks Rank #5 Strong Sells demand even more urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. Many appear to be sound investments but, since 1988, such stocks have actually performed more than 11X worse than the S&P 500.

See today’s Zacks “Strong Sells” absolutely free >>.

CryoLife: Zacks’ Bull of the Day Play

While the name may bring to mind some sort of futuristic technology, today’s Bull of the Day probably doesn’t do what you think it does. Though it is in the medical instruments field, it’s got nothing to do with freezing tissues. According to its investor relations page, CryoLife (CRYSnapshot Report) is a leader in medical device manufacturing and distribution and in the processing and distribution of implantable living human tissues for use in cardiac and vascular surgeries.  It operates throughout the U.S. and internationally.  CryoLife manufactures and distributes BioGlue® Surgical Adhesive, an FDA-approved adjunct to sutures and staples for use in adult patients in open surgical repair of large vessels.  BioGlue is also CE marked in Europe for use in soft tissue repair and has received additional marketing approvals in several other countries throughout the world.  CryoLife’s BioFoam® Surgical Matrix is CE marked in Europe for use as an adjunct to hemostasis in cardiovascular surgery and on abdominal parenchymal tissues (liver and spleen) when control of bleeding by ligature or conventional methods is ineffective or impractical.  CryoLife distributes PerClot®, a powdered hemostat, in Europe and other select international countries.

A big reason for the Zacks Rank #1 (Strong Buy) here is three analysts have increased their earnings estimates for the current year while 2 have done so for next year. The bullish sentiment has pushed up the Zacks Consensus Estimate for the current year from 21 cents to 34 cents and increased next year’s number from 31 cents to 38 cents.

The stock has been on an absolute tear since breaking out on earnings the end of July. Since then, the price has gone from $12 to over $18. The selling pressure over the last couple of days has only brought shares back to $17.82, keeping the longer term bullish trend line very much intact. The commodity channel index has come down from an overbought position to just above the zero line at 24.31.

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This week, Zacks researchers have named 7 other stocks that look to break out even sooner than today’s Bull of the Day. You can see these time-sensitive tickers free, and access additional trades that are not available to the public. Simply click here >>.

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Red Robin Gourmet Burgers: Zacks’ Bear of the Day Play

The restaurant business is a notoriously difficult one. This may be especially true in the burger business, thanks to intense competition and a bit of a burger craze over the past few years which has once again focused consumers and investors on this market.

But after a flurry of IPOs, key changes at behemoth McDonald’s, and waning consumer and investor interest in the market, several companies are beginning to feel the pain in this cutthroat market. One such burger stock that has been having a rough time and really epitomizes this trend is definitely Red Robin Gourmet Burgers (RRGBAnalyst Report) .

Inside RRGB’s recent performance

Red Robin was really ahead of the curve with its more gourmet burgers and it was arguably one of the key leaders in the ‘better burger’ movement. This led to big stock price gains a few years ago, and led to massive returns for investors who had been in the stock for the long haul.

However, the incredible run came to an end in the summer of 2015 and the company has been on a downward trajectory—at least in terms of its stock price—ever since. In fact, the stock has lost about 39% over the past 52 weeks and it even missed earnings estimates in their most recent report. But that might not be the end of the pain for RRGB, at least if we look to recent earnings estimate revisions.

Recent Estimates

Analysts have been ratcheting down their expectations for RRGB’s upcoming quarter and the full year too in recent weeks. Not a single estimate for either the current quarter or the current year has gone higher in the past two months, while at least five have gone lower for both of the time periods.

And the magnitude of these declines has also been troubling, as the current quarter consensus has fallen by over 16% in the past two months, while the following quarter has seen a nearly 20% decline. The full year outlooks aren’t much better, as they have fallen by about 7.7% for the full year and over 8.7% for the following one, suggesting that more pain could be ahead for RRGB.

RED ROBIN GOURM Price, Consensus and EPS Surprise

RED ROBIN GOURM Price, Consensus and EPS Surprise | RED ROBIN GOURM Quote

That is why we currently have RRGB as a Zacks Rank #5 (Strong Sell) and why we are looking for this stock to continue its bearish run. Note that just five percent of all stocks that we cover receive this low grade, so it is hard to find companies that are worse-off from an earnings estimate look than RRGB is right now.

Other Choices

As you can see, you should probably avoid Red Robin stock right now, and at least until they can turn around their earnings estimate picture. In the meantime, there are plenty of other restaurant stocks to snack on, including a few ‘buy’ ranked stocks.

In particular, Wingstop (WINGSnapshot Report) or Papa John’s ( (PZZAAnalyst Report) look like solid buys these days, and have just been upgraded from ‘hold’ territory. Additionally, both beat earnings estimates last quarter, unlike RRGB, making them potentially better picks going forward for investors who want to stay in this corner of the retail market.

So Where Are the Profitable Trades?

Be sure to avoid this Bear of the Day stock. Now, would you like to see Zacks’ recommendations that have the best profit potential? Starting today, for the next month, you can follow all our private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we’ve called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for all Zacks trades >>

Newmont Mining: Zacks’Bull of the Day Play

Thanks to a few Fed member comments, some investors were worried that the Federal Reserve would shock the markets and hike rates in the September meeting. However, not only did the Fed keep rates at their current levels, but they actually lowered rate hike forecasts for the future as well.

So while a rate hike seems likely before the year is out, that could be it for a while. This is in somewhat sharp contrast to even just a few weeks ago, and it is a good reminder that the Fed is going to go low and slow for quite some time.

Market Impact & Where to Look Now

This shift in expectations has led to a nice boost for dividend stocks, foreign securities, and also anything linked to commodities. As the Fed looks to keep rates low investors will increasingly look to precious metals, which is great news for miners in the space.

That is why now could be a perfect time to look at the gold mining industry for some top picks, as securities here can act as leveraged plays on the movement in the price of gold, while the industry rank is currently in the top 50% too. And while there are plenty of great choices in this market, it is going to be hard to beat Newmont Mining (NEMAnalyst Report) in the near term.

Why NEM?

NEM is one of the larger and more established mining companies in the gold world, with a market cap over $20 billion. Like many companies in the space, it has been on a tear this year, with gains of over 100% in the time frame. But unlike several of its competitors, analysts are remaining bullish on the company’s prospects, as earnings estimates have been on the rise for this company.

In fact, not a single analyst has decreased their earnings estimate in the past two months for either the current quarter or the current year time frames. And it isn’t like the estimate shifts have been small either, as the current quarter consensus has increased by 20% in the past two months, while the full year figure has gone up about 28% in the same time frame.

Thanks to these figures, NEM is now projected to more than double earnings this quarter compared to last year, as it is projected to post earnings of 54 cents this quarter compared to 23 cents a year ago. And the full year is almost as impressive, as NEM is expected to grow earnings by 91% in that time frame as well.

NEWMONT MINING Price, Consensus and EPS Surprise

NEWMONT MINING Price, Consensus and EPS Surprise | NEWMONT MINING Quote

That is how NEM can maintain a forward PE below 22 despite its incredible gains this year, and why the company’s prospects for the near term remain bright. These recent estimates are also why NEM has earned itself a Zacks Rank #1 (Strong Buy), which puts the company into the top five percent of all the stocks we cover.

Bottom Line

The Fed’s actions, or really, the lack of action from the Fed, could spark a nice rally in precious metals and act as a catalyst for more gains in this surging space. Most companies already have nice earnings estimate revision trajectories, and this Fed situation only makes choosing this sector even more compelling.

And while there are several that could make sense for investors right now, it is hard to go against Newmont Mining in this environment. The company has a great track record in earnings season, still is a decent value, and is poised to grow earnings at an incredible rate too. Definitely give this company a closer look if you are seeking a top name in this in-focus corner of the market.

Now see our private trades

Today’s Bull of the Day is a promising buy that we’re sharing with the public. Now would you like to look behind the curtain and view all our private portfolios? Starting today, for the next month, you can follow them in real time from value to momentum . . . from stocks under $10 to ETF and option plays . . . from insider trades to companies that are about to report positive earnings surprises (we’ve called them with 80%+ accuracy). You can even be privy to portfolios so exclusive that they are normally closed to new investors. Click here for all Zacks moves >>

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