For Immediate Release
Chicago, IL – June 20, 2017 –Zacks Equity Research CAI International (NYSE: CAI – Free Report ) as the Bull of the Day, Kroger (NYSE: KR – Free Report ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Broadcom (NASDAQ:AVGO) (NASDAQ: AVGO – Free Report ), Regeneron (NASDAQ: REGN – Free Report ) and Vodafone Group (NASDAQ: VOD – Free Report ).
Here is a synopsis of all five stocks:
This morning I stumbled across some very good news for a stock we are currently holding in Momentum Trader. Well ahead of its earnings report, not due out until mid-August, CAI International (NYSE: CAI – Free Report ) gave updated guidance for the upcoming quarter. Not only is it supposed to be good, but it’s absolutely fantastic. A game-changing report that could shoot this stock through the stratosphere. That’s why I’m naming it today’s Bull of the Day.
For those of you that don’t know CAI, CAI International is a global transportation and logistics company specializing in intermodal leasing, rail leasing and operations, and global logistics services. As of the last quarterly update, CAI owned more than 933,000 twenty-foot equivalent unit containers (TEUs). On top of its owned TEU fleet, CAI also manages additional containers totaling about 155,000 units for a total container fleet of about 1.09 million.
Last quarter, CAI’s net income was $5.3 million last quarter. The company estimates that Q2 net income will come in between $10.7 and $11.3 million or between 55 and 58 cents per share. That’s right folks, CAI is set to double its net income quarter-over-quarter. Their current utilization of their fleet is up at 97.7% and the company estimates this number will remain above 98% throughout Q3. Nearly all their containers are expected to be delivered in Q2 and Q3, with all under leases with an average term over 8 years.
Year-to-date CAI has already invested $370 million in new containers, with $105 million worth expected to be delivered in Q2 and $202 million delivered in Q3. With utilization so high and new containers already leased out, CAI also reached out to lenders to increase their loan commitment from $775 million to $960 million. This should help fuel a rally for several quarters to come.
Even before this recent news broke CAI was a Zacks Rank #1 (Strong Buy). A big reason for the favorable rank was three analysts increasing their EPS estimates for the current quarter and current year. The bullish sentiment pushed up our Zacks Consensus Estimate for the current quarter from 29 cents to 43 cents and increased the current year number from $1.19 all the way to $1.87.
The big story dominating the headlines last week was tech. The “tech wreck” on June 9th set the stage for a rough week for FANG stocks. Hidden among those headlines was a terrible week for today’s Bear of the Day, Kroger (NYSE: KR – Free Report ). The stock didn’t just have disappointing earnings report, which sunk the stock dramatically, but it also found out it’s now in a fight with one of the fiercest competitors on Earth in Amazon (NASDAQ:AMZN).
In case you’re not familiar with Kroger, the Kroger Co., together with its subsidiaries, operates as a retailer in the United States. It also manufactures and processes food for sale in its supermarkets. The company operates retail food and drug stores, multi-department stores, jewelry stores, and convenience stores. Its combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood, and organic produce; multi-department stores provide general merchandise items, such as apparel, home fashion and furnishings, outdoor living, electronics, automotive products, toys, and fine jewelry; and price impact warehouse stores offer grocery, and health and beauty care items, as well as meat, dairy, baked goods, and fresh produce items.
Kroger is the number one supermarket chain in the world by revenue. Thursday morning, Kroger’s earnings report revealed $36.3 billion in Q1 revenues, up 4.9% year-over-year. The figure actually beat consensus estimates calling for $35.5 billion. However, same-store sales dropped 0.2%, prompting CFO Michael Schlotman to blame deflation and a heightened competitive landscape. They slashed forward guidance from a range of $2.21 to $2.25 down to a range of $2.00 to $2.05 per share. That drop in guidance was enough to take shares down 17%.
Making things worse was Amazon’s announcement of its Whole Foods acquisition. Kroger was already reeling from price-slashing competition. With Amazon now a big part of the competition, Kroger is really in some trouble over the intermediate-term. Shares dropped another 9% as a result of the announcement.
Additional content:
Lazy, Unfocused Summer Is Here: Global Week Ahead
This Global Week Ahead has a unifying theme -- A Lazy, Unfocused Summer is here.
Yet that sentiment might be bullish stocks. No new news may be good news -- in this upward trending market -- driven by momentum, mostly.
The week’s equity trading slate should focus on share price recovery (or the lack of one) in the FANG large caps. The sudden tech sell-off wants to morph into a ‘buy the dip’ event. Futures on Monday were full of green arrows. The S&P 500 hit another all-time high at the open.
Valuations got rich on the big momentum stocks in the tech space in 2017. Then, Goldman Sachs (NYSE:GS) put out the early June warning that shot down these stocks from their dizzy heights. This Summer Solstice week will usher in the new big moment. We will see what the major trading houses conspire to next.
The published slate of activity shows a potpourri of macro speakers and macro data prints. There is no concentrated spot to point out. I list them by region below.
In the USA , Fed speakers get unleased on risk markets. Their self-imposed silence ends from last week’s FOMC meeting.
(1) On Monday, NY Fed President Bill Dudley (always voting) kicks it off. He hosts a roundtable in Plattsburgh, New York. Chicago Fed President Charles Evans (voting 2017) follows that evening. He speaks on current conditions and monetary policy.
(2) On Tuesday, Vice Chair Stan Fischer (always voting) speaks from Amsterdam in the Netherlands. This will be followed by Boston Fed President Eric Rosengren (nonvoting 2017) and Dallas Fed President Rob Kaplan (voting 2017).
(3) On Friday, Cleveland Fed President Loretta Mester (alternate 2017) and St. Louis Fed President Jim Bullard (nonvoting 2017) get the final Fed words in.
In Latin America on Thursday, we get to watch: will Mexico's central bank hike again?
Consensus thinks there will be a 25 basis point rate hike, from 6.75% to 7.0%.
Mexican CPI inflation may hit +6.6% y/y; up from +6.3% y/y in a prior reading. This inflation rise should be used to justify the new rate hike. Note: Governor Carsten moves on to the Bank for International Settlements (the BIS) in July.
In Asia on Monday , Chinese property prices get updated. Look for any tardy evidence of needed home price cooling — gratis tighter macroprudential measures.
“Macroprudential” means the measures are targeted to just this particular housing sector problem, not the broad economy. It’s the latest fad in macroeconomic policy writing.
In Europe this week , Eurozone purchasing managers’ indices (PMIs) and deferred comments by BoE Governor Mark Carney should be the big focus.
On Thursday and Friday, the European week ends with another EU Leaders Summit.
Reuters reported on a draft of the joint statement. It emphasized security and defense, anti-protectionist trade warnings, and support for continuing the fight against climate change. Those are all in open conflict with the latest from the USA’s new administration.
But more important, consider it an open message of European unity.
Top Zacks #1 Rank (STRONG BUY) Stocks—
Broadcom (NASDAQ:AVGO – Free Report ): This major semi $96 billion market cap stock is also a long-term Zacks VGM score of B. Let’s watch how it performs in the rebound week ahead.
Regeneron (NASDAQ:REGN – Free Report ): This is the darling of the big biotechs. This $48 billion market cap growth stock priced at a hefty $480 a share lately, is a key component in the iShares Biotech ETF, and usually leads it up or down.
Vodafone Group (NASDAQ:VOD – Free Report ): This is a big $77 billion market cap European wireless telco stock. Let’s see if the stock price gets moving on better PMIs out of Europe this week.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
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Kroger Company (The) (NYSE:KR
Broadcom Limited (AVGO): Free Stock Analysis Report
Regeneron Pharmaceuticals, Inc. (REGN): Free Stock Analysis Report
Vodafone Group PLC (LON:VOD
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