The Zacks Analyst Blog Highlights: Kraft Heinz, Coca-Cola Amatil, Craft Brew Alliance, Coty And McCormick & Company

For Immediate Release

Chicago, IL – September 12, 2016 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Kraft Heinz Company (KHC),Coca-Cola Amatil Ltd. (CCLAY),Craft Brew Alliance Inc. (BREW),Coty, Inc. (COTY) and McCormick & Company (NYSE:MKC), Inc. (MKC).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Friday’s Analyst Blog:

Kraft Heinz and 4 Other Surprising Stocks with Momentum

The 4.4% year-over-year rise in consumer expenditure in the second quarter is something that investors can cheer about. The main U.S. GDP contributor, consumer expenditure accounted for 2.94 percentage points of GDP growth, the highest in more than a year.

The impressive consumer spending growth has also helped to counter the negative impact of business inventories. It is noteworthy that GDP grew 1.1% in the second quarter, lower than the initial estimate of 1.2%, despite the robust consumer spending level due to lower business inventories.

However, markets were plagued by a number of macroeconomic factors since the beginning of 2016 that have created major volatility in the trading sessions. But fortunes turned around recently, with improvement in job numbers, rebounding oil prices along with indications of low volatility in the markets by the CBOE Volatility Index (VIX). So far this year, the DJI and the S&P 500 have improved a respective 6.05% and 6.72%.

Again, figures from the Federal Reserve Bank of Atlanta, one of Fed’s 12 regional banks, may offer some hope. It expects the U.S. economy to grow at an annualized rate of 3.5% in the third quarter as per the data released on Sep 2, up from 3.2% on Sep 1.

Importantly, consumer confidence – a key determinant of the economy’s health – grew during the month of August, indicating that the economy is on the recovery path after a dismal show during the first half of the year. In August, consumer confidence surged to its highest level in 11 months. The consumer confidence index increased 4.4 points to 101.1, well above the expected level of 97.4.

Keeping in mind the positive momentum and optimism surrounding economic growth, inflation and the labor market, momentum investing should be a winning strategy for investors seeking higher returns in a short spell. Given an improving labor market and the gradual rise in wages, we expect consumer spending – which accounts for over two-thirds of the U.S. economic activity – to improve.

Picking the Right Stocks

Finding the right stocks to invest is always a challenge. It is more so with an uncertain third-quarter earnings season around the corner. Although we have enough evidence that the economic picture is likely to improve in the third quarter due to improved residential construction and strong labor market conditions, picking consumer stocks should be a smart choice at this time owing to their defensive nature.

The Momentum Style Score is an indication of the time to buy a stock to benefit from rising share prices. The highest score is an A, so getting in on an A and out on a B or C could be a strategy for short term gains. For a more in-depth understanding, check out our Style Score System.

But investors should bear in mind that this is a speculative strategy and not meant for the weak hearted.

That said, we pair the momentum score with a Zacks Rank #1 (Strong Buy) or #2 (Buy), which as you know, indicates stocks with high chances of outperforming the market over the next 1-3 months. One of the main factors driving the Zacks Rank is estimate revisions, so stocks with high ranks as well as high momentum scores have even greater chances of short-term appreciation.

Here, we’ve picked five consumer staples stocks for momentum investors based primarily on these two factors:

The Kraft Heinz Company (KHC)

Although this Pittsburgh, PA-based packaged food company has been witnessing soft sales in the recent times, cost savings have led to improved margins, mainly in the developed markets of the U.S. and Europe. A portion of its savings is also being re-invested in the business for innovation, brand building and marketing to stimulate top-line growth.

The company has implemented many cost-saving initiatives including the integration of Kraft Foods (NASDAQ:KHC) and Heinz. Management plans to save $1.5 billion in annual costs by the end of 2017, mainly through workforce reductions, factory closures and consolidations. The company has garnered about $535 million of cost savings in the first half 2016. The company is also working for whitespace expansion of the Kraft and Heinz brands in both food services as well as international channels.

Zacks Rank: #2

Momentum Score: ‘A’

The company has an expected 3-5 year earnings growth rate of 19.54%. The company has been topping expectations in the recent past and has an average four quarter positive surprise of 5.22%. What’s more, estimates for 2016 and 2017 have jumped a respective 5.5% and 3.1% in the last 60 days. Its share price grew 22.58% year-to-date.

Coca-Cola Amatil Ltd. (CCLAY)

Coca-Cola Amatil Limited's principal activity is the manufacture, distribution and marketing of non-alcoholic ready to drink beverages. The company has an expected 3-5year earnings growth rate of 10%. Its share price grew 11.26% year-to-date.

Zacks Rank: #2

Momentum Score: ‘A’

Craft Brew Alliance Inc. (BREW)

A leading craft brewing company, Craft Brew is engaged in brewing, marketing and selling of craft beers in the U.S. Its second-quarter 2016 net sales, shipments and depletions were the highest in the company’s history. Owing to solid top-line growth and gross margin expansion, along with the anticipated incremental operational benefits in the second half of 2016, the company maintained its full-year guidance. Its estimated 3–5-year earnings growth rate of 25% shows promise and its share price has accelerated almost 133% year-to-date.

Zacks Rank: #2

Momentum Score: ‘A’

Coty, Inc. (COTY)

The New York-based beauty products company is involved in operations like manufacturing, marketing and distributing beauty products all over the world. For the last four quarters, the company delivered an average positive earnings surprise of 50.03%. Moreover, over the past 30 days, fiscal 2017 (ending Jun 2017) earnings estimates have gone up almost 6% while that for 2018 have increased 2.5%.

The company has a Zacks Rank: #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .

Momentum Score: ‘A’

McCormick & Company, Inc. (MKC)

Based in Sparks, MD, McCormick & Company, Inc. is a leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors to the entire food industry across the globe.

McCormick has been witnessing rising demand for spices, herbs and seasonings over the last few years, which is boosting its sales. McCormick is also focusing on building sales through brand marketing investments and acquisitions. The company’s recent acquisitions are expected to boost revenues in the coming quarters.

McCormick has also been regularly launching new products in order to remain competitive. Its share price has advanced 16.41% year-to-date. Moreover, the estimates are moving northward ahead of its third quarter 2016 earnings release on Sep 30.

Zacks Rank: #2

Momentum Score: ‘A’

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