For Immediate Release
Chicago, IL – September 16, 2022 – Zacks Equity Research shares Albemarle ALB as the Bull of the Day and Noodles & Company NDLS asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on C.H. Robinson Worldwide CHRW, Werner Enterprises WERN and Pangaea Logistics Solutions PANL.
Here is a synopsis of all five stocks.
Bull of the Day:
Today’s Bull of the day is a stock with a ton of growth potential over the long-term. This stock benefits from a paradigm shift that’s taking place across the world. It’s the move from the internal combustion engine to EVs. It makes this company’s products, essentially the crude oil of the next generation.
Today’s Bull of the Day is the diversified chemical operation Albemarle. Albemarle Corporation develops, manufactures, and markets engineered specialty chemicals worldwide. It operates through three segments: Lithium, Bromine, and Catalysts. The company serves the energy storage, petroleum refining, consumer electronics, construction, automotive, lubricants, pharmaceuticals, and crop protection markets.
Now for the numbers, and they are impressive. Current year sales estimates call for 123.58% growth over last year. Next year, that number is expected to grow yet again, this time by 29.46%. That’s translating to solid EPS numbers as well. Current year EPS growth is at 425.25%, with next year at 22.67%.
The bulls just keep getting more bullish. That’s the reason for the very favorable Zacks Rank. Over the last sixty days, no fewer than nine analysts have jacked up their estimates for the current year as well as next year. The bullish move has sent the Zacks Consensus Estimates flying. Current year numbers are up from $12.63 to $21.22 over that period, while next year’s number is up from $15.54 to $26.03.
Albemarle stock has absolutely taken off since bottoming out in early 2020. It should come as no surprise that earnings bottomed out right around that same time. With the stock trading down under $60, earnings rounded out and now there is consistent year-over-year growth. Estimates continued to rise even as the stock’s price retraced from highs over $280 in November 2021 to under $180 in February of this year. Since then, with estimates skyrocketing, the stock has pushed back up to new all-time highs, and now sits around $300.
Bear of the Day:
It’s easy to be bearish when it feels like the sky is falling. When you dig deep into the numbers, the market’s downside reaction after the CPI print has been bad, but not terrible across the board. Even on Thursday, as the broad market retreated, there were several industries which profited. Travel, biotech and others had their day in the sun while the tech-heavy NASDAQ Composite came under pressure.
Buying the dip has proven to be intelligent again and again in the grand scheme of things. You don’t have to try to perfectly time the bottom to win in the long run. Rather, it’s patience that plays a major role in long-term investing success.
One way to not get caught up in the day-to-day rumblings of the market is by investing in stocks with strong earnings trends to the upside, and avoiding those where analysts are cutting their growth numbers. Today’s Bear of the Day is a stock that has seen numbers cut across the board.
I’m talking about Zacks Rank #5 (Strong Sell) Noodles & Company. Noodles & Company, a restaurant concept company, develops and operates fast-casual restaurants. It offers cooked-to-order dishes, including noodles and pasta, soups, salads, and appetizers. As of December 28, 2021, the company operated 448 restaurants in 29 states, which included 372 company locations and 76 franchise locations.
The reason for the unfavorable Zacks Rank is the series of negative earnings estimates coming from analysts. Over the last sixty days, three analysts have cut estimates for the current year, while two have done so for next year’s numbers. The bearish moves have sliced our Zacks Consensus Estimates for the current year from 17 cents to 3 cents while next year’s number is off from 59 cents to 51 cents.
The Retail – Restaurants industry is in the Bottom 29% of our Zacks Industry Rank.
3 Low-Beta Transportation Stocks to Watch as Volatility Stays
Volatility gripping the markets in the United States this year refuses to die down. Due to this market bloodbath, the S&P 500, the teach-heavy Nasdaq and the Dow Jones Industrial Average have declined significantly on a year-to-date basis. Moreover, the August reading on inflation rattled markets.
The August Consumer Price Index (CPI: an indicator of inflation) increased 8.3% year over year. The figure exceeded the 8.1% expectation of analysts despite the 10.6% decline in gasoline prices. A sharp rise in shelter and food costs induced this unwanted inflation reading, which increased 0.1% month over month.
The greater-than-expected August inflation makes it highly probable that the Fed, which has already hiked interest rates 225 basis points so far this year, will announce another sharp rate hike (probably another 75-basis-point increase if not 100 bps) at its meeting later this month. The Fed had already indicated last month that the rate hike will continue until inflation is at least down close to the 2% target rate. The central bank’s hawkish stance on taming the sky-high inflation stoked fears of an economic slowdown. This is because higher interest rates escalate the cost of borrowing.
At this juncture, it will be prudent for investors to have low-beta stocks on their watchlist as they aim to navigate a choppy market. In this article, we focus on the widely-diversified transportation sector. For investors interested in the Zacks Transportation sector, low-beta stocks like C.H. Robinson Worldwide, Werner Enterprises and Pangaea Logistics Solutions should be on their radar in this volatile scenario. Notably, beta measures the volatility or risk of a particular asset compared to the market.
For example, if the market offers a return of 10%, a stock with beta of 3 will return 30%, which is highly impressive. However, when the market nosedives to the tune of 10%, the stock will sink 30%, which is devastating. Therefore, low-beta stocks are desirable, particularly in volatile scenarios like the present one.
Headwinds Confronting Transportation Sector
Geopolitical tensions between Russia and Ukraine further compounded the woes. The sanctions against Russia triggered the spike in oil price (up 48% in first-half 2022). Now this is undesirable for the transportation sector as fuel expenses represent a key input cost for any player in this sector. An uptick in fuel costs implies that bottom-line growth of transportation stocks is hampered.
Supply-chain disruptions having induced equipment shortages are also plaguing the sector. Labor-crunch is also not allowing sector players to meet the currency buoyancy in demand following the relaxation of coronavirus-related restrictions.
Due to the challenges, stocks in the Zacks Transportation sector have collectively lost 14.7% year to date.
Low-Beta Stocks the Way Forward
Now does this market volatility coupled with the unimpressive price performance of this sector imply that investors interested in the space shun these stocks? The answer is a categorical no.
To aid investors, we shortlisted three transportation stocks with low beta. We took stocks with beta between 0.60 and 0.85. These stocks have a Zacks Rank of either #2 (Buy) or 3 (Hold). Moreover, they are dividend-paying stocks, highly desirable in such volatile times. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Dividend-paying stocks not only provide a solid income stream but also have fewer chances of experiencing wild price swings. Dividend stocks are safe bets for creating wealth, as the payouts generally act as a hedge against economic uncertainty. In view of the tailwinds mentioned, it can be safely said that dividend-paying stocks emerge as preferred options compared to non-dividend-paying stocks in periods of high degree of market volatility as the present situation.
C.H. Robinson: CHRW is being aided by an improving freight scenario in the United States. Efforts to control costs also bode well. Measures to reward CHRW's shareholders instill confidence in the stock further.
In December 2021, C.H. Robinson, currently carrying a Zacks Rank #2, hiked its dividend to 55 cents per share (annually: $2.20) from 51 cents (annually: $2.04). CHRW has a beta of 0.73 and a dividend yield of 2% in addition to a five-year annualized dividend growth rate of 3.83%. CHRW's payout ratio is 26% of earnings at present. Check C. H. Robinson Worldwide’s dividend history here.
C.H. Robinson Worldwide, Inc. dividend-yield-ttm | C.H. Robinson Worldwide, Inc. Quote
Werner, based in Omaha, NE, is primarily focused on transporting the truckload shipments. Improvement in the freight scene in the United States is a positive for WERN.
Werner has a consistent track record of paying out quarterly dividends since Jul 1987. WERN, currently carrying a Zacks Rank of 3, hiked quarterly dividends twice in 2021.
Maintaining its pro-shareholder stance, on May 13, WERN’s board announced an 8% increase in its quarterly dividend to 13 cents per share. Werner has a beta of 0.82 and a dividend yield of 1.3% in addition to five-year annualized dividend growth of 10.23%. WERN's payout ratio is 13% of earnings at present. Check Werner Enterprise’s dividend history here.
Werner Enterprises, Inc. dividend-yield-ttm | Werner Enterprises, Inc. Quote
Pangaea Logistics is currently Zacks #3 Ranked. The bullish sentiment surrounding the drybulk market is a huge blessing for PANL.
Pangaea Logistics has a beta of 0.65 and a dividend yield of 6.09%. PANL's payout ratio is 15% of earnings at present. Check Pangaea Logistics Solutions’ dividend history here.
Pangaea Logistics Solutions Ltd. dividend-yield-ttm | Pangaea Logistics Solutions Ltd. Quote
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C.H. Robinson Worldwide, Inc. (CHRW) : Free Stock Analysis Report
Albemarle Corporation (ALB) : Free Stock Analysis Report
Noodles & Company (NDLS) : Free Stock Analysis Report
Werner Enterprises, Inc. (WERN) : Free Stock Analysis Report
Pangaea Logistics Solutions Ltd. (PANL) : Free Stock Analysis Report
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