Yahoo Finance The Zacks Analyst Blog Highlights BHP, Anglo American, Vistra, Tyler Technologies and Barrick Gold
For Immediate Release
Chicago, IL – June 4, 2024 – 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: BHP Group BHP, Anglo American AAL, Vistra VST, Tyler Technologies TYL and Barrick Gold GOLD.
Here are highlights from Monday’s Analyst Blog:
A.I. Reshapes Corporate America: Global Week Ahead
The start of a new calendar month can mean only one thing for investors: Time for the all-important monthly U.S. employment report.
But also, this time around? Look out for a likely European Central Bank (ECB) rate cut.
As well as the outcome of India's marathon general election.
Next are Reuters' five world market themes, re-ordered for equity traders—
(1) On Friday, traders get to see the MAY U.S. non-farm payroll report.
Is the U.S. economy finally cooling?
It will take several months of data to answer that question. But one key piece of the puzzle comes with the closely watched employment report out on Friday, June 7th.
Investors had been worried that an overly strong economy might prevent the U.S. Federal Reserve from lowering rates this year at all, or even require a rate rise.
But those concerns were put to rest last month, albeit temporarily, by data showing slowing inflation and a cooling labor market.
Still, policymakers have urged patience on rate cuts, saying they would like to see several months of data to be sure inflation is heading back towards their +2.0% target.
The MAY employment report could prove the U.S. economy is losing steam, if it shows the slowdown in job creation has continued.
(2) On Thursday, the European Central Bank (ECB) should cut its policy rate.
The ECB is all but certain to become the first major central bank to cut interest rates this cycle on Thursday.
Policymakers have practically promised a June cut that is expected to lower the bank's key rate by 25 basis points to 3.75%.
So, all focus will be on what hints ECB boss Christine Lagarde gives on what happens next.
Inflation in the bloc's dominant services sector remains sticky and its economy is recovering faster than expected, while a closely-watched wage growth figure accelerated last quarter, leaving the outlook beyond June less certain.
Traders are still much more confident that the ECB will cut rates multiple times this year compared to its U.S. and British peers, though they have also reduced their bets on its moves.
They now expect two cuts and less than a 50% chance of a third — compared with three when the ECB last met and at least five at the start of the year.
(3) A revival in U.K. Mergers & Acquisitions is happening.
BHP Group may have failed in its bid for Anglo American, taking $49 billion out of bankers' league tables. But the emergence of the bid in April highlights a revival in U.K. M&A.
April saw 38 companies in the U.K. under offer, the most since June 2022, according to Peel Hunt. Take one away and that high-water mark doesn't change.
Bankers pinpoint that it's companies driving the charge, and they expect more U.K. deals, as the interest rate outlook and economic backdrop stabilize and competition from private equity funds for assets is still muted.
Driving the inbound interest is the persistent cheapness of U.K. assets.
The FTSE 100 12-month forward price-to-earnings ratio continues to trade at the widest discount to the S&P500's since at least 1990, and lags the performance in the pan-European STOXX 600 and Germany's DAX.
(4) In the USA, summer vacation driving season has begun. Gasoline prices?
The oil market is entering into a sweet spot in the year — the summer driving season in the United States.
The price of crude is up +10% year-on-year, and intensifying Middle East tensions are keeping the market nervous.
Meanwhile, gasoline futures have fallen by -7%, offering a potential boon to customers at the pump.
But, U.S. gasoline inventories aren't declining as quickly as they ordinarily would at this time of year, which suggests consumption isn't quite hot enough to put a dent into supply.
A measure of demand for immediate delivery of crude is also around its lowest since December.
A lot is riding on the outlook for growth and, therefore, demand for fuel.
The world's biggest oil exporters are expected to maintain their existing supply cuts at an OPEC meeting on June 2nd.
(5) India counts votes on Tuesday, June 4th. Mexico headed to the polls Sunday.
India's six-week long national election is in its final stages, with votes due to be counted on June 4th.
Exit polls, out on Sunday June 3rd, were confirming Modi's win. So, investors should be gearing up for Prime Minister Narendra Modi securing a third term in office.
Markets see a Modi win as providing political stability and continuity in India to support sustained economic growth. Indian equities outperformed most major markets in 2023 and are already trading at lofty valuations.
They could get another boost if Modi remains in power, even as part of a coalition government.
Mexicans also went to the polls on Sunday June 3rd. Former Mexico City Mayor Claudia Sheinbaum won by at least 30 percentage points in Mexico's presidential election.
The Mexican peso has sold off heavily in the past week, as traders ponder the uncertainty for the Mexican economy, stemming from the vote.
Zacks #1 Rank (STRONG BUY) Stocks
This week, I picked two Texas-based large cap stocks, and one Canadian gold miner.
(1) Vistra: This is a $105 stock, found in the U.S. Electric Power Utility Industry, with a market capitalization of $36B. I see a Zacks Value score of C, a Zacks Growth score of B and a Zacks Momentum score of B.
Vistra Energy Corp. is an energy company. It offers electricity and power generation, distribution and transmission solutions. Vistra is based in Dallas, Texas.
(2) Tyler Technologies: This is a $477 stock, found in the U.S. Business Software Services Info Tech Industry, with a market capitalization of $20.2B. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of B.
Tyler Technologies is a leading provider of integrated information-management solutions and services for the public sector.
Clients consist primarily of federal, state, county and municipal agencies, school districts, and other local government offices.
· In counties, clients include the auditor, treasurer, tax assessor/collector, county clerk, district clerk, county and district court judges, probation officers, sheriff and county appraiser.
· At municipal government sites, clients include directors of various departments, including administration, finance, utilities, public works, code enforcement, personnel, purchasing, taxation, municipal court and police.
The company's software solutions & services are grouped into the following areas:
1. Financial Management and Education
2. Courts and Justice
3. Public Safety
4. Property Appraisal and Tax
5. Planning, Regulatory and Maintenance
6. Land and Vital Records Management
7. Data and Insights, and
8. Case Management and Business Process Management
Tyler serves its customers both on-premise and in cloud.
By leveraging Tyler private cloud, the company delivers its applications through Software-as-a-Service ("SaaS") model. In October 2019, the company entered into a partnership agreement with Amazon Web Services for cloud-hosting services.
Tyler reported revenues of $1.95 billion in 2023.
The Plano, TX-based company derives revenues from six sources: (i) Sales of software licenses and royalties, (ii) Subscription-based arrangements, (iii) Software services, (iv) Maintenance and support (v) Appraisal services, and (vi) Hardware and other.
Subscription-based revenues are primarily derived from Tyler's SaaS arrangements, as well as transaction-based offerings such as e-filing solutions, online dispute resolution solutions, and online payment services.
Moreover, client-support services comprise a significant base of recurring maintenance revenues. During 2023, approximately 24% of Tyler's revenues were attributable to ongoing support and maintenance agreements.
Tyler faces competition from Oracle, Infor, SAP AG, Workday, CentralSquare, Thomson Reuters, Motorola Solutions and Axon Enterprise.
(3) Barrick Gold: This is a $17 stock, found in the Basic Materials - Gold Mining Industry, with a market capitalization of $29.7B. I see a Zacks Value score of B, a Zacks Growth score of C and a Zacks Momentum score of A.
Barrick Gold, based in Toronto, Canada, is one of the largest gold mining companies in the world.
The company has many advanced exploration and development projects located across five continents.
Barrick is placed amongst the top gold producers with peers, such as Newmont (based in the United States) and AngloGold Ashanti (based in South Africa).
The company produced 4.05 million ounces of gold and 420 million pounds of copper in 2023. Barrick had 77 million ounces (oz) of proven and probable gold reserves at the end of 2023. The company generated total revenues of roughly $11.4 billion in 2023.
The company's strategy to create value for its shareholders is focused on the following key areas:
· Maximizing the benefits of rising metal prices by meeting operational and financial targets
· Increasing gold and copper reserves and production through exploration and selective acquisitions
· Maximizing the value of its existing mines and properties by leveraging its expertise and regional infrastructure
· Growing production by investing in and developing high return projects
· Continuing to improve corporate social responsibility practices to maintain and strengthen its incense to operate
By executing on this strategy, the company expects to increase earnings and cash flow and enhance its shareholders' leverage to metal prices.
In September 2018, Barrick entered into a share-for-share merger agreement with Randgold Resources Ltd. The merger was successfully completed on Jan 1, 2019. The deal formed an industry-leading gold company and strengthened Barrick's position.
Post-merger, Barrick has the ability to generate strong cash flow to support robust investment and return cash to shareholders.
Higher operating metrics, including lowest total cash cost position as well as highest adjusted EBITDA margin are likely to support sustainable investment in growth and shareholder returns.
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