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The Zacks Analyst Blog Highlights: Microsoft, NIKE, Procter & Gamble and Walmart

Zacks Equity Research

For Immediate Release

Chicago, IL –October 16, 2019 – 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:Microsoft Corp. MSFT, NIKE Inc. NKE, The Procter & Gamble Co. PG and Walmart Inc. WMT.

Here are highlights from Tuesday’s Analyst Blog:

4 Blue-Chip Stocks Rallying in 2019 Amid Slowdown Concern

Wall Street has been reeling under severe volatility for the past six months due to uncertainty regarding the trade-related conflict, which resulted in a global economic slowdown. Though the U.S. economy has slowed down too, it managed to grow for eleven years.

Notably, third-quarter 2019 earnings reports will gather pace from this week. However, expectation for third-quarter earnings is not quite favorable at the moment.

Near-Term Headwinds   

Wall Street faces several near-term obstacles. The 19-month old trade tussle between the United States and China is yet to reach conclusion. On Oct 11, President Trump said that the largest two trading countries of the world have reached an agreement for the first part of the broader trade deal. However, on Oct 14, Bloomberg reported that China needs more discussions with the United States before signing a partial trade deal.  

The U.S-China trade conflict has resulted in global economic slowdown. The economies of Eurozone, Japan and several emerging nations are suffering along with China due to a massive reduction in global trade volume. This scenario especially affected global manufacturing and countries where export constitutes a large part of the GDP. Several economic agencies like IMF, World Bank and OECD reduced global growth forecast for 2019.

Moreover, geopolitical concerns in the Middle East resulting in oil shock, tensions related to Brexit and political turmoil in various countries are other concerns. In the United States, slowing economic growth, a steep fall in corporate profit due to tariff war and bond market syndrome like inverted yield curve of government bonds are near-term negatives.

Against this backdrop, some blue-chip stocks have however surged, defying all odds, and still have upside left for the rest of this year. Investment in these stocks with a favorable Zacks Rank will be lucrative for investors in the near term.

4 Blue-Chip Stocks Surging in 2019

Not all stocks are suffering from market volatility. Notably, overall, in the first nine months, Wall Street provided impressive returns to investors. The three major stock indexes ---- the Dow, the S&P 500 and the Nasdaq Composite --- gained 14.8%, 18.3% and 21.3%, respectively.

We have narrowed down our search to four blue-chip stocks, which have rallied more than the broader market and still have upside left for the rest of 2019. We have used several selection criteria for our picks.

We have selected large-cap stocks as these companies are doing business for a long time and their stock prices are generally stable. Second, these companies are regular dividend payers. So, during severe market downturns, they can prove to be a regular income stream. Third, all four stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Microsoft Corp.is one of the largest broad-based technology providers in the world. Although software is the most-important revenue source, its offerings also include hardware and online services.

Microsoft has a dominant position in the desktop PC market, with its operating systems being used in the majority of PCs worldwide. Robust execution and better-than-expected demand from customers for hybrid cloud offerings drove the quarterly results. Moreover, strong Commercial business positively impacted the top and the bottom line.

The company’s expected earnings growth rate for the current year is 10.3%. The Zacks Consensus Estimate for the current year has improved 0.4% over the last 30 days. The stock has jumped 37.4% year to date and has a dividend yield of 1.32%.

NIKE Inc.is engaged in the business of designing, developing and marketing of athletic footwear, apparel, equipment and accessories, and services for men, women and children worldwide. Despite the volatile macroeconomic and geopolitical environment, NIKE expects to continue investing in key capabilities to aid digital transformation and deliver robust growth in fiscal 2020 and beyond.

NIKE expects results for fiscal 2020 to be driven by brand recognition, robust innovation pipeline, and positive response from Nike Direct and wholesale partners. Despite the tariff-related concerns, NIKE continues to deliver strong results in Greater China, one of its key markets, with continued strength in the digital business.

The company has expected earnings growth rate of 19.3% for the current year. The Zacks Consensus Estimate for the current year has improved 2.4% over the last 30 days. The stock has soared 28% year to date and has a dividend yield of 0.94%.

The Procter & Gamble Co.provides branded consumer packaged goods to consumers in North and Latin America, Europe, the Asia Pacific, Greater China, India, the Middle East, and Africa. It operates in five segments: Beauty; Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care.

Procter & Gamble remains focused on productivity and cost-saving plans to boost margins and lift profit. The company’s continued investment in business, alongside efforts to offset macro cost headwinds and balance top- and bottom-line growth, underscores its productivity efforts. It also focuses on improving its product portfolio through strategic initiatives, which enable it to concentrate on its fast-growing businesses.

The company has expected earnings growth rate of 7.3% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.2% over the past 30 days. The stock has jumped 30.6% year to date and has a dividend yield of 2.46%.

Walmart Inc.operates retail stores, restaurants, discount stores, supermarkets, supercenters, hypermarkets, warehouse clubs, apparel stores, Sam’s Clubs, and NeighborhoodMarkets, as well as the websites, walmart.com and samsclub.com.

Walmart has been gaining from its sturdy comparable store sales (comps) record, which in turn is driven by its constant expansion efforts and stellar e-commerce performance. The company is trying every means to evolve with the changing consumer environment to compete with brick-and-mortar rivals and e-commerce behemoths.

The company has expected earnings growth rate of 2.8% for the current quarter. The Zacks Consensus Estimate for the current year has improved by 0.2% over the past 30 days. The stock has soared 28% year to date and has a dividend yield of 1.76%.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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