Summer is here, well it is technically here even though the
other day in Chicago saw a high of 57. But cool beginnings have a
way of becoming warm endings, and there will undoubtedly be a few
super-hot sunny days.
Most articles like this want to tout stocks that will sizzle in the
summer time, like theme parks or golf equipment stocks. I want to
keep you from getting burned in the sun... literally.
The Cool Comfort of the Cinema
One way to hide from the sun is to take in a matinee. The movie
theater is always cranking the AC, and I haven't seen any outdoor
movie theaters lately. So my first pick is
, as their movies are bound to excite and thrill and entertain.
Opening on July 3, 2013 is "Kevin Hart: Let Me Explain" a stand-up
comedy movie featuring the star of the BET hit "Real Husbands of
Hollywood." Some quick research shows Kevin Hart's last stand up
movie grossed $7.7M and that was good enough for 7th place on the
all-time list of stand-up comedy movies. The Eddie Murphy classic
"Raw" was tops with $50.5M.
Beyond that movie there will be others, but investors will
certainly want to own this stock ahead of the November releases of
"Ender's Game" and "The Hunger Games: Catching Fire". Those will be
blockbusters of immense proportion.
From a financial perspective, LGF is coming of a great FY2013. 70%
top line growth was complemented by 286% earnings growth. Looking
forward, earnings growth of 20% in FY2014 and 29% in FY15 are 600
and 400 basis points higher than the expected earnings growth for
Estimates have recently ticked higher for LGF, but not enough to
move the stock from a Zacks Rank #3 (Hold) to a higher rank. FY2014
estimates at $1.33 in May but they inched up a penny to $1.34 in
June. Similarly, FY2015 also moved the same amount to $1.74. As
more analysts increase their earnings per share estimates, it will
become more likely that this stock receives a higher Zacks Rank.
Sitting In The Shade
In keeping with my avoidance of the sun theme, my next stock is
going to be a bit of a stretch. One of the most basic ways to avoid
the sun is to sit under a tree. This pick is a smart one, its
This issuer of Exchange Traded Funds (ETF) has a lot of things
going for it like the super popular DXJ ETF that allows investors
to gain exposure to Nikkei and other Asian exporters and at the
same time hedges the currency. While the first half of the year was
nothing short of gangbusters for that ETF, the recent correction
has given investors a more attractive entry point.
Whenever I see a story about WETF I am amazed that the idea of the
company being bought out is never addressed. I see WETF as a great
target for companies like BlackRock (BLK) and other investment
managers. The M&A premium on this stock is almost nonexistent,
despite its 32x forward PE compared to 14x industry average. A big
reason for the heavy premium on forward PE is that the 18.7% net
margin that WETF sports compared to an industry average of 7.6%.
A Zacks Rank #3 (Hold) could bump higher if the most recent slip in
estimates gets reversed. From January through May, WETF saw its
Zacks Consensus Estimate increase in each month, moving from $0.27
to $0.38 in May. The same could be said of 2014 estimates as they
rose from $0.29 to $0.53.
Where the Sun Doesn't Shine
With domestic indices down around 1.6% as I write this and European
markets down around 2% overnight there is definitely a sense of
panic in the markets. Hopefully today's trading will not lead to
more business for
Carriage Services (CSV)
I am pretty sure the sun will never shine again on those that
eventually get "serviced" by CSV. The funeral and death care
services company is getting hammered today after Ben Bernanke shook
markets by talking of tapering the paper. The intraday move lower
of 8% seems dramatically out of character for a conservative
business that is seeing nothing but slow and steady growth.
Recent M&A in the sector has investors taking a second look at
this company and other upstarts in the industry like eFuneral, a
Cleveland Ohio based that helps consumers choose a funeral service
CSV is trading in line with most of the metrics that investors use
to judge valuation. The lone standout is the price to book multiple
of 2.4x with the industry trading at almost double that at 4.7x.
CSV is expected to see topline growth of 10% this year, while the
industry is looking for 1.4%. The outperformance flows through the
income statement with CSV expected to show 31% EPS growth compared
to 9.5% for the industry.
There's A Little Black Spot on the Sun Today
Posting an investment idea on June 20, 2013 is a difficult task as
the market reacts to the statements from the Fed and the impending
end of QE3. Some perspective is always something investors seem to
have and traders utterly lack. Some of these stocks, like WETF are
acting like Godzilla has been sighted just north of Tokyo, which is
a totally unconfirmed rumor.
In these times of market corrections, know that panic and fear will
cause poor long term investment decisions. With that said, make
sure you wear SPF 15 or more in the sun this summer.
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BLACKROCK INC (BLK): Free Stock Analysis Report
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WISDOMTREE INV (WETF): Free Stock Analysis
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