For Immediate Release
Chicago, IL - May 19, 2017 - 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 Aramark (NYSE: ARMK - Free Report ), British American Tobacco p.l.c. (NYSEMKT: BTI - Free Report ) and Ollie's Bargain Outlet Holdings, Inc. (NASDAQ: OLLI - Free Report ).
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Here are highlights from Thursday's Analyst Blog:
3 Consumer Staples Stocks with Strong Growth Prospects
The consumer staples sector has been performing well of late. Lower oil prices and declining unemployment along with a resurgent housing market suggest that the economy is on a recovery mode. Domestic economic progress and a boost in infrastructure spending under President Trump's administration bode well for the sector.
Consumer confidence - a key determinant of the economy's health - had increased sharply in February and March. However, it declined in April due to less optimism in the labor market. Despite the decline, we expect consumers to remain confident regarding the economy in the near term. This positive sentiment is hence likely to translate into higher consumer spending, which accounts for more than two-thirds of U.S. economic growth.
While estimates for GDP growth increased marginally by 0.7% in the first quarter 2017, overall growth for the year is expected to improve from last year. GDP is expected to increase 2.3% in 2017 compared with 1.9% last year. The recent improvement in financial conditions is expected to contribute to the upside.
This above-trend pace will further tighten the labor market, with solid job growth expected in the coming months. That will help bump up inflation to 2% or higher over the next two years.
This is also evident from the 6.4% year-to-date (through May 16, 2017) rally in the Consumer Staples Select Sector SPDR ETF. Year to date, shares of Consumer Staples sector were up 9.1%, compared with the S&P 500's 7.5% gain.
These factors signal at growth in the economy, which will boost consumer spending - a key driver for the staples sector. However, a few disruptive trends are likely to persist, which in turn are expected to influence investment approach. Headwinds like unfavorable currency, food deflation, declining volumes, potential price wars, a competitive environment, slowdown in international markets and other global issues have been hindering the sector.
Nevertheless, the economy is rebounding and investors seem to be happy with the way the quarter has shaped up till now. For the 458 S&P 500 companies that have reported Q1 results, as of May 17, 72.3% have beaten estimates, while 65.9% exceeded the same, as per Earnings Trends report. The reported figures show a stark improvement from the preceding quarter. At present, sectors like energy, finance, technology, industrials, basic materials look promising. Interestingly, the pace of growth is likely to be maintained in the second quarter as well.
The Winning Strategy
Improved consumers' confidence and definite signs of near-term economic recovery are making the consumer staples sector attractive. However, picking the right stocks may prove to be quite daunting task.
With the help of our new style score system , we have shortlisted three consumer staple stocks that have excellent prospects and hold immense growth potential. Our Growth Style Score condenses all the essential metrics from a company's financial statements to get a true sense of the quality and sustainability of growth. Our research shows that stocks with Growth Style Scores of 'A' or 'B' when combined with a Zacks Rank #1 or 2 (Buy) offer the best investment opportunities in the growth investing space.
All the stocks selected herein flaunt a Zacks Rank #1 or 2, with a Growth Style Score of 'A' and have the potential to ride out the impending volatility.
3 Prominent Picks
Aramark (NYSE: ARMK - Free Report )
Investors can count on Aramark, which provides food, facilities, and uniform services in North America and internationally. This company has a market cap of more than $9 billion, beta of as low as 0.50 and a long-term growth rate of 12.80%. The company not only has an impressive earnings surprise history over the past four quarters but has also posted an average surprise of 4.45%.
Positive estimate revisions for fiscal 2017 and fiscal 2018 over the past 30 days also instill confidence among investors. This Philadelphia, PA-based company can be a perfect fit for investors' portfolio, armed with a Growth score of 'A' and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Further, Aramark's stock price history reveals that the company hasn't been a disappointment in a long time. In fact, on a year-to-date basis, the stock has rallied 2.4%, outperforming the Zacks categorized Food-Miscellaneous/Diversified industry, which declined 1.6%.
British American Tobacco p.l.c. (NYSEMKT: BTI - Free Report )
We recommend investing in British American, which engages in the production and sale of tobacco products. This London, U.K-based company has been witnessing positive estimate revisions for 2017 and 2018 over the past 30 days. This Zacks Rank #2 stock has a long-term earnings growth rate of 10.63% and a Growth Score of 'A.'
Looking into the stock price history, we note that British American shares have gained 24.9% on a year-to-date basis, outperforming the Zacks categorized Tobacco industry, which showcased growth of 15.1%.
Ollie's Bargain Outlet Holdings, Inc. (NASDAQ: OLLI - Free Report )
Based in Harrisburg, PA, Ollie's Bargain Outlet Holdings has delivered an average positive earnings surprise of 16.80% in all the trailing four quarters. Further, estimates of this merchandise retailer are rising since the past 60 days and are expected to witness earnings growth of 17.9% in fiscal 2017 and 14.9% in fiscal 2018.
Further, the stock has rallied 39.4% on a year-to-date basis, outperforming the Zacks categorized Consumer Products-Miscellaneous Staples industry, which showcased growth of 11.7%.
With a Growth Score of 'A,' beta of 0.13, long-term earnings growth rate of 17.14% and an attractive Zacks Rank #1, this stock is a hot pick for investors.
Intelligently selecting stocks for investments greatly benefits investors. The abovementioned stocks can prove to be valuable additions to your portfolio.
You can also use the Zacks Stock Screener to find other stocks with this winning combination. Your search ends at stocks with a favorable Zacks Rank of either #1 or 2, which encompasses its strong fundamentals, promises price movement and highlights analysts' constructive view on the same via positive estimate revisions. As we know, a sturdy portfolio always gives favorable returns.
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About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
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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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Aramark (ARMK): Free Stock Analysis Report British American Tobacco p.l.c. (BTI): Free Stock Analysis Report Ollie's Bargain Outlet Holdings, Inc. (OLLI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research