Quantcast

The Zacks Analyst Blog Highlights: General Motors, Tyson Foods, Boeing, Caterpillar and 3M


Shutterstock photo

For Immediate Release

Chicago, IL - October 4, 2018 - 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 General Motors Company GM , Tyson Foods, Inc. TSN , The Boeing Company BA , Caterpillar Inc. CAT and 3M Company MMM .

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday's Analyst Blog:

Winners & Losers on USMAC (aka NAFTA 2.0)

Canada, Mexico and the United States recently finalized a sweeping new trade deal after several months of tense negotiations. The pact, now called the U.S.-Mexico-Canada Agreement or USMCA (aka NAFTA 2.0), updates the 1994 North American Free Trade Agreement (NAFTA) and promises to lead "to freer, fairer markets, and to robust economic growth" in the three-country region.

Both Canadian Foreign Minister Chrystia Freeland and US Trade Representative Robert Lighthizer in a joint statement welcomed USMCA as a "modernized" pact that "will strengthen the middle class, and create good, well-paying jobs."

Canadian Prime Minister Justin Trudeau said that USMCA would "enhance competitiveness & prosperity, while creating new jobs"; while Mexican President Enrique Pena Nieto added that the deal is a "win-win-win" agreement. President Trump, in the meanwhile, tweeted that "the USMCA is a historic transaction!" He added that "we had negotiated this new agreement based on the principle of fairness and reciprocity. To me, it's the most important word in trade."

Now, let's take a look at who's smiling and who's not on the making of the new NAFTA.

Is USMCA the New Dawn for Auto Industry?

NAFTA required automakers to manufacture 62.5% of a vehicle's parts in North America to qualify for zero tariffs. USMCA, in the meanwhile, raised the threshold. Now, 75% of auto components have to come from within the trade bloc. In addition, 40% of value added to vehicles must come from factories that pay its workers a minimum of $16 an hour. That is essentially triple the average wage in factories in Mexico right now. The new agreement, thus, will compel automakers to shift suppliers from Mexico to Canada or the United States.

Major automakers, including General Motors Company, breathed a sigh of relief. After all, the North America supply chains won't get hampered by something that they had heavily relied on.

General Motors, in particular, said that the agreement is "vital to the success of the North American auto industry." General Motors co-owns the DMAX truck engine plant in Moraine, which has nearly 800 workers. Several Miami Valley companies also supply General Motors with auto parts, including Fuyao Glass America, also in Moraine, and Tenneco, in Kettering.

But, auto experts cautioned that the new trade agreement is going to bump up car prices in the United States, especially small cars that used to be manufactured in Mexico but may not be able to bring across the border tariff free anymore. Automakers also can't depend on cheap Mexican labor now, which means further escalation in cost. Those costs will eventually spiral down to consumers in the form of higher car prices. Lest we forget, the Fed has already hiked interest rates and that means higher auto loans for consumers.

Thus, Ivan Drury, Edmunds' Senior Manager of Industry Analysis rightly said that "the new regional value content requirements mean that automakers will not able to source parts as freely, so there will be added costs associated with vehicle manufacturing." He added that "given that new vehicle prices are already stretched to record highs, things could take an ugly turn for consumer wallets."

US Farmers Welcome New NAFTA, Canadian Farmers Feel the Heat

The new North American trade pact has been welcomed by U.S. farmers. After all, the new trade deal is widely expected to protect tens of billions of dollars in farm goods traded across the country's borders, per U.S. Department of Agriculture estimates.

The tri-nation deal should encourage each country to get rid of tariffs on each other's products that have badly hurt U.S. prices for pork, cheese and other foodstuff. Needless to say, the United States for now is maintaining tariffs on foreign-made steel and aluminum. This, in turn, prompted Canada and Mexico to place retaliatory duties on U.S. products, ranging from pork to yogurt, slashing profits of some U.S. food companies and leaving farmers facing huge losses.

But now the new deal will benefit U.S. food companies, including Tyson Foods, Inc., as well as some farm groups that have raised concern over the tariffs' impact on the U.S. farm belt.

Tyson, the biggest U.S. meat processor by sales, urged "approval of a new deal and the removal of retaliatory tariffs and other trade barriers so that U.S. farmers and companies like ours can continue to expand in these important markets."

Canada, by the way, has agreed to drop its Class 7 pricing system . And that's good news for the U.S. dairy industry. This is because Eric Meyer, the president of HighGround Dairy in Chicago, has said that "the pricing system allowed for Canada to be competitive to export their excess skim milk powder, taking away market share from the U.S."

On the flip side, Canadian farmers complained that the agreement would limit exports. The Daily Farmers of Canada said that "we fail to see how this deal can be good for the 220,000 Canadian families that depend on dairy for their livelihood."

Dow Hits New Record on Optimism Around Global Trade

Dow companies, such as The Boeing Company, Caterpillar Inc. and 3M Company, which have been sensitive to trade-related issues, scaled north on the back of the revamped North American trade pact between the United States, Canada and Mexico.

Trade conflicts are always seen as a factor that can weigh on the global economy and eventually squeeze profits of such blue-chip companies. International Monetary Fund chief Christine Lagarde recently said that trade worries have affected global growth and that there were signs that major economies such as the U.S. had "plateaued."

Nonetheless, the unexpected new deal helped the 30-stock Dow Jones Industrials close at a record for the fourteenth time this year on Oct 2, while Boeing soared to an all-time high. The Dow rose 122.73 points, or 0.5%, to 26773.94, a record that tops its previous high of 26753.50 set on Sep 21.

Best Electric Car Stock? You'll Never Guess It.

Zacks Research has released a report that may shock many investors. One stock stands out as the best way to invest in the surge to electric cars. And it's not the one you may think!

Much like petroleum 150 years ago, lithium battery power is set to shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, revenues that were already at $31 billion in 2016 are expected to blast to over $67 billion by the end of 2022.

See Zacks Best EV Stock Free >>

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

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.  See these high-potential stocks free >>.

Follow us on Twitter: https://twitter.com/zacksresearch

Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com/

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.


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

The Boeing Company (BA): Free Stock Analysis Report

General Motors Company (GM): Free Stock Analysis Report

3M Company (MMM): Free Stock Analysis Report

Tyson Foods, Inc. (TSN): Free Stock Analysis Report

Caterpillar Inc. (CAT): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Stocks
Referenced Symbols: BA , GM , MMM , TSN , CAT



More from Zacks.com

Subscribe






Zacks.com
Contributor:

Zacks.com

Equity Research










Research Brokers before you trade

Want to trade FX?