For Immediate Release
Chicago, IL – March 23, 2023 – Zacks Equity Research shares Asure Software ASUR as the Bull of the Day and CF Industries CF as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Toll Brothers, Inc. TOL, Tecnoglass Inc. TGLS and NVR, Inc. NVR.
Here is a synopsis of all five stocks:
Bull of the Day:
Asure Software, a Zacks Rank #1 (Strong Buy), has been widely outperforming since bottoming out last October. A new bullish phase has begun for the stock as it has been hitting a series of 52-week highs this year on increasing volume. Shares continue to display relative strength as buying pressure accumulates in this market leader.
ASUR is ranked favorably by our Zacks Style Scores with a best-in-class 'A' rating in each of our Zacks Growth and Momentum categories, indicating further upside is likely. The company is part of the Zacks Internet – Delivery Services industry group, which currently ranks in the top 4% out of approximately 250 Zacks Ranked Industries. Because this group is in the top half of all industries, we expect it to outperform the market over the next 3 to 6 months.
Historical research studies suggest that approximately half of a stock's price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. It's no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Asure Software provides cloud-based human capital management (HCM) software and services. The company helps small and medium-sized businesses to build productive teams and allocate resources efficiently. ASUR offers payroll, tax, and human resources software to the payroll service industry along with mid-market and large corporate employers.
Asure Marketplace helps automate interactions between the company's HCM systems and third-party providers. ASUR was incorporated in 1985 and based in Austin, TX.
Earnings Trends and Future Estimates
ASUR has surpassed earnings estimates in each of the past four quarters, with an average earnings surprise of 445.8%. The software firm most recently reported fourth-quarter earnings back in February of $0.17/share, beating the Zacks Consensus Estimate of $0.01 by 1,600%.
Asure software has witnessed improving earnings estimate revisions. Looking into the current year, analysts have raised their 2023 EPS estimates by 25% in the past 60 days. The '23 Zacks Consensus Estimate now stands at $0.35/share.
Let's Get Technical
ASUR shares have advanced more than 170% off the bottom from last year. Only stocks that are in extremely powerful uptrends are able to make this type of price move while the general market remains volatile. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
The stock has been making a series of higher highs. With both strong fundamentals and technicals, ASUR is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Asure Software has recently witnessed positive revisions. As long as this trend remains intact (and ASUR continues to deliver earnings beats), the stock will likely continue its bullish run this year.
ASUR has vastly outperformed its software peers, and increasing volume throughout the year adds to the bullish sentiment.
Robust fundamentals combined with a strong technical trend certainly justify adding shares to the mix. Backed by a leading industry group and healthy history of earnings beats, it's not difficult to see why this company is a compelling investment. Investors would be wise to consider ASUR as a portfolio candidate if they haven't already done so.
Bear of the Day:
CF Industries assists in the transformation of natural gas into nitrogen products. The company manufactures and sells hydrogen and nitrogen products for fertilizer, energy, emissions abatement, and other industrial activities. CF Industries is a manufacturer and distributor of nitrogen fertilizer around the world. Its principal products include anhydrous ammonia, granular urea, and ammonium nitrate. CF Industries was founded in 1946 and is headquartered in Deerfield, IL.
The Zacks Rundown
CF Industries, a Zacks Rank #5 (Strong Sell), is a component of the Zacks Fertilizers industry group, which currently ranks in the bottom 14% out of approximately 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months – just as it has year-to-date.
Candidates in the bottom tiers of industries can often be solid potential short candidates. While individual stocks have the ability to outperform even when included in a poor-performing industry group, the inclusion in a weaker group serves as a headwind for any potential rallies and the journey forward is that much more difficult.
Along with many other fertilizer stocks, CF experienced a climax top in August of last year and has been in a price downtrend ever since. The share price is hitting a series of lower lows and represents a compelling short opportunity as the market remains volatile.
Recent Earnings Misses & Deteriorating Outlook
CF has fallen short of earnings estimates in three of the past seven quarters. Back in November of last year, the company reported Q3 earnings of $2.55/share, missing the $3.19/share Zacks Consensus estimate by -20.06%.
CF Industries has posted an average earnings miss of -3.15% over the last four quarters. Consistently falling short of earnings estimates is a recipe for underperformance, and CF is no exception.
The fertilizer company has been on the receiving end of negative earnings estimate revisions as of late. For the current fiscal year, analysts have decreased estimates by -27.53% in the past 60 days. The 2023 Zacks Consensus Estimate is now $9.95/share, reflecting negative growth of -42.75% relative to fiscal 2022.
Falling earnings estimates are a huge red flag and need to be respected. Negative growth year-over-year is the type of trend that bears like to see.
While not the most accurate indicator, CF has also experienced what is known as a 'death cross', wherein the stock's 50-day moving average crosses below its 200-day moving average. CF would have to make a serious move to the upside and show increasing earnings estimate revisions to warrant taking any long positions in the stock. The stock has fallen nearly -28% in the past year alone.
A deteriorating fundamental and technical backdrop show that this stock is not set to make new highs anytime soon. The fact that CF is included in one of the worst-performing industry groups provides yet another headwind to a long list of concerns. A history of earnings misses and falling future earnings estimates will likely serve as a ceiling to any potential rallies, nurturing the stock's downtrend.
Potential investors may want to give this stock the cold shoulder, or perhaps include it as part of a short or hedge strategy. Bulls will want to steer clear of CF until the situation shows major signs of improvement.
3 Top Housing Stocks You'll Regret Not Buying Soon
The home builder sector, which predominantly consists of homebuilders, building product manufacturers, and home improvement companies, has gained decently this year. The home construction ETF has jumped around 12% over the past three months compared to the broader S&P 500's gain of a meager 2.7%.
This is in sharp contrast to last year, when the housing market had to bear the adverse impact of surging raw material prices and an increase in mortgage rates. However, the first year-over-year decrease in home prices in 11 years in February, coupled with lower mortgage prices, especially between mid-November through the beginning of last month, immensely boosted the struggling housing market. Existing home sales in the United States rebounded more than expected in the month.
Existing home sales soared by 14.5% to a seasonally adjusted annual rate of 4.58 million, per the National Association of Realtors. This was the biggest jump since July 2020, and well above estimates of 4.2 million. Existing home sales were broad-based, with the South, West, and Midwest regions registering double-digit growth.
It seems the worst may be over for the housing market, as the cooling of housing prices should certainly attract more buyers. In January, the median sales price of new houses declined nearly 1% year over year to $427,500. At the same time, inflation has been easing for some time now, which should undoubtedly compel the Federal Reserve to reduce the pace of its interest rate hikes. The central bank curtailed the increase in interest rate hikes, which currently stands at 0.25% versus 0.75% last year.
Thus, the average 30-year mortgage rate has decreased considerably in recent times, thereby making financing new houses a bit cheaper. To top it, presently, there is undersupply of homes, indicating that any company which is part of the home builder sector could easily make the most of the demand-supply disparity when the economy gathers steam.
Given such positives, it is prudent to invest in fundamentally sound housing stocks like Toll Brothers, Inc., Tecnoglass Inc. and NVR, Inc. that are well poised to scale upward as the home builder sector bounces back.
These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth, and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today's Zacks #1 Rank stocks here.
Toll Brothers build single-family detached and attached home communities; master-planned luxury residential resort-style golf communities; and urban low, mid, and high-rise communities, principally on the land it develops and improves. The company, currently, has a Zacks Rank #2 and a VGM Score of B.
The Zacks Consensus Estimate for its current-year earnings has moved up 10% over the past 60 days. TOL's expected earnings growth rate for the next five-year period is 11%.
Tecnoglass is engaged in manufacturing and selling architectural glass and windows and aluminum products for the residential complexes and commercial construction industries. The company, presently, has a Zacks Rank #1 and a VGM Score of B.
The Zacks Consensus Estimate for its current-year earnings has moved up 10.7% over the past 60 days. TGLS' expected earnings growth rate for the current year is 15.4%.
NVR is engaged in the construction and sale of single-family detached homes, townhomes and condominium buildings. The company, currently, has a Zacks Rank #1 and a VGM Score of B.
The Zacks Consensus Estimate for its current-year earnings has moved up 22.7% over the past 60 days. NVR's expected earnings growth rate for the next five-year period is 4.3%.
Shares of Toll Brothers, Tecnoglass and NVR, by the way, have already gained 16.7%, 24.8%, and 18.9%, respectively, on a year-to-date basis.
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CF Industries Holdings, Inc. (CF) : Free Stock Analysis Report
Toll Brothers Inc. (TOL) : Free Stock Analysis Report
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Asure Software Inc (ASUR) : Free Stock Analysis Report
Tecnoglass Inc. (TGLS) : Free Stock Analysis Report
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