The market put together one heck of a run the last several trading days. We've seen a breakout on the small caps and the NASDAQ to new all-time highs. But the high beta stocks aren't the only ones benefiting from the recent movement. The risk-on behavior has helped money flows to emerging markets and commodities. Today's Bull of the Day is a stock that lies at the intersection of these two attractive areas of the financial world.
Cosan (CZZ) Is the leading global ethanol and sugar company in terms of production with low-cost, large-scale and integrated operations in Brazil. Their production is based on sugarcane, a competitive and viable feedstock for ethanol, sugar and energy because of its low production cost and high energy efficiency ratio relative to other ethanol sources, such as corn and sugarbeet.
The company is a Zacks Rank #1 (Strong Buy) in an industry that ranks in the Top 24% of our Zacks Industry Rank. A big reason for the rank is the bullish move in earnings estimates for the current year. Just ninety days ago, analysts were expecting $1.11 in profits for Cosan. Revisions of these current year numbers have now pushed our Zacks Consensus Estimate from $1.11 to $2.05. Next year's Zacks Consensus has increased from $1.95 to $2.40 over that same period.
Shares of Cosan have underperformed the Agriculture Products Industry so far this year. While the Industry is up 11.7% shares of Cosan have only added 2.4%. That may sound like a negative for the stocks but really that shows its potential to catch up with the rest of the industry.
The stock has been very volatile over the last six months, bouncing from just under $7 to $9.50 on a few different occasions. The reason I'm bringing up Cosan now is it looks very oversold and could be due for a bounce. The Commodity Channel Index (CCI) is all the way down at -136 while Friday's selling reversed at the 76.4% retracement of the move from the November lows to the February highs. If buyers follow up to start the week, CZZ could be back on its way to $9 in a hurry.
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