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Cal-Marine Foods, Zumiez, Apple, Amazon.com and eBay highlighted as Zacks Bull and Bear of the Day

Chicago, IL - October 02, 2015- Zacks Equity Research highlights Cal-Marine Foods ( CALM ) as the Bull of the Day and Zumiez Inc. ( ZUMZ ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Apple Inc. ( AAPL ), Amazon.com, Inc. ( AMZN ) and eBay Inc. ( EBAY ).

Here is a synopsis of all five stocks:

Bull of the Day :

In March of this year, Iowa was hit by avian influenza (bird flu), and wiped out over 31 million chickens at a cost of over $1.2 billion dollars. This flu caused a significant rise in egg prices because Iowa is the largest egg-producing state in the Union. Iowa chicken farmers are still rebounding from this loss, and it takes months to reintroduce the new chickens into approved conditions. Further it will take about one to two more years before the farms get back to production levels seen before the flu outbreak.

This has been a boon for egg producers who have seen higher prices and therefore higher profits. One of the largest producers of fresh shell eggs is Cal-Marine Foods ( CALM ). Cal-Marine recently reported Q1 16 earnings and revenues wherein the company posted massive gains across the board. Net Sales improved 70.9% y/y, Net Income jumped +416.2% y/y, and EPS growth improved +421%. Note, that Q1 is typically the company's slowest quarter. Due to these factors, Cal-Marine is the Zacks Bull of the Day.

This Zacks Ranked #1 (Strong Buy) is engaged in the production, cleaning, grading, and packaging of fresh shell eggs for sale to shell egg retailers. The company is the one of the largest producers and distributors of fresh shell eggs in the United States. The company markets its eggs primarily in the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States.

In their most recent earnings announcement, Dolph Baker, Chairman President and CEO, stated, "Our financial and operating results for the first quarter marked a very strong start to fiscal 2016 with record quarterly sales and net income. Overall sales were up 70.9 percent over the prior year period, as average selling prices for shell eggs spiked to record levels during the first quarter and were up 65.7 percent compared with the same period last year. Volumes were also up slightly in what is typically our slowest quarter, with total dozen shell eggs sold up 2.8 percent over the first quarter of fiscal 2015."

Bear of the Day :

After meeting both the Zacks Consensus Earnings and Revenue estimates for Q2, this specialty retailer announced weakness in August. The company saw August comps at -10.7%, versus the expected -4.2% due to a decrease in transactions across the board. This includes, mens, footwear, juniors, hardgoods, and accessories. Also, the company saw lower customer traffic, FX (foreign currency) difficulties in their Canadian division, and weak summer and spring merchandise. Due to these reasons, Zumiez Inc. ( ZUMZ ) is the Zacks Bear of the Day.

This Zacks Ranked #5 (Strong Sell) company is a leading specialty retailer of action sports related apparel, footwear, equipment and accessories. Their stores cater to young men and women between ages 12-24, focusing on skateboarding, surfing, snowboarding, motocross and BMX.

Going into Q3, management is expecting "an anticipated comparable sales decrease in the 7% to 9% range for the third quarter of fiscal 2015." This caused management to reduce net sales guidance for Q3 to a range of $202 to $206 million down from expected $225 million. These decreases the expected net income per diluted share to now be between $0.27 to $0.31 from a previously anticipated $0.52. To make matters worse, management saw cash and marketable securities drop -28.7% from the year ago level of $113.4 million.

Additional content:

Icahn to Raise Stakes in Apple - Should You, Too?

Activist investor Carl Icahn has again made headlines with his plans to buy "a lot more" shares of Apple Inc. ( AAPL ), as per a CNBC report.

While Icahn has been a loyal Apple supporter for quite some time with about 55 million shares of the company, this time around the statement has sparked a lot of interest among investors.

This is because just a couple of days back, Icahn had released a video titled 'Danger Ahead' in which he stated - 'It's going to be a real bloodbath.' referring to the U.S. financial markets and warning investors that may be it's time to 'keep cash' instead.

The billionaire remarked he had hedged his portfolio sufficiently to minimize the damages that are likely to happen on account of the Fed's stance on a near zero interest rate, which is making investors go for high-yield debt bonds issued by highly leveraged companies.

In this scenario, with his plans to increase his stake in Apple, he gave a ray of hope to confused investors.

Icahn is known for his knack of investing in undervalued companies with a scope for decent growth. However, he is also known to influence management strategies, thereby having the potential to impact market sentiments. This is apparent from the fact that Apple shares inched up 1.14% in yesterday's trading session.

Icahn has already added about $3.4 billion to his wallet, since he invested in Apple back in 2013. At present, his stake in Apple would be somewhere around $5.8 billion.

What Does Icahn See in Apple the Market Doesn't?

"I don't see how you can compete with Apple, because of this ecosystem they've built" says Icahn in explanation of his stance on Apple.

The veteran has been saying for the past few months that Apple stock is grossly undervalued. In May, Icahn had written an open-letter to Apple CEO, Tim Cook stating that Apple's stock should have been valued at around $240 at that time. However, the target price was based on Apple's possible entry into television and automobile markets.

The letter emphasized that Apple's venture into new markets (like Apple Watch, Apple Pay, Homekit, Healthkit, Apple Music, Apple TV and others) are strengthening its ecosystem considerably for an unmatched user experience.

Icahn had also urged Cook to increase the company's share repurchase in addition to investments in innovation to make a better use of its cash pile.

It's All About Numbers!

Apple, even after falling significantly from its 52-week high position, is still the most valuable company of the world with a market cap of over $700 billion.

But more important is the company's potential to drive growth. Apple delivered phenomenal growth of over 44% in earnings and 33% in revenues in its third-quarter fiscal 2015 results. And this was despite the weakness in the Chinese economy (Apple's second largest market), to which it seems immune !

Additionally, according to our model, the company's long-term growth estimate of 14.1% is better than the industry's expected growth rate of 11%. Also, Apple's PEG ratio of 0.85, which compares favorably with the industry's figure of 2.01 indicates the further possibility of an upside going ahead. Positive estimate revision for this year's earnings over the last 7 days makes the stock even more attractive.

Bottom Line

Apple's solid business model, technological prowess and the sheer size of resources are what Icahn is betting on despite the downward-spiraling economy. As such, Icahn considers the present dip in prices as an opportunity to add position.

We believe that over the past seven years, the company has positioned itself well to maintain position even amid rocky market conditions.

As Icahn remarked in his letter to Cook, 'Apple has clearly demonstrated a track record of excellence and success when entering new categories. We expect this to continue with the Apple Watch, the television, and the car, and the world will look back on today's undervaluation as a fascinating example of market inefficiency'.

May be Icahn has stretched the target price a bit, but even then the company has enough steam left to drive growth.

Currently, Apple carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks in the broader tech space include Amazon.com, Inc. ( AMZN ) and eBay Inc. ( EBAY ), which carry a Zacks Rank #2 (Buy).

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CAL-MAINE FOODS (CALM): Free Stock Analysis Report

ZUMIEZ INC (ZUMZ): Free Stock Analysis Report

APPLE INC (AAPL): Free Stock Analysis Report

AMAZON.COM INC (AMZN): Free Stock Analysis Report

EBAY INC (EBAY): Free Stock Analysis Report

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Zacks Investment Research

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


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

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