Chicago, IL - September 17, 2015- Zacks Equity Research highlights Red Lion Hotel ( RLH ) as the Bull of the Day and Ultimate Software ( ULTI ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Altria Group Inc. ( MO ), Post Holdings Inc. ( POST ) and Constellation Brands Inc. ( STZ ).
Here is a synopsis of all five stocks:
Red Lion Hotel ( RLH ) doesn't have the type of Zacks Style Scores I like to see, but that isn't stopping me from being bullish on this small hotel company. Analysts have recently increased their earnings estimates and that has helped push the stock to a Zacks Rank #1 (Strong Buy) and today it is the Bull of the Day.
I normally like to see a Growth Style Score of "A" but RLH is sporing the complete opposite of that with an "F." The Momentum Style Score of "B" is nice to see, but that focusing more on earnings momentum.
The Value Style Score of "D" isn't something that concerns me that much either as I am generally looking for stocks that are not what Value investors are interested in.
One general rule of thumb says that Growth Investors and Value Investors are looking for two distinctly different things. That is why I like to see a big discrepancy between the growth and value style scores, but that is not the case for RLH.
One reason for this is that the story is still pretty new and developing. Being a pretty small cap company is also keeping it off many radar screens, but that might soon change.
Red Lion Hotels Corporation owns, manages, and franchises hotels under its Hotel RL, Red Lion Hotel, Red Lion Inn & Suites, GuestHouse International, and Settle Inn brands. As of August 11, 2015, it had 130 hotels. The company was formerly known as WestCoast Hospitality Corporation and changed its name to Red Lion Hotels Corporation in September 2005. Red Lion Hotels Corporation was founded in 1937 and is headquartered in Spokane, Washington.
Ultimate Software ( ULTI ) has missed the Zacks Consensus Estimate in each of the last two quarters. Along with those misses, analysts are lowering estimates and that has pushed the Zacks Rank on the stock lower. It is a Zacks Rank #5 (Strong Sell) and it is the Bear of the Day.
The Ultimate Software Group provides cloud-based human capital management solutions primarily to enterprise companies. The company was founded in 1990 and is headquartered in Weston, Florida.
Earnings estimate revisions, which is the primary component of the Zacks Rank, have fallen dramatically. The Zacks Consensus Estimate was at $1.47 at the start of this year, but is now $0.93. That is a huge drop in the 2015 Zacks Consensus Estimate.
As estimates increase, the stock tends to follow. The Zacks Rank is impacted by earnings estimate increases, beats and incorporates the idea of analyst agreement and magnitude. As a Zacks Rank #5 (Strong Sell) we see that estimates are moving lower.
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Do You Hold These Consumer Staples Outperformers?
Standing amid an unstable global economy and the roller-coaster ride the stock market has been on; investors are at a crossroads, wondering which path to take? The markets across the globe have been see-sawing in the face of a dwindling economic environment and devaluation of most currencies against the U.S. dollar.
The latest headlines from the global economic news columns highlighted China's slowing growth rates, the recent fall in Chinese stock markets and various economic challenges facing the country. Further, the world's second-largest economy sent shock waves around the world by its sudden decision to devalue the yuan, which worsened the economic picture worldwide.
This global turmoil has also impacted the otherwise resilient U.S. markets, which have been unstable for quite a while and declined to some extent following the slump in the Chinese economy. The Dow Jones fell nearly 7.3%, while the S&P 500 declined close to 5.6% in the past three months.
Although the major U.S. indices have turned south over the past few months, resulting in a slowdown in stock prices of most companies, we have identified three stocks from the consumer staples sector that have outperformed the major indices in the past three months.
The stocks in this sector have been performing reasonably well, driven by a moderate economic recovery in the U. S., improving job scenario, better business and renewed optimism as a result of the housing recovery. Also, lower fuel prices and rising wages have raised consumers' disposable income.
In many cases, commodity costs have stabilized and this in turn, has improved profit margins for certain staples companies. The favorable margins should help offset some of the negative effect that unfavorable currency translations typically has on earnings.
3 Prominent Picks
Altria Group Inc. ( MO )
Altria Group is among the leading manufactures and sellers of cigarettes, smokeless products, and wine in the United States and internationally. The company has been able to maintain leading positions in cigarettes with Marlboro, machine-made large cigars with Black & Mild and smokeless tobacco with Copenhagen and Skoal.
The shares of Altria Group have been on an impressive run over the last three months, rising 12.7%. Moreover, this Zacks Rank #2 (Buy) stock has a long-term earnings growth rate of 7.8%. The Richmond, VA-based company has delivered an average positive earnings beat of 1.1% over the trailing four quarters. It is expected to witness earnings growth of 9.1% in 2015 and 8.7% in 2016.
Post Holdings Inc. ( POST )
We also recommend Post Holdings, a leading producer and seller of refrigerated, active nutrition, and private label food products in North America. Shares of this Zacks Rank #2 stock have surged 4.04% in the last three months and have a long-term earnings growth rate of 7%.
The St. Louis, MO-based company has delivered average positive earnings in the trailing two quarters. It is expected to witness earnings growth of 259.5% in fiscal 2015 and 96.6% in fiscal 2016.
Constellation Brands Inc. ( STZ )
Another stock that stands out is Constellation Brands, the largest wine company in the world with a strong portfolio of premium wine brands, complemented by spirits, imported beer and other select beverage alcohol products. Shares of this Zacks Rank #2 stock have grown 9.2% over the last three months and have a long-term earnings growth rate of 11.8%.
The Victor, NY-based company has delivered an average positive earnings beat of 4.3% over the trailing four quarters. It is expected to witness earnings growth of 12.8% in fiscal 2016 and 13.6% in fiscal 2017.
Though the markets do not seem rewarding at the moment, we suggest stock picks like the ones mentioned above, based on price performance, earnings history and outlook that can help investors to skim the cream off these frothy markets.
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About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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