Author: Benjamin Rains

SAM – Buy SAM Stock Down 25% Before Q2 Earnings?

The Boston Beer Company, Inc. (SAM Free Report) has skyrocketed 475% in the past five years as Wall Street dove into the stock on the back of SAM’s growth within the booming hard seltzer market. The stock has tumbled since its Q1 release in April, as Wall Street sold overheated shares and questioned how much longer the seltzer craze will last.

Now let’s examine SAM ahead of its second quarter FY21 financial release on Thursday, July 22.

Hard Seltzer & Craft Beer

Boston Beer has been at the forefront of the American craft beer industry since the 1980s and its portfolio currently includes Samuel Adams, Dogfish Head Brewery, and other craft brands. SAM then launched Truly Hard Seltzer in 2016 and in doing so helped kickstart the biggest alcoholic beverage revolution since light beer.

Truly is one of two dominant players in the category at the moment, alongside White Claw—owned by Mike’s Hard Lemonade maker Mark Anthony Brands. Truly and hard seltzer’s massive expansion forced Anheuser-Busch InBev (BUD Free Report) , Molson Coors (TAP Free Report) , Constellation Brands (STZ Free Report) , and even Coca-Cola (KO Free Report) , under its Topo Chico brand, to enter the hard seltzer market.

Boston Beer’s revenue surged 15% in fiscal 2018, another 26% in FY19, and 39% last year. The last three years represented SAM’s strongest top-line growth since 2014.

In fact, Boston Beer had never posted 30% or stronger revenue growth since it went public in the late 1990s until 2020. And Truly “generated triple-digit volume growth in 2020 and grew its velocity and its market share sequentially despite other national, regional and local hard seltzer brands entering the category.”

Zacks Investment Research
Image Source: Zacks Investment Research

Other Fundamentals

Boston Beer posted 65% sales growth in Q1, while its adjusted earnings skyrocketed. Despite the continued growth, SAM shares plummeted and Wall Street analysts lowered their EPS projections, as investors thought about the eventual slowdown of the seltzer market.

The stock has now fallen roughly 27% since right before its April 22 earnings release. SAM has slipped below both its 50-day and 200-day moving averages along the way. The stock did pop nearly 3% Monday amid the broader market pullback from its records to close regular hours at $951.50 a share.

Boston Beer currently sits below neutral RSI levels (50) at 42. And it’s trading over 40% below its year-long high and 20% under its median at 35X forward 12-month earnings. These factors could potentially provide Boston Beer shares runway if it impresses Wall Street Thursday.

Zacks estimates call for SAM’s first quarter revenue to climb another 43%, with adjusted EPS projected to pop 49%. Peeking ahead, Boston Beer’s FY21 revenue is projected to surge 39% from $1.74 billion to $2.41 and then climb 19% higher to reach $2.87 billion in 2022—it pulled in $996 million in FY18. At the bottom end, SAM’s adjusted earnings are projected to soar 60% and 21%, respectively.

Investors should also know that Boston Beer is a well-run and financially solid company, with no debt on its books at the moment. Plus, reports project the global hard seltzer market could reach $14.5 billion by 2027, expanding at a CAGR of over 16%. And the company has launched Truly Lemonade Hard Seltzer and Iced Tea Hard Seltzer. These efforts are part of Truly’s continued expansion within a highly competitive area.

Bottom Line

Boston Beer’s downward earnings revisions help it land a Zacks Rank #5 (Strong Sell) right now and it sits below key technical levels heading into its Q2 release. Investors should also note that SAM’s short interest was around 10.5%, as of the last reporting. Therefore, investors likely want to stay away from Boston Beer for now, or until it shows signs of a comeback.

CMG – Is It Too Late to Buy Soaring Chipotle (CMG) Stock?

Chipotle Mexican Grill (CMG Free Report) ) shares have skyrocketed 250% in the last three years, as its new CEO, who took over in 2018, prepares for the future while remaining true to the fast-casual burrito chain’s simple, fresh menu. CMG has already returned to new highs following a significant pullback in 2021 ahead of its Q2 FY21 earnings released on July 20.

Fast-Casual Champion

Brian Niccol took over as CEO in March of 2018, after he came over from Yum Brands’ (YUM Free Report) Taco Bell. The new boss didn’t do anything crazy or come up with a new menu item every week, to help CMG fight back from some foodborne illness setbacks. Instead, Chipotle focused on regaining its crown as the standard-bearer of the growing fast-casual industry through a rather consistent menu of fresh and quality ingredients.

Chipotle’s sales jumped 9% in 2018, 15% in 2019, and 7% in a pandemic-hit 2020. The company closed Q1 with over 2,800 restaurants in the U.S., Canada, and several other countries. Despite its size, the company hasn’t gone to the franchise model and it boasts that it’s the “only restaurant company of its size that owns and operates all its restaurants.”

Wall Street has cheered Chipotle’s huge digital and mobile ordering push, which allows people to order ahead and pick up in store, as well as its delivery efforts. CMG has adapted to the modern retail age where many customers crave online ordering and convenience, everywhere from Amazon (AMZN Free Report) to Starbucks (SBUX Free Report) .

Chipotle’s focus on digital ordering has paid off and it’s committed to customer retention, through rewards programs and more. Most importantly, CMG hasn’t changed its menu much over the years, as it remains focused on the staples that turned it into a titan.

That said, CMG announced in March its first ever on-menu quesadilla, after years of off-menu ordering was spurred by social media. The company is also leaning into its digital explosion by offering the quesadilla as a digital-only menu item available for pick-up or delivery.

Zacks Investment Research
Image Source: Zacks Investment Research

What Else

CMG’s 2020 revenue popped 7% to $6 billion, while digital sales soared 174% to account for 46% of total sales. The growth came as it faced covid setbacks and the disruption of its business lunch crowd for much of the past year. The company then topped Q1 FY21 estimates, with revenue up 23% and comps 17% higher.

Chipotle’s digital sales growth continued, with the segment up 134% to make up 50% of first quarter revenue. “A little more than half of the digital sales were from order ahead transactions as guests increasingly appreciate both the value and convenience offered by this channel, as well as the added convenience of more Chipotlanes,” the firm wrote in its Q1 release.

CMG did say it raised prices by roughly 4% across its menu, citing higher labor costs. Many others in the restaurant industry including McDonald’s (MCD Free Report) are raising pay, as well as dealing with inflation. But analysts remain largely unconcerned about higher prices at Chipotle, especially since a chicken burrito remains under $8 throughout much of the country.

Zacks estimates call for CMG’s fiscal 2021 sales to surge 23% to $7.35 billion, with FY22 set to climb another 13%. Plus, CMG’s fiscal 2021 comparable sales are projected to pop 16.2%. Meanwhile, its adjusted earnings are projected to soar 128% and 32%, respectively over this stretch.

Investors should note that 23% sales growth would be Chipotle’s best since 2014 and 13% expansion would come in not too far below FY19’s jump.

As we mentioned up top, CMG stock is up 250% in the last three years to crush the market and its industry. The stock has cooled down a bit, up 40% in the past 12 months to roughly match the Retail – Restaurants space. Chipotle stock has also gone on a somewhat wild ride in 2021, which includes a 20% climb since May 19.

CMG closed regular hours Thursday at $1,582 a share, down slightly from the records it hit earlier this week. The stock is trading at 56X forward 12-month earnings, which might be rich for many to pay for a burrito chain. But Wall Street has been willing to pay up for CMG and its current levels mark a 33% discount to its own year-long highs and come in below its median, even as its shares are right at new highs.

Bottom Line

Chipotle currently lands a Zacks Rank #3 (Hold), alongside an “A” grade for Growth in our Style Scores system. And 16 of the 23 brokerage recommendations Zacks has for CMG are “Strong Buys,” with none below a “Hold.”

Some investors might want to hold off CMG heading into earnings, as it could be used as a chance to take profits even if it posts strong results and offers great guidance. Nonetheless, those with long-term horizons should consider keeping their eye on the fast-casual powerhouse that’s prepared to thrive in the digital future, while offering tasty, fresh food.

KBH – Add this 'Strong Buy' Stock on the Dip to Your Q3 Portfolio?

KB Home (KBH Free Report) shares have tumbled about 25% since May 10, as Wall Street took profits on some cyclical and economically sensitive areas to dive back into technology stocks. Despite some recent setbacks, including a Q2 revenue miss, the homebuilder boasts some solid fundamentals and its outlook remains strong.

Quick Overview  

KB Home operates in 45 markets, mostly in highly desirable areas within Colorado, Arizona, Texas, California, Nevada, and Washington. The company allows buyers to customize many aspects of their homes. KBH is also committed to more energy-efficient offerings. In fact, the firm boasts that it is “the first builder to make every home we build ENERGY STAR certified.”

The Los Angeles-based firm has benefitted from the booming housing market that saw U.S. home sales hit their highest levels since 2006 in 2020. KBH and other U.S. builders are poised to grow going forward within a tight housing market that is, based on one recent report, 5.5 million units below necessary levels.

More importantly, the housing market is finally being driven by millennials. This plays into KBH’s strength since a majority of its clients are first-time buyers. KB Home said on its Q2 earnings call that it “opened 33 new communities in the second quarter,” but it noted that due to “heightened demand for our homes, we sold out more communities than we had projected.”

The broader dynamic of low supply and high demand is largely good for homebuilders despite challenges. KBH did miss Q2 sales estimates in late June, but it topped our earnings projections and its backlog skyrocketed 126% to $4.3 billion. “We are poised to deliver a substantial increase in revenue this year, at solid margins that we anticipate will contribute to a return on equity of roughly 20%,” CEO Jeffrey Mezger said in prepared remarks.

“As we look to 2022, our backlog, together with our expected community count growth, positions our company for another year of healthy expansion.”

Zacks Investment Research
Image Source: Zacks Investment Research

What Else?

Zacks estimates call for KB Home’s fiscal 2021 revenue to soar 44% to $6 billion and crush its pre-pandemic total of $4.6 billion in FY19, while its adjusted earnings are projected to soar 91% to $5.99 a share. Peeking further down the line, its FY22 sales are expected to climb 16.5% higher to $7 billion and lift its adjusted EPS by 17%.

KBH announced on July 8 that it upped its stock buyback program. Plus, its 1.5% dividend yield tops the 10-year U.S. Treasury and many of its fellow highly-ranked peers like Lennar (LEN Free Report) and Toll Brothers (TOL Free Report) .

KB Home stock has fallen 25% since climbing above $50 a share on May 10, which marked its highest levels since the financial crisis. The stock is still up over 20% in the last 12 months and 140% in the past five years to easily outpace its industry’s 100% run. KBH also trades at a 30% discount to its year-long median and 50% below its year-long highs at 5.9X forward sales, which comes in 20% below its industry’s average.

Bottom Line

KBH’s positive, post-release ESP revisions help it grab a Zacks Rank #1 (Strong Buy) right now, alongside its “A” grade for Value in our Style Scores system. On top of trading 25% below its recent highs, even as the broader market is trading near record levels, KB Home is near oversold RSI levels, which could give it runway.

That said, some investors might want to wait for signs of a comeback since KBH shares recently slipped below their 200-day moving average.

SDC – Bear of the Day: SmileDirectClub, Inc. (SDC)

SmileDirectClub, Inc. (SDC Free Report) is a direct-to-consumer focused teeth straightening firm that aims to challenge the orthodontics industry, as well as clear braces pioneer Invisalign. But SDC has largely struggled since its September 2019 IPO.

Wall Street Is Not Smiling

SmileDirectClub boasts it is the “first direct-to-consumer medtech platform for transforming smiles.” The company uses clear aligners to help customers straighten their teeth. SDC is part of the larger and growing e-commerce and DTC healthcare space.

SmileDirectClub offers consumers the ability to straighten, whiten, and clean their teeth, all without the need to leave their homes. The company now allows its clients to get a free in-person scan at one of its SmileShops, or utilize an at-home kit to create an impression. SDC aims to compete directly against Invisalign maker Align Technology, Inc. (ALGN Free Report) , offering direct comparisons on its website: “Doctor-directed teeth straightening for 60% less than Invisalign, guaranteed for life.”

Despite a much-talked-about IPO, SDC has struggled. The company’s 2020 sales fell over 12%. SDC also posted an adjusted FY20 loss of $77 million, or -$0.72 a share. The pandemic clearly didn’t help SmileDirectClub and many on Wall Street are betting against SDC stock, with it pretty heavily shorted.

Zacks Investment Research
Image Source: Zacks Investment Research

Bottom Line

SDC fell short of our adjusted first quarter EPS estimate, posting an adjusted loss of -$0.12 a share. Zacks estimates do call for the company’s revenue to climb in 2021 and 2022, with it also projected to trim its losses.

However, SmileDirectClub’s EPS outlook has trended in the wrong direction (as the nearby chart shows) to help it land a Zacks Rank #5 (Strong Sell) at the moment. SDC shares have also fallen 35% in 2021, and they recently fell below their 50-day moving average.

The downturn comes in direct contrast to the broader market and Invisalign maker Align’s nearly 20% climb so far this year. Therefore, investors might want to stay away from SDC for now, or until it shows signs of a comeback.

YETI – Bull of the Day: Yeti Holdings (YETI)

Yeti Holdings, Inc. (YETI Free Report) is in the midst of an impressive run as the high-end cooler company diversifies its product portfolio to reach more consumers and create sustainable growth opportunities. And Wall Street has loved the stock, pushing Yeti up 130% in the last year.

Expanding Its Cool

The Austin, Texas-based firm began selling its white, heavy-duty coolers that can hold ice for days roughly 15 years ago. Yeti’s journey from helping commercial fishing boats, food trucks, and countless other outdoor activities that rely on keeping ice cold for a long time into a billion-dollar retailer is a case study in the combination of functionality and brand building.

Yeti grew its customer base for its rugged, reliable, and simply-branded coolers that cost up to $1,300 by expanding its portfolio far beyond its now-iconic and massive white coolers. Today, the firm sells an ever-growing array of styles, sizes, and colors.

On top of coolers, Yeti sells multi-purpose buckets, gear-boxes, outdoor chairs, dog bowls, and other Yeti-made and branded offerings. The star of its expanding portfolio is drinkwear. The unit includes tumblers, mugs, bottles, jugs, and more. Drinkware accounted for nearly 60% of its total FY20 revenue.

Yeti has also ventured deeper into the bag market, where it’s rolling out more luggage, backpacks, and duffels. Wall Street might start to focus more on Yeti’s opportunity to compete against the likes of Away and other popular and expensive travel bags.

Zacks Investment Research
Image Source: Zacks Investment Research

Other Fundamentals

Yeti is a mainstay everywhere from boats, trucks, and campsites to backyards, car cupholders, and office desks. The company’s growing stable of products helped its 2020 sales soar 20% to $1.1 billion, with its direct-to-consumer revenue up 50% to account for nearly half of its sales.

Yeti’s DTC growth outside of its wholesale business to stores such as Dick’s Sporting Goods (DKS Free Report) and other outdoor-focused retailers will play a larger role going forward. Along with e-commerce, Yeti has slowly and strategically built its brick-and-mortar business beyond its flagship store in Austin.

The company currently has stores in Denver, Charleston, Chicago, and a few other locations. It has cultivated a hip, cool brand in the social media age that’s inspired knockoffs and similar looking products. Yeti is also part of a group of newer, higher-end brands thriving in the Amazon (AMZN Free Report) era that includes the likes of Lululemon (LULU Free Report) and Peloton (PTON Free Report) .  And perhaps most importantly, its products work and boast strong reviews and ratings across their various channels.  

Yeti crushed our first quarter 2021 estimates, with sales up 42%. The top-line expansion marked its highest as a public firm and came on top of 12% growth in Q1 FY20. Meanwhile, its adjusted earnings skyrocketed 245% and it gross margins climb 5.6% from the year-ago period to 58.6%—its gross margin sat at 42% three years ago.

Zacks Investment Research
Image Source: Zacks Investment Research

Yeti’s e-commerce segment climbed 60% during the quarter to help boost its margins. The company has invested in modernizing its back-end and supply chain efforts, which includes its beefed-up e-commerce business.

Plus, its wholesales unit popped 26% as its products continue to sell-through in retail. And its international space “grew triple digits for the period to reach an all-time Yeti high of 9% of net sales with good momentum across the global regions.”

The company is part of the Zacks Leisure and Recreation Products industry that’s in the top 6% of our over 250 industries and includes fellow highly-ranked stocks such as Callaway Golf (ELY Free Report) . Yeti stock has soared 130% in the last 12 months to more than double its peers. This run is part of a roughly 500% climb since its public debut.

Yeti has cooled off a bit, but it’s still up 35% in 2021 to easily top the S&P 500’s 17% climb and its industry’s sideways movement. The stock popped 1.6% during regular hours Monday to close at $93.09 a share, which puts it about 3% below its June records.

Despite its run and the broader market looking due for a bit of a pullback, Yeti sits near neutral RSI levels (50) at 56. The stock is also trading 18% below its year-long highs in terms of forward earnings, providing Yeti plenty of potential runway.

Zacks Investment Research
Image Source: Zacks Investment Research

Outlook

Yeti management upped its guidance and it’s prepared to continue benefitting from strong consumer spending, highlighted by pent-up demand, especially amid higher-income households who can afford $40 mugs and $300 coolers. “The momentum carried over from 2020 and on display to start 2021 showcases the passion for the brand and the relevance of our product portfolio as consumers continue to participate in the significant growth in active, outdoor lifestyles,” CEO Matt Reintjes said in prepared Q1 remarks.

Zacks estimates call for Yeti’s fiscal 2021 sales to jump another 22.5% to reach $1.34 billion, with FY22 revenue projected to climb 14% higher. These estimates follow FY19’s 17% expansion and FY20’s 19.5% and highlight continued strength for a company that went public in the fall of 2018.

At the bottom end of the income statement, Yeti’s adjusted earnings are projected to climb over 26% this year and another 17% in 2022. And these growth outlooks could come up well short since the firm has beaten our bottom-line estimates by an average of 82% in the trailing four periods, including a 73% Q1 beat.

Bottom Line

Yeti’s positive earnings revisions help it grab a Zacks Rank #1 (Strong Buy) right now, alongside its “B” grade for Growth in our Style Scores system. Plus, eight of the 14 brokerage recommendations Zacks has are “Strong Buys,” with nothing below a “Hold.”

YETI – Buy This Soaring, Highly-Ranked Stock Now for More Growth?

Yeti (YETI Free Report) stock has skyrocketed since it went public in 2018, including a 115% jump in the last year. The growing high-end cooler company’s expansion into other areas has attracted more customers and more Wall Street praise.

Far from Cooling Down    

Yeti started out as a high-end cooler maker about 15 years ago. Its heavy-duty offerings can cost up to $1,300 and they have become a mainstay on commercial fishing boats and other outdoor-activities that demand ice, given their rugged nature and ability to keep ice cold for days. But there is only so big a cooler firm catering to niche consumers can grow.

Yeti still sells those massive white coolers. More importantly, it sells a seemingly ever-expanding array of coolers in various styles, sizes, colors, and more. And its strong branding efforts have helped it turn into a billion-dollar business.

Along with coolers, Yeti sells gear-boxes, outdoor chairs, dog bowls, and much more. In fact, some of its most popular items are tumblers and mugs, with drinkware accounting for nearly 60% of total FY20 revenue.

Yeti is now a staple everywhere from car cupholders and office desks to cookouts, campsites, and beyond. And the company is currently focused on rolling out more luggage, backpacks, and duffels as it continually expands its reach.

Yeti’s 2020 sales jumped 19.5% to $1.1 billion, with its direct-to-consumer revenue up 50% to account for nearly half of its sales. The company’s DTC growth outside of its wholesale business to stores such as Dick’s Sporting Goods (DKS Free Report) , and other outdoor-focused retailers has helped improve its margins.

Along with e-commerce, Yeti has slowly built its brick-and-mortar business beyond its flagship store in Austin, Texas. The company currently has stores in Denver, Charleston, Chicago, and a few other strategic locations. All of these offerings are supported by its rather impressive brand building that’s inspired countless knockoffs.

Zacks Investment ResearchImage Source: Zacks Investment Research

Other Fundamentals

Yeti crushed our Q1 estimates, with sales up a whopping 42% and its adjusted earnings 245% higher. Looking ahead, Zacks estimates call for its full-year 2021 sales so jump another 22.5% and then pop 14% higher in FY22. These estimates would come on top of 17% top-line growth in FY19 and 19.5% last year.

Meanwhile, its adjusted earnings are projected to climb by 26% this year and another 17% in 2022. Yeti has also has topped our bottom-line estimates by an average of 82% in the trailing four periods.

Yeti is part of the Leisure and Recreation Products industry that’s in the top 7% of our over 250 Zacks industries. It is poised to benefit from continued spending and pent-up demand, especially amid higher-income households that can afford $40 mugs and $300 coolers.

Yeti is also part of a group of newer, higher-end brands thriving in the Amazon (AMZN Free Report) age that includes the likes of Lululemon (LULU Free Report) , Peloton (PTON Free Report) , Canada Goose (GOOS Free Report) , and others. “The momentum carried over from 2020 and on display to start 2021 showcases the passion for the brand and the relevance of our product portfolio as consumers continue to participate in the significant growth in active, outdoor lifestyles,” CEO Matt Reintjes said in prepared Q1 remarks.

As we mentioned up top, Yeti has surged 115% in the last year, which is part of a roughly 430% climb since its public debut. The stock had cooled off a bit earlier in the year. But it’s up 15% in the past three months to outclimb its industry and the market.

Yeti closed regular hours Thursday 5% below its early June record at around $90 a share. Despite its run and the broader market looking due for a bit of a pullback, Yeti sits below neutral RSI levels. The stock is also trading 15% below its year-long highs in terms of forward earnings.

Bottom Line

Yeti’s positive EPS revisions help it capture a Zacks Rank #1 (Strong Buy) at the moment, alongside its “B” grade for Growth in our Style Scores system. Plus, eight of the 14 brokerage recommendations Zacks has are “Strong Buys,” with nothing below a “Hold.” Therefore, investors with long-term outlooks might want to consider Yeti.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

APPS – Buy This Strong Growth Tech Stock in Q3 and Hold?

Digital Turbine, Inc. (APPS Free Report) shares soared from around $7 last year to nearly $100 in March. The mobile app and digital advertising-focused tech firm, which has expanded through acquisitions recently, has seen its stock price fall from its highs. But Wall Street has already started to jump back in amid the tech resurgence that’s pushed the Nasdaq to records, driven by Facebook (FB Free Report) , Adobe (ADBE Free Report) , Microsoft (MSFT Free Report) , and others.

Mobile Expansion

Digital Turbine connects OEMs, mobile operators, and publishers with advertisers and developers for “frictionless app and content discovery, user acquisition and engagement, operational efficiency and monetization opportunities.” The Austin, Texas-headquartered firm boasts it has delivered more than “three billion app preloads for tens of thousands advertising campaigns.”

APPS has also prepared for the future through acquisitions, including its Mobile Posse purchase last March. The firm then acquired AdColony at the end of April, adding proprietary video technologies and rich media formats that deliver “industry-leading third-party verified viewability rates for well-known global brands, such as Disney (DIS Free Report) .

In a world full of smartphones and consumer tech, with everyone addicted to their devices from Apple (AAPL Free Report) to Samsung, Digital Turbine is poised to grow. In fact, APPS has landed on Deloitte’s Technology Fast 500 list multiple times in the last several years. And Digital Turbine has announced and completed other acquisitions in the last several months that help provide an “opportunity to significantly increase” its share of the “$300+ billion mobile media advertising market.”

Zacks Investment ResearchImage Source: Zacks Investment Research

Other Fundamentals

Digital Turbine beat our Zacks fourth quarter fiscal 2021 estimates on June 1, with its revenue up 126% to top FY20’s 34% jump. Looking ahead, our estimates call for its revenue to skyrocket 258% from $314 million to $1.1 billion in FY22. APPS is then projected to follow up these acquisition-driven years with another 30% expansion next year.  

Meanwhile, its adjusted earnings are expected to surge 111% to hit $1.56 a share this year, before climbing another 52% in fiscal 2023. Plus, analysts raised their bottom-line outlooks on its strong guidance, with its FY22 consensus up 26% and FY22 28% higher.

As we touched on at the top, APPS skyrocketed from $7 a share last year to roughly $100 in March. Digital Turbine then slipped back to Earth, as Wall Street sold pandemic high-flyers. The pullback provided a healthy recalibration for the mobile app technology company.

Buyers jumped in after it tumbled nearly 40%. The stock has climbed 30% since May 12, having recently broken above its 50-day moving average. The stock closed regular trading Wednesday still 20% below its records at $76 a share, proving plenty of more potential runway.

Digital Turbine also sits near neutral RSI levels (50) at 56 at the moment. And APPS trades at a 40% discount to its own year-long median at 6.0X forward 12-month sales.

Bottom Line

Overall, Digital Turbine’s positive earnings revisions help it land a Zacks Rank #1 (Strong Buy) right now, alongside its “A” grade for Growth in our Style Scores system. On top of that, four of the five brokerage recommendations Zacks has for Digital Turbine are “Strong Buys,” with the other at a “Hold.”

Bitcoin, Like the Internet Itself, Could Change Everything

Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.

Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.

See 3 crypto-related stocks now >>

BBY – Buy BBY Stock Before Earnings Amid Strong Retail Results?

The first quarter earnings season has been impressive, from technology titans such as Apple (AAPL Free Report) all the way to the recent reports from Target (TGT Free Report) and other big retailers. Best Buy (BBY Free Report) benefitted from the coronavirus-forced remote schooling and work push. But the strong showing might put pressure on the consumer electronics retailer in 2021.

Let’s look at BBY ahead of its Q1 FY22 financial release before the opening bell on Thursday, May 27 to see if investors might want to buy the stock.

Tech Retail Growth

Best Buy sells smartphones, TVs, connected-appliances, and nearly every other consumer electronics device under the sun. The firm benefitted from remote work and school, as people were forced to purchase laptops, tablets, and more to adapt.

The coronavirus aside, tech devices and the broader consumer electronics space will grow for years in our digital and device-heavy world. BBY, like every other retailer, has spent the last several years working to improve its digital commerce offerings in order to succeed long-term in an age where millions of shoppers crave the convenience Amazon (AMZN Free Report) helped popularize and normalize.

Best Buy’s revenue climbed by 8.3% last year for its best top-line expansion in ten years. Meanwhile, its adjusted earnings jumped 30%. The company’s online sales helped drive its growth last year, with domestic comparable online sales up 144%.

Executives said that online sales made up about 43% of total Q4 revenue. “Our stores played a pivotal role in the fulfillment of these sales, as almost two-thirds of our online revenue was either picked up in store or curbside, shipped from a store or delivered by a store employee,” CEO Corie Barry said in prepared remarks.

More recently, BBY joined Walmart (WMT Free Report) and other retailers in the subscription services space. Best Buy announced on April 7 that it’s piloting a new membership program, called Best Buy Beta. The $199.99 a year service includes “exclusive member pricing, unlimited Geek Squad technical support, up to two years of protection on most product purchases, free standard shipping and delivery, and free installation on most products and appliances,” as well as some other perks.

What’s Next?

Best Buy said last quarter it expects online sales to account for approximately 40% of total domestic sales this year. The company also announced plans to buy back “at least $2 billion” in stock. Peeking ahead, Zacks estimates call for its adjusted Q1 FY22 earnings to soar 103% to $1.36 a share on 21% higher sales.

These projections come up against an easier to compare period, given BBY’s fiscal year ended on January 30 and its first quarter will include the three-month period ended near May 1. With this in mind, Best Buy’s adjusted fiscal 2022 (current year) EPS is projected to slip 6.3% on 1% lower revenue.

BBY does boast a solid history of quarterly earnings beats, including big beats in the first three quarters last year. And it has seen its earnings outlook turn more positive recently.

Bottom Line

Best Buy has soared 310% over the last five years to easily top Walmart, Target, and the S&P 500. BBY is also up 50% in the last year and 15% in 2021 to continue its outperformance. BBY closed regular hours Tuesday at $114.42 a share, which puts it about 10% below its records. The recent pullback has also pushed it under neutral RSI levels at 43.

Despite this growth and outperformance, BBY trades at a significant discount against some of its competitors at 14.9X forward 12-month earnings and its industry’s 28.8X average. This also marks value compared to its own year-long median. Furthermore, Best Buy’s 2.44% dividend yield crushes the S&P 500, the 10-year Treasury’s 1.56%, and Walmart’s 1.55%.

Best Buy’s earnings revision activity helps it land a Zacks Rank #3 (Hold) at the moment, alongside “A” grades for Growth, Value, and Momentum in our Style Scores system. All of this means some investors might want to consider BBY as a solid retailer to add to their longer-term portfolios.

Bitcoin, Like the Internet Itself, Could Change Everything

Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.

Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.

See 3 crypto-related stocks now >>

TGT – Why Target (TGT) Stock is a 'Strong Buy' At New Highs

Target (TGT Free Report) crushed first quarter estimates on May 19 and provided upbeat guidance during a busy week for retail earnings that featured fellow heavyweights Home Depot (HD Free Report) , Lowe’s (LOW Free Report) , and Walmart (WMT Free Report) . TGT stock has surged to new highs since its report as Wall Street continues to dive into the big-box retailer.

Quick Q1 Recap

Target’s Q1 FY21 revenue surged 23.4% to reach $24.2 billion. This crushed our Zacks estimate and blew away the year-ago period’s 11% growth, which included the early coronavirus lockdown period. At the bottom end of the income statement, TGT’s adjusted first quarter earnings skyrocketed 525% to $3.69 a share to top our estimate by over 60%.

The first quarter marked Target’s third beat of 60% or higher in three out of the last four quarters. Target also provided strong Q2 guidance that called for mid-to-high single-digit comps growth and “positive single-digit comparable sales growth in the last two quarters of the year.”

Since its report, analysts have raced to raise their earnings outlook (see chart).

Business is Booming

Target’s e-commerce boom saw it thrive during the heart of the pandemic and those same offerings will help sustain its growth in the modern retail age. TGT’s same-day offerings feature in-store pickup, Drive Up, and its subscription-style Shipt unit. Along with its new-age shopping push, the Minneapolis-based retailer has focused even more heavily on its own in-house brands for fashion, furniture, food, and more.

TGT’s various store brands have expanded and stood out because of the company’s ability to constantly adapt and stay on-trend, while remaining affordable. These efforts include athleisure brands that challenge the likes of Lululemon (LULU Free Report) , its Good & Gather grocery brand, and many others.

The company’s growing slate of in-house brands have helped separate TGT from rivals like Walmart and Costco (COST Free Report) within some key demographics. Target’s owned brands grew by 36% in Q1, which company executives said was the strongest increase “ever recorded.”

Target has successfully positioned itself as a fantastic one-stop shopping option and has been able to grow despite Amazon’s (AMZN Free Report) constant pressure on the industry at large. TGT’s Q1 comps jumped 23%, with digital up another 50%—on top of the year-ago quarter’s 141%. And its same-day services climbed 90%.

Wall Street has also focused on Target’s impressive margins that help it stand out against many of its big-box peers. Its Q1 operating margin came in at an “unprecedented” 9.8%, up from a “very healthy” 6.4% before the pandemic in Q1 FY19.  Looking ahead, Target expects its full-year operating margin rate could reach 8% “or somewhat higher” to easily top last year’s 7%.

The company has been able to grow its margins despite the new offerings since it is not reliant on separate fulfillment centers or warehouses. “The distinction between a store sale and a digital sale is largely irrelevant. Because of our unique stores and hub model, more than three-quarters of our first-quarter digital sales were fulfilled by our stores,” CEO Brian Cornell said on its earnings call.

Bottom Line

Target’s adjusted 2020 earnings soared 47% on 20% stronger sales. Looking ahead, TGT is expected to post more growth this year, even as it comes up against an unprecedented coronavirus-boosted year. Zacks estimates call for the company’s FY21 revenue to pop another 4.5% to come in at $98 billion to help lift its adjusted earnings by 12%.

Target’s strong post-release EPS revisions help it grab a Zacks Rank #1 (Strong Buy) at the moment. The stock also lands an “A” grade for Momentum and a “B” for Growth in our Style Scores system. And 15 of the 20 brokerage recommendations Zacks has for TGT are “Strong Buys,” with none below a “Hold.”

Despite its market and industry-beating run over the past three years, Target trades at a discount compared to its industry and WMT. Along with its strong valuation, its 1.21% dividend yield tops its industry’s 0.81% average. And the booming U.S. economy looks poised to help retailers as consumers continue to spend.

The stock has surged 9% since its release and it closed at another new high Monday at over $225 a share. The recent run has pushed Target stock right near oversold RSI levels of 70. This could see it face near-term selling pressure as investors take profits and let the stock that’s already soared 95% in the past year possibly cool down a bit.

Nonetheless, long-term investors don’t need to worry as much about trying to time stocks and might want to consider adding Target to their portfolios.

Infrastructure Stock Boom to Sweep America

A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.

The only question is “Will you get into the right stocks early when their growth potential is greatest?”

Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.

Download FREE: How to Profit from Trillions on Spending for Infrastructure >>

  • 1
  • 2