For Immediate Release
Chicago, IL – June 13, 2017 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Lantheus Holdings, Inc. (NASDAQ: LNTH – Free Report ), Nutrisystem, Inc. (NASDAQ: NTRI – Free Report ), Telecom Argentina S.A. (NYSE: TEO – Free Report ), The Chemours Company (NYSE: CC – Free Report ) and British American Tobacco (LON:BATS) p.l.c. (NYSEMKT: BTI – Free Report ).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free .
Here are highlights from Monday’s Analyst Blog:
Rotate Out of Tech: 5 Alternative Stock Picks
The year’s top performing sector turned headwind for burgeoning equity markets on Friday, as stocks closed mixed. Tech stocks were the worst performers for the day with the Nasdaq closing 1.8% lower. The tech-heavy index also posted its worst weekly performance for the year. All big tech names driving up the markets this year lost in excess of 3% during the trading session.
Most market watchers think that fears about soaring valuations led to the decline of tech stocks on Friday. Not everyone is on the same side, though, with many analysts pointing out that the selloff is likely to subside soon.
However, in case such a trend continues over the next few weeks, should you give up your hard-gotten gains in a hurry? It makes sense to rotate into some of the year’s other leading sectors. Picking such stocks would boost portfolio gains for you in the weeks ahead.
FAAMG Group Felled by Valuation Concerns
On Friday, Goldman Sachs (NYSE:GS) issued a report regarding the top five performing tech majors of the year, which triggered off several questions about the sector’s recent gains. The report raised concerns about the exorbitant valuations and low levels of volatility for this group. It goes to the extent of saying that such stocks have developed a close correlation with such safe haven sectors like utilities and bonds.
The group in question, comprising of Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) has together added around $600 billion to overall market capitalization this year. Goldman Sachs points out that they account for only 13% of the S&P 500 but have contributed nearly 40% of its performance year to date.
Profitability the Key Difference from Dotcom Era
Ultimately, the report reaches a conclusion which could cause some alarm. According to Goldman Sachs, today’s tech majors are better placed in terms of cash balance, valuation and cash flow compared to the leading five tech stocks in the first quarter of 2000. However, the group lags on account of profitability, measured using total assets and gross profits. Only Microsoft made the older list which includes Lucent, Intel (NASDAQ:INTC), Oracle (NYSE:ORCL) and Cisco Systems (NASDAQ:CSCO).
Of course, another section of market watchers take a completely different stance on tech stocks. They point out that business conditions for the sector remain excellent. Also, investors have been quick to react to poor earnings performance or other stock-specific worries. But Apple’s downgrade on Sunday proves that a near-term storm for tech stocks is still brewing. At this time, it’s best to look at the year’s other sector leaders to shore up your gains.
Investing in the Year’s Other Winners
Coming in right after the Technology Select Sector SPDR, which is up 15.8% year to date, is the Health Care Sector SPDR which has gained 12.5% up to now. Concerns related to upcoming reforms are brewing for the sector. However, biotech earnings and the solid nature of sector majors have maintained the popularity of the sector.
The Consumer Discretionary Select Sector SPDR comes in next and is up 11% year to date on optimism over economic growth and tax reductions. More surprising is the success of the Utilities Select Sector SPDR ETF (NYSE:XLU), up 10.5% year to date. Possibly, the lure of stable dividends has buoyed this safe haven sector.
Materials have registered strong gains after Nov 8, riding on expectations that a stronger economy would boost demand. This is likely why the Materials Select Sector SPDR is up 9.9% year to date. And to round off the list, consumer staples remain a favorite for risk-averse investors seeking higher yields than those available in the bond market. Consequently, the Consumer Staples Select Sector SPDR is up 9.6% in 2017 till now.
Our Choices
Tech stocks are likely to remain strong performers this year, given the strong demand for the industry’s products. But losses are likely in the weeks ahead given concerns raised over valuation and excessive gains for the sector stocks.
In such a scenario it makes good sense to rotate into other sectors, at least partially, especially into those which also offer strong gains. However, picking winning stocks may be difficult.
This is where our VGM score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.
We have narrowed down our search to the following stocks, each of which has a Zacks Rank #1 (Strong Buy) and a good VGM score. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Lantheus Holdings, Inc. (NASDAQ:LNTH – Free Report ) is involved in developing, manufacturing, selling and distributing diagnostic medical imaging agents and products for diagnosis of cardiovascular and other diseases.
Lantheus Holdings has a VGM Score of B. The company has expected earnings growth of 28.5% for the current year. The forward price-to-earnings ratio (P/E) for the current financial year (F1) is 17.35, lower than the industry average of 17.57. The stock has returned 86.6% year to date, outperforming the Zacks Medical sector, which has gained 9.3% over the same period.
Nutrisystem, Inc. (NASDAQ:NTRI – Free Report ) is a leading provider of weight management products and services.
Nutrisystem has a VGM Score of B. The company has expected earnings growth of 37.4% for the current year. The stock has returned 32.8% year to date, outperforming the Zacks Consumer Discretionary sector, which has gained 10.9% over the same period.
Telecom Argentina S.A. (NYSE:TEO – Free Report ) is a provider of telecom and related services in Argentina and other countries
Telecom Argentina has a VGM Score of A. The company has expected earnings growth of 10.8% for the current year. It has a P/E (F1) of 16.51x, lower than the industry average of 17.18. The stock has returned 39.9% year to date, outperforming the Zacks Utilities sector, which has gained 6.6% over the same period.
The Chemours Company (NYSE:CC – Free Report ) is a provider of performance chemicals with worldwide operations.
Chemours has a VGM Score of A. The company has expected earnings growth of more than 100% for the current year. Its earnings estimate for the current year has improved by 0.8% over the last 30 days. The stock has returned 81.6% year to date, outperforming the Zacks Basic Materials sector, which has gained 5.9% over the same period.
British American Tobacco p.l.c. (NYSEMKT:BTI – Free Report ) is the holding company of a group of companies which manufacture, market and sell tobacco products.
British American Tobacco has a VGM Score of B. Its earnings estimate for the current year has improved by 2.6% over the last 30 days. The stock has returned 24.5% year to date, outperforming the Zacks Consumer Staples sector, which has gained 10.1% over the same period.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
Get the full Report on LNTH - FREE
Get the full Report on NTRI - FREE
Get the full Report on TEO - FREE
Get the full Report on CC - FREE
Get the full Report on BTI - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Lantheus Holdings, Inc. (LNTH): Free Stock Analysis Report
NutriSystem Inc (NTRI): Free Stock Analysis Report
Telecom Argentina Stet - France Telecom S.A. (TEO): Free Stock Analysis Report
Chemours Company (The) (CC): Free Stock Analysis Report
British American Tobacco p.l.c. (BTI): Free Stock Analysis Report
Original post
Zacks Investment Research