Advertisement
UK markets close in 17 minutes
  • FTSE 100

    7,963.20
    +31.22 (+0.39%)
     
  • FTSE 250

    19,891.74
    +81.08 (+0.41%)
     
  • AIM

    743.68
    +1.57 (+0.21%)
     
  • GBP/EUR

    1.1698
    +0.0029 (+0.25%)
     
  • GBP/USD

    1.2629
    -0.0009 (-0.07%)
     
  • Bitcoin GBP

    56,140.39
    +1,646.80 (+3.02%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,253.16
    +4.67 (+0.09%)
     
  • DOW

    39,788.96
    +28.88 (+0.07%)
     
  • CRUDE OIL

    82.60
    +1.25 (+1.54%)
     
  • GOLD FUTURES

    2,236.80
    +24.10 (+1.09%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,496.43
    +19.34 (+0.10%)
     
  • CAC 40

    8,211.51
    +6.70 (+0.08%)
     

Celsius Holdings and PacWest Bancorp have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – May 16, 2023 – Zacks Equity Research shares Celsius Holdings CELH as the Bull of the Day and PacWest Bancorp PACW as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Pulte Group PHM, Steel Dynamics STLD and W.W. Grainger GWW.

Here is a synopsis of all five stocks:

Bull of the Day:

Healthy energy drink maker Celsius Holdings is currently one of the most compelling growth stories on Wall Street. The company is separating itself from the pack with its delicious and healthy carbonated and non-carbonated energy drinks. Under the "Essential Energy" brand, the company offers sparkling and carbonated options in various flavors clinically proven to burn body fat and speed up the metabolism while exercising. Celsius also offers "Smartly Sweetened", "Performance Energy", and "Recovery Fuel". Unlike many of its competitors, Celsius energy drinks use no aspartame, high fructose corn syrup, added sodium, or artificial flavors.

Record Earnings

Last Wednesday, CELH shares were energized by the company's first-quarter earnings results. Revenue grew 94% year-over-year, while EPS shot higher by 344%. CELH bested Zacks Consensus Estimates by a wide margin of 81.82%. President and Chief Executive Officer John Fieldly said, "During the first quarter of 2023, Celsius delivered an all-time quarterly record revenue of $260 million in sales and over $34 million in net income, driven by expanded availability and increased consumer awareness. In addition, we continue to further transition into Pepsi's best-in-class distribution system."

Caffeinated Earnings Forecasts

When determining a stock's prospects, forward earnings estimates supersede current earnings. Celsius is a company that boasts both. For full-year 2023, Zacks Consensus Estimates forecast 149.43% EPS growth, year-over-year.

ADVERTISEMENT

Beyond the strong forecast, analysts raised estimates following the recent earnings report – another bullish sign.

Price & Volume

After the hefty price move earlier in the week, it's understandable that investors wonder whether buying Celsius at these levels is chasing. However, CELH is showing all the classic signs of a breakaway gap. A breakaway gap occurs at the beginning of a move when a stock gaps above prior resistance.

Breakaway gaps typically have 3 characteristics inherent in them, including:

·      Massive volume: Heavier than average volume turnover signifies strong demand on the price gap. Last Wednesday, CELH's volume swelled to levels 575% above the norm.

·      Large price move: Small gaps typically get filled, while large gaps tend to spark new trends. CELH closed higher by nearly 20% and finished near the top of the daily price range.

·      Break above resistance: CELH broke out of a five-month base structure. Bulls will not need to fight overhead supply now that the stock is back to fresh highs.

Conclusion

Celsius has all the ingredients of a winning stock, including a unique product offering, strong current and future earnings growth, and signs of heavy buying demand from a price and volume perspective.

Bear of the Day:

Since March, the following banks have collapsed or have been sold for pennies on the dollar: Signature Bank of New York, Silvergate Capital, Silicon Valley Bank, First Republic and Credit Suisse.Though Fed Chairman Jerome Powell called the U.S. banking system "strong" a week and a half ago, clearly, markets disagree. Unfortunately for Powell, he has no real choice in the matter – if he calls the banking system weak, it will induce more bank runs and withdrawals.

PacWest Company Overview

PacWest Bancorp is a Los Angeles-based bank holding company with one wholly-owned banking subsidiary, Pacific Western Bank. The company provides commercial banking services, including real estate, construction and commercial loans, and comprehensive deposit and treasury management services to small and medium-size businesses.

Is PacWest the Next Domino to Fall?

In the fourth quarter of 2022, PACW experienced withdrawals of roughly $5 billion. Since then, deposits have stabilized. However, any way you spin it, PacWest's first quarter earnings announcement was disappointing, to say the least. Earnings growth slowed by 35% versus last year. Though the company reported adjusted earnings of $0.66 per share, non-adjusted earnings careened lower to a loss of $10.22 a share.

Beyond the fluctuations in deposits held and the negative earnings trajectory, one of the biggest concerns for investors is the skyrocketing debt of the company. In 2023 alone, the debt-to-equity ratio has skyrocketed by more than 400%.

Though PacWest is currently solvent, one primary concern is the current narrative in the regional banking sector. As customers see regional banking stocks tanking, they may shift their money to larger "household" banking names such as JP Morgan or Bank of America. In other words, the narrative around the company and its falling stock price may trigger a self-fulfilling phenomenon.

Technical View

PacWest's price action is the definition of relative weakness. Over the past twelve months, PACW has underperformed 99% of its peers. The stock remains steeped in a downtrend, and until it can get back over the 50-day moving average, it should be considered an avoid.

Conclusion

PacWest is a bank at the heart of the current regional banking crisis. PACW suffers from soaring debt, lackluster earnings, and abysmal price action. Barring any government or FDIC intervention, investors should avoid the stock.

Additional content:

3 Top-Ranked Stocks with Substantial Share Buyback Programs

Stock buybacks, also known as share repurchase programs, are one of several ways for companies to return cash to shareholders. By absorbing a portion of the outstanding shares, a company effectively reduces the share count implicitly boosting the share price.

Companies will do this when the stock is undervalued, or there are limited reinvestment opportunities currently available. Buybacks aren't without limitations though as there are plenty of ways for companies to enact them in a poor way. However, many of the best companies have a long history of strategically buying back shares at the benefit of investors.

Seeing a chart of declining shares outstanding can be one strong indicator of responsible management, and a stock that has likely been trending higher. To further improve the likelihood of buying a good stock, investors can utilize Zacks proprietary research, which identifies stocks with an elevated probability of moving higher in the near term.

In this article I will cover three stocks that have considerably reduced their outstanding shares over the last decade, have a strong performing stock, and a high Zacks Rank.  Pulte Group, Steel Dynamics and W.W. Grainger fit all those criteria.

Pulte Group

Pulte Group is a homebuilder and financial services company based in the US. The Homebuilding segment offers a wide variety of home designs including single family detached, townhouses, condominiums, and duplexes at different prices. The financial services segment is just 2% of total revenues and offers mortgage banking and title services.

Pulte Group has been a persistent buyer of its own shares over the last decade. Over that time the number of shares outstanding has been reduced by 40%. Also in the last decade, PHM shares have compounded at an annual rate of 12.6%, slightly edging out the returns of the S&P 500.

Revenues over the last ten years have grown tremendously as well, nearly tripling from $5.8 billion in 2014, to $16.8 billion today. PHM has been extremely generous to its shareholders, significantly increasing dividends over that period as well. With growing revenues, and dividends in addition to the share buybacks, PHM's stock price appreciation is clearly more than just financial engineering.

Pulte Group is trading at a one-year forward earnings multiple of 7.5x, which is below the industry average of 10x, and below its 10-year median of 10.4x. PHM also boasts a Zacks Rank #1 (Strong Buy), indicating upward trending earnings revisions.

Steel Dynamics

Steel Dynamics is among the leading steel producers and metal recyclers in the US. It currently has steelmaking and coating capacity of around 16 million tons. STLD is one of the most diversified steel companies in the country with a vast range of specialty products. The company makes and markets steel products, processes and sells recycled ferrous and nonferrous metals, and fabricates and sells steel joist and decking products internationally.

Steel Dynamics is another company that has made huge efforts to consistently buy back shares. Between 2016 and today, total shares outstanding have been reduced by 30%. Also, over that period revenues have tripled from $7.7 billion to $21.6 billion, and dividends per share have also tripled.

Like Pulte Group, Steel Dynamics stock has clearly rallied for reasons other than its share buybacks, namely the marked growth in revenues and investor friendly dividend payouts. Since 2016 STLD has compounded at an annual rate of 24%, doubling the annual returns of the broad market index.

STLD is trading at a one-year forward earnings multiple of 5.9x, which is below the industry average 6.6x, and below its 10-year median of 12x. With such a relatively low valuation as well as a Zack Rank #2 (Buy), STLD is a worthy consideration for investors looking at stocks buying back shares.

W.W. Grainger

W.W. Grainger is a business-to-business distributor of maintenance, repair and operating (MRO) products and services. Its operations are primarily in North America, Japan, and the U.K. Its customers represent a wide array of industries including government, manufacturing, transportation, commercial and contractors. Its products include material-handling equipment, safety and security supplies, lighting and electrical products, power and hand tools, pumps and plumbing supplies, cleaning and maintenance supplies, and metalworking tools.

W.W. Grainer's 20-year buyback campaign has reduced its outstanding shares by 45% over that time. Over that period revenues have tripled from $5 billion to $15 billion and earnings per share have 10x'd $3.02 to $32.21 per share.

GWW clearly loves its investors as dividends have also been trending higher over the last 20 years. Dividends per share have climbed from $0.79 in 2004 to $6.88 per share today.

GWW is trading at a one-year forward earnings multiple of 19x, which is in line with the industry average and just below its 10-year median of 20. W.W. Grainger also has a Zacks Rank #1 (Strong Buy), indicating upward trending earnings revisions.

Bottom Line

These three stocks have shown a history of returning huge amounts of money to investors through both stock buybacks and dividends. Actions like this are typical of stocks with strong long-term returns. Additionally, with the current high Zacks Ranks, they have good chances of good returns in the near-term as well.

Why Haven't You Looked at Zacks' Top Stocks?

Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.

See Stocks Free >>

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

https://www.zacks.com

Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.

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/performancefor information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Steel Dynamics, Inc. (STLD) : Free Stock Analysis Report

PulteGroup, Inc. (PHM) : Free Stock Analysis Report

W.W. Grainger, Inc. (GWW) : Free Stock Analysis Report

PacWest Bancorp (PACW) : Free Stock Analysis Report

Celsius Holdings Inc. (CELH) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research