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Manchester United and Big Lots have been highlighted as Zacks Bull and Bear of the Day

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·14-min read
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For Immediate Release

Chicago, IL – January 6, 2022 – Zacks Equity Research shares Manchester United MANU as the Bull of the Day, and Big Lots BIG as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ford F, General Motors GM, and Tesla TSLA.

Here is a synopsis of all five stocks:

Bull of the Day:

Manchester United is a Zacks Rank #1 (Strong Buy) operates the popular Manchester United Football Club in the United Kingdom. For those Americans not aware, this is a popular soccer team, known very well worldwide.

The ManU club is also known as the “Red Devils” and could be compared to the New York Yankees in terms of their historical success. The team competes in the English Premier League and other soccer events around Europe.

The stock has done very little over the last decade since MANU became public in 2012. As it trades at the bottom of a decade-long range on Omicron fears, there is now a great opportunity to enter the stock for both short and long-term investors.

About the Company

Manchester United operates the football club, markets sponsorships, sells apparel and other licensed products. The company was founded in 1878,employs over 1,000 and is headquartered in Manchester, United Kingdom.

MANU has a market cap of $2.4 billion and has Zacks Style Scores of “A” in Growth and “B” in Value.

Football, Soccer or Fútbol?

Whatever you may call it, the sport is growing globally around the world. Even if you haven’t seeked it out, you have probably noticed English Premier League games on Saturday and Sunday mornings on the NBC or USA networks.

These games are giving exposure to viewers who didn’t have access a decade ago. With viewers comes fans, merchandise and revenue for each club.

Q1 Earnings

Manchester United reported earnings back in November, seeing 56% EPS surprise to the upside. Revenues came in at £126.5M v £109.0M last year and net debt came down a tad, moving from $440.6M last year to $439.7M.

Management cited the success of the company’s resilience through the pandemic. With that, they reiterated that their top priority is “success on the pitch”.

Estimates

Estimates are mixed going forward. Analysts are hiking numbers for the current quarter, but keeping them flat for next quarter. However, we see improvement into next year, with estimates going from negative $0.12 to a positive $0.01.

No doubt the recent resurgence of cases with the Omicron variant has scared investors. There have been some cancelled games where players have tested positive, which has hurt the stock.

However, England has announced they will not be shutting down the country. Investors need to understand that this is not 2020 and the games will be played.

The Technicals

The sell off due to the variant has created a great opportunity for both short and long-term investors.

Looking at the chart since 2020, the $14 level has held and bounced five times now. The stock has moved to $16 each of those times and we saw a bounce to $20 twice. That's a gain of 40% that happened twice in 2021 alone. So traders should be buying this $14 level and looking for a sixth bounce.

Long-term, we are looking at that support level to set up for a multi-year hold. The bulls will need to take back the $18 level and then finally break that $20 level that was sold twice this year. If that can happen, we could see $25 and the 2019 high of $27.70.

Bottom Line

If we can get past Omicron and normalize later in the year, MANU is poised to have strong demand for its brands. Whether its sponsors, merchandise or actually fans in the stands, MANU stands to benefit from the end of COVID.

Traders have a great setup off the $14 support level. And long-term investors have a chance to buy low into a top brand in a growing global sport.

Bear of the Day:

Big Lots is a Zacks Rank #5 (Strong Sell) that operates as a broad-line closeout retailer operating in the United States. The company offers everyday consumables, housewares, toys and seasonal goods.

The stock has been in a downtrend since the summer, falling 45% from the June highs. After a disappointing guidance, BIG made new lows and rallied back to November highs. Estimates are starting to fall, so inventors should look into taking profits as the stock comes into technical resistance.

About the Company

The company offers products under various merchandising, seasonal, soft home, consumables and food categories. Big Lots has over 1400 stores in 47 states and an e-commerce platform. The company was founded in 1967 and is headquartered in Columbus, Ohio.

BIG is valued at $1.5 billion and has a Forward PE of 8. The company holds a Zacks Style Score of “B” in Value, but “F” in Growth. Big Lots does pay a dividend with a yield of 2.5%.

Q4 Earnings

Big Lots reported earnings in early December, coming in as expected. Revenue for the quarter did beat and the company announced a $250M stock buyback. They saw a strong start to Q4 due to Black Friday Sales, but they cut their FY21 outlook.

Big Lots also guided Q4 lower, seeing a range of $2.05-2.20 v the $2.38 expected. They expect “slightly positive growth” for the quarter.

FY21 was lowered to $5.70-5.85 v the $6.01 expected. Additionally, they see FY21 SSS increasing in the low single digits.

Estimates

The guidance from earnings forced analysts to take numbers down and cut price targets.

For the current quarter, we have seen a drop over the last 60 days from $2.39 to $2.20, or 8%. With that, Goldman Sachs put a sell rating on the stock and lowered its price target from $58 to $43.

Technical Take

The stock was trading at $40 right after earnings and rallied all the way to $50, for a 25% gain in a month. This could have been a short squeeze after the negative quarter and investors should not view the move higher as a reversal.

There are two resistance areas that will limit the upside. First, we have the November sell zone, which was in the $50-52 area. Second, we have a 200-day moving average at $56. This is where the halfway back mark is drawn from June highs to recent lows. We will likely see strong selling in those areas.

In Summary

Big Lots had a nice run last year, but the stock has come back down to earth and likely trades in the $40-$50 range. Being at the top of that range, investors should look to sell current prices and buy back lower.

Additional content:

Does Ford's (F) Impressive Rally Have Legs?

Ford’s shares are currently at a 20-year high, largely driven by a massive electric vehicle (EV) push. The U.S. auto giant was the biggest S&P 500 gainer yesterday, rallying 11.6% to close the session at $24.31. The upside came after the automaker doubled its production goal for the Electric F-150 Lightning model amid high demand.

Ford has been on a tear since the appointment of Jim Farley as the CEO in October 2020. Since Farley took the helm, shares of Ford have skyrocketed more than 200%. Currently valued at more than $97 billion, Ford tops the market cap of its crosstown rival General Motors.

Investors have been appreciative of Farley’s promise to communicate more openly. Quoting the CEO, “My commitment to each of you is transparency, including purposeful, measurable key performance indicators so you can objectively track our progress.”

Also, Farley’s Ford+ restructuring plan, with a hard pivot toward EVs, has cheered investors and raised optimism amid the changing dynamics of the auto industry. The Ford+ plan focuses on increasing profitability, exploring the e-mobility future and enhancing customer experience. The management change has given the company a major push into the domain of green vehicles, which has contributed to its catapulting shares.

Going All Out to Demonstrate EV Prowess

Ford is hitting all the right notes toward an electrified future and is well positioned to gain a competitive edge in the EV space with its upcoming launches that include zero-emissions pickup and van. The aggressive electrification push, with planned spending of around $30 billion by 2025 and the target of 40% of its global vehicle volume to become all-electric by the end of the decade, is indeed commendable.

Over the next two years, Ford aims to become the #2 EV maker in North America and then attain the top spot with huge investments in battery and vehicle production coming onstream. By 2024, Ford targets a global production capacity of 600,000 battery electric vehicles annually.

Mustang Mach-E — which is giving tough competition to Tesla — is already boosting Ford’s sales. Ford commenced deliveries of Mustang Mach-E in late 2020 and the vehicle got a great reception from customers. Last month, the company confirmed plans to triple the production for the Mustang Mach-E. Amid the soaring popularity of the model, Ford expects to manufacture 200,000-plus units per year for North America and Europe by 2023.

Ford made another bullish EV announcement yesterday, stating that it plans to nearly double the F-150 Lightning e-pickup output at the Rouge Electric Vehicle Center in Dearborn. The company now plans to produce 150,000 such vehicles per year to cater to the surging demand of the electric-version of America’s best-selling truck.

Currently, reservations for the F-150 Lightning are at 200K. Deliveries of the 2022 F-150 Lightning pickup will commence this spring at a starting price of $39,974. Ford’s all-electric van, the E-Transit, will also go on sale early this year.

Meanwhile, Ford is establishing the biggest and the most technically advanced auto production facility in Tennessee, wherein it plans to assemble the next-gen F-Series e-pickup. Further, Ford is on track to create twin battery plants in Kentucky and a technologically-advanced mega campus in Tennessee.

It is collaborating with SK Innovation, with a combined investment of $11.4 billion (with Ford’s share being $7 billion) for the same. The investment is part of the Ford+ turnaround plan to make the automaker’s operations more profitable and create a niche in trending sectors such as autonomous, electric, and connected vehicles.

Approximately $5.6 billion of the total outlay will be allotted for building an all-new mega campus called Blue Oval City in Stanton, TN. The investment will create roughly 6,000 new jobs and revamp vehicle and battery designing, manufacturing, and recycling.

Joining the Blue Oval City is a planned $5.8-billion, 1,500-acre BlueOvalSK battery manufacturing campus in Glendale, KY, which is targeted to commence operations in 2025. The twin lithium-ion battery plants on the site will create 5,000 jobs and are intended to supply Ford’s North American assembly plants with locally-assembled batteries for powering the next-generation electric Ford and Lincoln vehicles.

The Top Performing Auto Stock of 2021

Ford had a breakthrough 2021, with its shares rallying nearly 140% during the year — a remarkable achievement for a non-tech stock. It was the top-performing auto stock of the year, having handily outperformed other legacy automakers, emerging EV startups and EV behemoth Tesla.

With a market cap of more than $1.1 trillion, shares of Tesla rose 49.8% in 2021. Currently carrying a Zacks Rank #2 (Buy), TSLA has a long-term expected EPS growth rate of 37.5%.

Ford’s closest peer, General Motors soared 40.8% for the year. GM also carries a Zacks Rank #2 currently and has a long-term expected EPS growth rate of 9.85%. In comparison, Ford’s triple-digit percentage gain in share price (precisely 136.3%) is an exceptional feat, especially at a time when the auto industry is suffering from global chip concern.

Wall Street is buying Ford’s EV future. Ford’s long-term prospects look positive on the back of accelerated efforts to transition to smart, connected and green vehicles, which is the need of the hour. The firm’s scalable EV architectures and connected car tech poise it for endless growth opportunities. Investors should note that Ford expects an 8% adjusted profit margin before interest and taxes in 2023.

Hold the Temptation to Cash Out the Gains

While Ford is at a 20-year high, don’t get enticed to sell the stock in haste to encash your profits. Stay invested in the stock if you already own it, as this rally has much more upside potential. As for others, don’t wait for a better entry point and add the stock to your portfolio at the current levels to reap handsome rewards.

The raised full-year 2021 guidance, thanks to strong demand and order book for the recently launched vehicles as well as upcoming models, instills optimism in the stock. It is to be noted that 2022 wholesale volumes of Ford are likely to grow 10% year over year.

As proof of its strong cash flow generating ability, Ford has restored dividends, after suspending the payout for more than a year and a half amid the COVID-19 crisis. Rising investments in emerging technologies including EVs, self-driving vehicles and software-as-a-service capabilities have also been cheered by investors. Its restructuring initiatives in the European market have been yielding results.

With so much going in favor of the stock, Ford is a screaming buy right now. Currently sporting a Zacks Rank #1 (Strong Buy), the company’s long-term expected EPS growth rate is pegged at 24.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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 5 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 >>

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Ford Motor Company (F) : Free Stock Analysis Report
 
Big Lots, Inc. (BIG) : Free Stock Analysis Report
 
General Motors Company (GM) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
Manchester United Ltd. (MANU) : Free Stock Analysis Report
 
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