CHICAGO, June 18, 2014 /PRNewswire/ -- Zacks Equity Research highlights AGL Resources (NYSE: GAS-Free Report) as the Bull of the Day and Hertz Global Holdings (NYSE: HTZ-Free Report) as the Bear of the Day.
In case you haven't noticed there's a bit of an energy boom taking place in the U.S. All the while prices on nat gas and crude have been on the rise. That's a recipe for successful companies and also a recipe for you to profit. While some aspects of that business can be very risky, there are other aspects that are bread and butter. One of those aspects is the distribution business. The companies that get the nat gas into your house to heat your water and cook your food. One such company is our Bull of the Day, AGL Resources (NYSE: GAS-Free Report).
AGL is a freshly minted Zacks Rank #1 (Strong Buy). The company operates in five core areas; distribution, retail, wholesale, midstream, and shipping. The company serves 4.5 million customers across seven states. Their performance is driven by customer growth and usage, balanced regulatory outcomes and prudent infrastructure investment.
AGL expects rate base growth of approximately 4.5 – 5.5% and targets five-year net income CAGR of 4 – 6%. The company sees upside potential in non-utility business and has new opportunities such as pipeline investment expected to provide for additional regulated earnings.
Over the last 60 days two analysts have raised their estimates for the current year earnings, pushing consensus up to $4.38 per share from $3.00. This is a big reason for the top Zacks Rank. As far as the rest of the sector goes, the industry is in the top 16% of our Zacks Industry Rank.
If you're looking for slow and steady growth, AGL Resources may be a great idea. Take a look at the price and consensus chart over the last several years. After seeing estimates dip down and bottom out towards the end of 2012, AGL's estimates have steadily increased along with the stock price. Most recently the revisions for this year have been through the roof, providing a huge boost for the stock over the last year and a half.
With the market hitting all-time highs almost every day, there have been many sectors of the market that have been hot. The risk-on trade we've seen over the last few weeks has helped tech, energy, and other high beta names take off. So if you're holding a stock in this hot market that hasn't been performing, you should certainly take the time to reevaluate your position. One such position that you may want to reconsider is our Bear of the Day, Hertz Global Holdings (NYSE: HTZ-Free Report).
Hertz is a Zacks Rank #5 (Strong Sell) in the rental car business side of the business services industry that ranks in the bottom 28% of our Zacks Industry Rank. Hertz is a global brand that also owns Dollar Rent-A-Car, Thrifty Car Rental and Firefly Car Rental. The rental car company generates revenues from airport revenue, vehicle leasing, and the rental car leisure segment. Recently, Hertz has reorganized its corporate structure to separate the car business from its worldwide equipment rental business. That side of the business rents out heavy equipment for mostly industrial and construction usage.
Analysts have been unimpressed by Hertz recently. Over the last 60 days four analysts have revised earnings to the downside for the current year and five have done so for next year. This has helped drop consensus from $2 to $1.80 for the current year and down from $2.55 to $2.22 next year.
After several years of steady growth year over year, the current reversal of that trend has helped to reverse the stock price as well. Take a quick look at the price and consensus chart for Hertz. You can see the slide in estimates beginning in summer of 2013. While these estimates have come down, the stock has yet to take as violent of a tumble.
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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