Doctor Reddy's Laboratories, Safeway, Target, TJX and Wal-Mart Stores highlighted as Zacks Bull and Bear of the Day
CHICAGO, Dec. 24, 2013 /PRNewswire/ -- Zacks Equity Research highlights Doctor Reddy's Laboratories (NYSE: RDY-Free Report) as the Bull of the Day and Safeway (NYSE: SWY-Free Report)as the Bear of the Day. In addition, Zacks Equity Research provides analysis ontheTarget Corp. (NYSE: TGT-Free Report), TJX Companies, Inc. (NYSE: TJX-Free Report) and Wal-Mart Stores Inc. (NYSE: WMT-Free Report).
Here is a synopsis of all five stocks:
The medical sector has largely had a pretty good year in 2013. That is because many companies in the space have fought through Obamacare worries, and have adapted to life with this new law.
While the rules might have a short term negative impact on companies in the health insurance space, for example, those in the drug production market could see a boost. That is because firms here are expected to see a surge in demand for their products by people who now have medical insurance, potentially boosting drug company bottom lines.
Although a play on any number of drug companies might be a solid idea, a focus on low-cost generic producers could be the way to go. After all, generics are going to be in high demand with the new law in the U.S., especially from insurance companies trying to keep costs down.
Meanwhile, in key emerging markets, many consumers are now in the middle class and can, thanks to generics, afford a variety of new drugs. As more of these consumers reach this plateau, drug demand could rise once again, suggesting companies that have exposure to both American and emerging market consumers may be top picks.
Doctor Reddy's Labs is based in India, but it has a global presence including operations in the U.S., Europe, and Australia/New Zealand. The drug producer has 50 products under its Dr. Reddy's label, and it has a solid pipeline as well, suggesting more growth could come for this company.
And investors, or users of the company's drugs, should rest assured that it has 8 API facilities which are FDA-inspected, as well as 4 FDA-approved finished dosage facilities serving the U.S., so quality concerns shouldn't be an issue.
Thanks to a strong consumer, lower gas prices and flat commodity costs, many in the grocery and supermarket space have had a great 2013. Several companies in this space have actually crushed the market from a year-to-date look, and were looking pretty good heading into the final part of the year.
However, it is important to remember that the supermarket space is extremely cutthroat, and with tiny margins, there is little room for error in this space. And we have begun to see a former high-flyer start to slip up in this segment, Safeway (NYSE: SWY-Free Report), and it could actually be a company to avoid heading into 2014.
Safeway is a major food and drug retailer, arguably most famous for its Safeway brand grocery store. The company operates across the country, but definitely has a focus on the West, South, and Mid-Atlantic regions of the United States.
Safeway has surged more than 80% on the year thanks largely to the positive trends impacting grocery stores earlier in the year. However, as of late, the stock has stagnated, adding just 4.6% in the past three months, underperforming the S&P 500 in the time frame.
While part of the reason for this sluggish performance lately is undoubtedly the stock taking a breather after its incredible run, some cracks are starting to appear in SWY's story. This is particularly true when investors look at the firm's recent history at earnings season.
Target Sued Over Security Breach
The Christmas spirit at specialty retailer Target Corp. (NYSE: TGT-Free Report) was dampened by media reports pointing to more lawsuits following its massive credit and debit card security breach. Last week, Target acknowledged that nearly 40 million credit and debit accounts of its customers were hacked. According to the company, the hacking took place during the holiday season – from a day before Thanksgiving up to Dec 15.
A source familiar with the investigation authorities claimed that the company was alerted by credit card processors who detected an increase in dubious transactions pertaining to cards used at Target stores.
In an attempt to make reparation, Target is trying to woo back its customers. Over the weekend, the company had allowed a 10% discount to customers. However, it will require time to regain customers' confidence.
Though the company did not disclose how the lapse occurred, it assured it was taking the help of federal law enforcement and external experts to tighten security to avoid similar frauds, going forward.
In 2007, the biggest security breach in U.S history was detected when The TJX Companies, Inc. (NYSE: TJX-Free Report) – a leading off-price retailer of apparel and home fashions –reported data theft involving nearly 90 million credit and debit cards over a span of about one and a half years. Ever since, companies likeWal-Mart Stores Inc. (NYSE: WMT-Free Report) as well as Target have been deploying substantial cash to tighten security.
However, security and industry experts have pointed out a major flaw in the card payment system. Unlike Europe and Canada, credit card in the U.S. uses a magnetic strip to store data. For the contemporary sophisticated hacking technology, obtaining card information is effortless and as a result U.S. remains highly vulnerable to card scams.
Outside the U.S., cards have digital chips to contain data, which generate a new code after every use and thus makes hacking difficult.
The credit and debit card security breach of Target's consumers could result in loss of millions of dollars. However, lawyers and other experts on the matter remain tight-lipped as to who is likely to bear the expense. Lawyers believe that Target could be slapped with more litigation charges in the coming days.
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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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