Synaptics, BHP Billiton, Sonic, McDonald's and Dunkin Brands Group highlighted as Zacks Bull and Bear of the Day
CHICAGO, June 25, 2013 /PRNewswire/ -- Zacks Equity Research highlights Synaptics (Nasdaq: SYNA-Free Report) as the Bull of the Day and BHP Billiton (NYSE: BHP-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onthe Sonic Corp. (Nasdaq: SONC-Free Report), McDonald's Corp. (NYSE: MCD-Free Report) and Dunkin' Brands Group Inc. (Nasdaq: DNKN-Free Report).
Here is a synopsis of all five stocks:
How interested would you be in a technology growth company making touch sensor "hover" technology for Samsung phones and dozens of other devices that is trading under 15X next year's estimates? The stock is down over 15% since an early June report that the Korean handset maker was seeing a slowdown in sales of its Galaxy S4 unit. But that's not the whole story.
Synaptics (Nasdaq: SYNA-Free Report) is a leading developer of human interface solutions for a wide variety of mobile computing and communications devices and is the leading supplier of TouchPads to the notebook computer market.
Products include the TouchPad input device, TouchStyk pointing stick, Dual Pointing combination input solution, ClearPad touch screen, Spiral pen input solution, and QuickStroke Chinese handwriting software.
Here's how much SYNA shares have been impacted by the Samsung concerns...
Investors need to consider several things when evaluating Synaptics as a buy or a sell. First, Samsung accounts for an estimated 20-30% of overall sales for the company and the Galaxy S4 program, specifically, is only 10% of that.
Second, what is the true extent of the S4 slowdown? The biggest concern was slowing sales to Europe. But from all the analyst reports I've read, it looks like those fears were overblown. The worst downgrade to sale estimates came from the analysts at Needham last week when they lowered their forecast from 100 million units to 80 million for 2013.
"At an estimated average selling price (ASP) for the touch controller of $1.10, the overall impact to revenue is around $30MM in CY13 or $0.30-$0.35 EPS impact."
Base materials, as an investment story, have been a heavy load to bear in the past 2 years since the China recovery story has never really taken hold. And this has been nowhere more evident than in the stocks of big diggers like BHP Billiton (NYSE: BHP-Free Report).
Slipping back down to a Zacks #4 Rank (Sell) in late March, BHP has fallen from $70 to new four-year lows this week below $58. In fact, since its post-recession peak above $100 in 2011, the stock has consistently held a Zacks Rank of #3 (Hold) #4 (Sell) or #5 (Strong Sell) because of its stagnant or declining earnings estimates.
Here's a look at the shares of this $94 billion mining behemoth, known for its vast reserves of iron ore, coal, copper and other natural resource assets, vs the SelectSector SPDR Materials ETF for the past 4 years...
I mentioned some of the big and common mining products of BHP, but you may be surprise they also have access to silver and diamond mines. What surprised me is that when the company made a big decision last year to diversify into the energy business, it hasn't helped their earnings outlook much at all.
Sonic's West Coast Expansion Plans
The biggest chain of drive-in restaurants in the U.S., Sonic Corp. (Nasdaq: SONC-Free Report) recently inked a deal to set up five new drive-ins in San Diego County and 10 new drive-ins in the greater Los Angeles area in association with present franchise partner, SPG Management. The restaurants will be developed over the next six years.
Oklahoma-based Sonic has a long-standing relationship with SPG Management. The franchise partner boasts superior local market knowledge and a proven track record in the restaurant industry. One of SPG's principals even served as a CFO for a McDonald's Corp. (NYSE: MCD-Free Report) contractor and helped build 70 McDonald's restaurants during his tenure.
SPG currently owns and operates five other Sonic Drive-Ins in Southern California. We believe, the latest alliance reflects Sonic's intent to make California one of the prime markets for expansion considering the state's potential to generate about $67.4 billion in restaurant sales in 2013, as per the national restaurant association.
Not only Sonic, another restaurateur Dunkin Donuts, a subsidiary of Dunkin' Brands Group Inc. (Nasdaq: DNKN-Free Report), is also considering expansion opportunities in the markets of Los Angeles, Riverside, San Diego, San Bernardino, Ventura and Orange counties. Dunkin is planning to open new restaurants in these regions by 2015.
A Zacks Rank #3 (Hold) company, Sonic is gradually moving in a positive direction. The highlights of its second-quarter 2013 earnings, reported in March, were strong comps momentum and margin expansion based on stringent cost control measures. On the developmental front, Sonic is aggressively tapping existing and new markets and is primarily focusing on franchise development.
It also cut a franchise development deal this month for five new drive-ins in the Rochester, NY market over the next four years. As part of its initiative to expand into new markets such as the Northeast, it is teaming up with franchisees to test new drive-in prototypes that cater to market specific needs.
At the end of the second quarter of 2013, this drive-in fast food chain operator had a total of 3,526 drive-in restaurants.
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.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Click here to subscribe to this free newsletter today.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://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.
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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
SOURCE Zacks Investment Research, Inc.