Blackhawk Network, Anadarko Petrol, Netflix and Time Warner highlighted as Zacks Bull and Bear of the Day
CHICAGO, Oct. 16, 2014 /PRNewswire/ -- Zacks Equity Research highlights Blackhawk Network (Nasdaq:HAWK-Free Report) as the Bull of the Day and Anadarko Petrol (NYSE:APC-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onNetflix (Nasdaq:NFLX-Free Report) and Time Warner (NYSE:TWX-Free Report).
Here is a synopsis of all four stocks:
I know it's tough to be bullish about anything when it seems like the entire market is collapsing around you. This is usually where I throw out a bunch of inspirational quotes to get you all fired up and patriotic, as well as the obligatory Warren Buffet knowledge. But I'm going to spare you that for now and just have you think clearly. The one stock market mantra, or any market for that matter, that makes the most sense at the most basic level of understanding; Buy low, sell high. This is the "Buy low" part. That's not to say that you may not be able to buy lower later, I'm just saying right now this is low.
And it's low for everything. All different types of asset classes. Yields are very low with the 10 year below 2% today, the market had a mini-meltdown yesterday with extreme volatility. Yet today I'm telling you to do something crazy. Take money that you thought you were going to put under your mattress for a decade, pull it out of the pickle jar, close your eyes, get some guts and buy some stock while there's blood in the street.
Today's Bull of the Day, Blackhawk Network (Nasdaq:HAWK-Free Report) may be the perfect buy in this imperfect market. HAWK is a Zacks Rank #1 (Strong Buy) in the miscellaneous Financial Services industry. Blackhawk Network Holdings is a provider of prepaid financial payments products for consumers and businesses. The company distributes gift cards, prepaid handsets and prepaid financial services products and is headquartered in Pleasanton, California.
Blackhawks distribution network spans 21 countries with over 400 distribution partners. They have a proprietary platform for activation, processing and settlement. From 2009 to 2013 the company had a CAGR on Operating Revenue of 26% and on EBITDA of 28%, making it a huge growth stock in the making. In 2013 alone, Blackhawk processed 242 million load transactions and $10 billion in load value.
There is significant market opportunity in this space. There has been a channel shift to third-party gift cards with the creation of "destination card malls." There is expanding "self-use" of gift cards and growth in prepaid telecom products as well. New innovations allow for digitalization of gift cards and wallets through online and mobile use. Also, incentives and rewards are shifting from physical and travel products to gift cards. Blackhawk estimates the total addressable prepaid market at $221 billion per year, over 22 times the size of HAWK's footprint today.
Not sure if you've been paying much attention to the oil market but things are getting back for Texas Tea. Once a perpetual $100/barrel bringer, the market has taken a turn south and is having a tough time finding support, let alone rebounding. There are a few reasons for this, among them is the strength of the US dollar. As the dollar gains against the majors, it puts pressure on commodity prices. Makes sense when you think about it, if my dollar is "worth more" then it should be able to buy more things. In the case of oil prices, that's a bearish situation.
Another reason is all the new supply that has been coming to the market with the new fracking technology that's developing as well as the ability to get barrels out of oil sands. The US has never had as much supply as it does today, and this is certainly having an effect on prices. As a result, you may want to shy away from most oil stocks. Especially when the entire market is taking it on the chin like we've been seeing for the last week or so. It should come then as no surprise when I name today's Bear of the Day, Anadarko Petrol (NYSE:APC-Free Report).
Depressed prices for crude have had a negative effect on this Zacks Rank #5 (Strong Sell). Anadarko is one of the world's largest independent oil and gas exploration and production companies. Majority of the company's total proved reserved are located in the US, primarily in the mid-continent area of Kansas, Oklahoma, and Texas, as well as offshore in the Gulf of Mexico and in Alaska. The small remainder of the company's production is in Algeria. The company also owns and operates gas gathering systems in its US core producing areas.
Analysts have noted the effect of a lower crude oil price on APC's bottom line. As a result, eight analysts have lowered their numbers for next year and seven for the current year. This year's numbers have dropped from a consensus of $5.51 sixty days ago down to current consensus at $5.34. Next year's numbers don't really look much better. The drop here goes from $5.85 sixty days ago down to $5.31 today. That's a drop of over 10% in expectations. With oil falling even further, these numbers could look a whole lot worse before all is said and done.
Additional content:
Netflix Tanks on Lowered Guidance
In what was a bad day overall for stocks with the down-leg continuing with across-the-board selloffs, Netflix (Nasdaq:NFLX-Free Report) has suffered brutally today in the after-market, sinking 23% following the company's Q3 earnings announcement after the bell Wednesday. And this was after posting in-line revenues and an earnings beat of 5 cents per share for the quarter. But the company lowering guidance going forward has released a huge wave of selling off NFLX stock.
The big news from Time Warner's (NYSE:TWX-Free Report) HBO that the company will bring to market a standalone streaming service next year, which will directly compete with the Netflix model. Though this news was met with a lukewarm reaction mid-day today, the lowered guidance seemed to reflect poorly for Netflix on this development. Netflix acknowledged the HBO news in its note to shareholders today, but put a positive spin on the development by saying, "...[W]e think it is likely we both prosper as consumers move to Internet TV," calling the HBO move "inevitable and sensible."
None of this has been taken well by after-hours traders, however -- Netflix has currently sold off all of its considerable gains year to date. This is a considerably drastic immediate devaluation of a recent tech/entertainment high-flyer on the NASDAQ. But as analysts parse through the game-changing nature of the HBO development, early conclusions are that Netflix is no longer in the catbird seat of home entertainment.
Getting back to the nuts and bolts of the earnings report, however, operating income has nearly doubled year over year. Market launches in Europe and expanding its original content have helped Netflix keep pace with analyst expectations for the most part. The company boasts over 53 million global members and $1.22 billion in revenue over the past 3 months.
Clearly, however, investors see Netflix existing on a shifting plate teutonic, and are abandoning the stock in droves. Netflix currently is a Zacks Rank #3 (Hold) stock.
About the Bull and Bear of the Day
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