iRobot, Ecopetrol, Twitter, Facebook and Yahoo! highlighted as Zacks Bull and Bear of the Day
CHICAGO, Nov. 18, 2014 /PRNewswire/ -- Zacks Equity Research highlights iRobot (Nasdaq:IRBT-Free Report) as the Bull of the Day and Ecopetrol (NYSE:EC-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onTwitter (NYSE:TWTR-Free Report), Facebook (Nasdaq:FB-Free Report) and Yahoo! (Nasdaq:YHOO-Free Report).
Here is a synopsis of all five stocks:
Although many growth stocks have struggled in this higher risk environment, a few have managed to persevere and could be poised for gains in the near future. This is especially the case in the often-overlooked automation and robotics industry, where companies not only have great growth prospects, but have held up better than many of their peers in the recent burst of market volatility.
Furthermore, companies in this segment actually combine to have a Zacks Industry Rank that is in the top 5% overall, suggesting there are few better choices out there from an industry perspective right now. And if you are wondering which company in particular in the automation space might be the best bet, consider taking a closer look at iRobot (Nasdaq:IRBT-Free Report).
iRobot has really made a name for itself by developing robots for use in the home in order to complete various cleaning tasks. Their first real big hit was their Roomba brand vacuum robot, though the company has developed a number of other robots in order to help with floor scrubbing, cleaning swimming pools, and gutter cleaning, among others.
In addition to this wide lineup, the company has plenty in development as well. These new segments will focus more on the business and military, diversifying the company's revenue streams and opening up huge new markets.
Analysts also seem to like the company's prospects in the medium term, as full year earnings estimates have been soaring. In fact, IRBT has seen two revisions higher for the current year in the past 30 days, compared to zero lower in the same time period. We also see a similar trend for the next year time frame, suggesting the longer term future for IRBT is looking increasingly promising.
It has been a very difficult time for stocks in the broader energy space as crude oil prices have collapsed in recent months. In fact, crude is testing its 52 week low, and with prices around $75/bbl., are a far cry from their 52 week high of just over $107.
Thanks to this severe slide, companies in the oil production segment have been hit hard with many testing 52-week lows of their own in recent sessions. While these trends have been very much front-and-center for energy companies here in the U.S., we often forget that international oil stocks are also impacted by these trends and have been under pressure as well.
These foreign oil giants can also be impacted by a stronger dollar too, potentially acting as another catalyst for weakness, while geopolitics can also play a role in foreign oil companies' losses. And while we tend to think that only companies in Eastern Europe and the Middle East are impacted by these factors, it can also strike Latin America and hit companies there.
A great example of this trend is undoubtedly Ecopetrol (NYSE:EC-Free Report), a Colombian oil giant which has seen severe weakness in recent trading sessions. After all, the Colombian peso is at its lowest level since July 2009 against the dollar, including a nearly double digit loss in the past three months, while we have recently seen community protests and rebel attacks for the first time in more than a decade, adding to the risks in Colombia.
Both of these factors have dulled the appeal of EC and Colombian stocks in general, and given that it doesn't appear as if a strong dollar is going away any time soon, the pressure could remain on this emerging market and its big oil company.
It also doesn't help that earnings estimates have been on the decline as of late, signaling that analysts do not like the company's near term prospects. For the current year, we have seen one estimate move higher in the past 30 days, but two go lower, and the same trend for the next year time frame too.
Additional content:
Twitter Debt Gets Junk Rating: Should You Worry?
Twitter's (NYSE:TWTR-Free Report) optimistic outlook regarding the long-term strategy seems to be only a flash in the pan outweighed by Standard and Poor Junk level rating for its debt. The company's brief moment of glory, which came with its first analyst day on Nov 12, (Read More: Twitter Up on Upgraded Long Term Outlook at Analyst Day) was marred by a BB- rating for its convertible notes, which represents below investment-level grade, leading to significant concern among investors.
The stock fell almost 5% ($2.50) from the Wednesday's closing price to $40.04 on Thursday and went further down to $39.77 during Friday's trade.
Going by market reports, however, the latest development on the micro blogging company does not come as a surprise. Despite a significant surge in revenues, Twitter is not profitable. The company has accumulated a deficit of $1.27 billion and expects revenue growth to slow down in the near future due to the anticipated sluggishness in the user growth rate. We believe that continuing investments in product development, costs related to international expansion and higher sales & marketing expenses would continue to cloud Twitter's profitability in 2014 and beyond.
However, some of the analysts do not consider the Junk rating as a long-term threat to the company's growth given Twitter's stable outlook supported by a low-cost business model, which remains significantly under-monetized and leaving room for growth. Being an emerging company, raising debt from the market remains imperative and the recent issuance of convertible notes worth $1.8 billion, which is now labeled as Junk, offers substantial liquidity needed to ensure the company's long-term growth.
While the stakes remain high, we believe the company can revive its market value by directing its investments toward growth drivers such as the expansion into international markets and continued focus on offering new products for advertisers. Further, Twitter is gearing up to enter the fast-growing e-Commerce market. As competition intensifies in the advertising market, e-Commerce will open up as a new revenue source for the company over the long term.
Despite significant competition from Facebook (Nasdaq:FB-Free Report) and Yahoo! (Nasdaq:YHOO-Free Report), we believe its open platform with real-time content, conversational format and distribution ability continues to be its USP. We are hopeful that given its growth plans and current investments, the company will deliver bottom-line growth over the long term.
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