Jamba, Tesco, MSCI USA Minimum Volatility ETF, PowerShares S&P 500 Low Volatility Portfolio ETF and PowerShares S&P 500 High Dividend Portfolio ETF highlighted as Zacks Bull and Bear of the Day
CHICAGO, Sept. 25, 2014 /PRNewswire/ -- Zacks Equity Research highlights Jamba (Nasdaq:JMBA-Free Report) as the Bull of the Day and Tesco (OTC:TSCDY-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on MSCI USA Minimum Volatility ETF (AMEX:USMV-Free Report), PowerShares S&P 500 Low Volatility Portfolio ETF (AMEX:SPLV-Free Report) and PowerShares S&P 500 High Dividend Portfolio ETF (AMEX:SPHD-Free Report).
Here is a synopsis of all five stocks:
While many small caps have been hit hard in the recent slump, this trend hasn't afflicted all of the companies in this capitalization level. Take for example Jamba (Nasdaq:JMBA-Free Report),a company best known for its subsidiary, Jamba Juice, which offers blended drinks and smoothies across the U.S.
While it has seen a brief dip in recent trading, the company has easily outperformed the Russell 2000 over the past six months. In fact, JMBA has added about 13.6% in the time frame, compared to a loss of 4.9% for the Russell 2000 ETFin the same period.
Obviously, this represents a large level of outperformance when compared to peers in the small cap world, and especially so when considering how weak many other stocks have been over the past few months. However, when considering the recent earnings report, it is pretty clear why JMBA is outperforming and how it could continue to move higher in the quarters ahead too.
In the August earnings report, JMBA reported earnings of 44 cents a share, a big beat from analyst expectations which called for EPS of 38 cents for the quarter. Additionally, it marked a return to profitability for JMBA as last quarter saw a loss of one cent a share so this represented a very much needed surprise for the company.
Additionally, a highlight from the report was the firm's new products which are helping to drive sales growth. Many now believe that the company's turnaround plan is working and that more growth could be ahead for JMBA in the future.
Analysts seem to agree with these bullish prospects as earnings estimates have been moving higher lately for JMBA, signaling bullish prospects for the company's EPS. In fact, not a single estimate has gone lower in our consensus for either the current year or next year time frames.
Additionally, the magnitude of these revisions have been pretty solid, and for both the current year and next year time frames as well here. For the current year, the consensus has moved from $0.37/share 60 days ago to $0.43/share today, while next year's figures have seen numbers move from $0.71/share to $0.80/share in the same time period.
Generally speaking, we don't like to focus on foreign stocks for our Bear of the Day segment here at Zacks. However, the bear case for the ADR of Tesco (OTC:TSCDY-Free Report) is pretty compelling and definitely deserves a closer look by investors.
For those of you who don't know, TSCDY is a grocery retailer based out of the UK. The company has over 7,000 stores, and in addition to its home market, the firm has operations in continental Europe and a variety of emerging markets in Asia.
Grocery stores are usually pretty stable businesses, though they admittedly face cutthroat competition and razor thin margins. However, TSCDY has run into some serious volatility as of late, largely thanks to a brewing accounting scandal.
Recently, Tesco slashed its most recent profit outlook as it was found that the company has overstated fiscal 2015 profits by about $409 million. This was largely due to booking revenue too early and delayed recognition of costs, and adding insult to injury, it comes pretty soon after Tesco cut its full year forecast anyway.
This announcement really caught analysts off-guard, while some management executives were suspended for the issue. Some have put their ratings of the company on review, while others are thinking that Tesco may have to sell some assets in order to recover from the impact from this debacle.
Given this issue, it probably shouldn't be too surprising to note that analysts have universally slashed their full year estimates for Tesco, with three moving lower in just the past week alone. Investors have witnessed a similar trend in the next year numbers too, suggesting this recent double guidance cut could have a longer term impact on the company.
This is particularly true when you consider the magnitude of these estimate revisions lately. The consensus estimate for the current year has fallen from $1.22/share 30 days ago to just $0.92/share today, while next year's figures have, over the same time period, fallen from $1.25/share to just $0.85/share today.
Additional content:
Endure Market Volatility with These ETFs
The U.S. stock market has been performing pretty strongly since the U.S. economy returned to the growth path in Q2 posting about 4% growth. Most of economic indicators released recently, be it consumer confidence, manufacturing, inflation and jobless data, were upbeat and the S&P soared crossing the 2,000 mark for the first time.
The global stock markets will keep receiving incessant flows of cheap money thanks to the continuation of super accommodative policies in Japan, mini stimulus in China and the expected initiation of QE in the Euro zone. But a faster-than-expected hike in interest rates in the U.S., once the procedure begins, may restrain the stock market rally, at least for the short term.
Investors should note that the Fed is just one month away from leaving the QE era which started in 2008. While the Fed cut its QE stimulus by another $10 billion this month, its dovish commitment to keep the interest rates at a rock-bottom level for a 'considerable time' is still adding cheer to the stock markets.
Investors normally take 'considerable time' to mean about 6 months, though the Fed has never mentioned it in any official dialogue. Fed officials increased their median estimate for the key interest rate at the end of 2015 to 1.375% from 1.125% projected in June, per Bloomberg. Whatever the case, investors might see a short-term sell-off once the Fed hikes interest rate with rate sensitive sectors and high momentum stocks being hit hard.
It was not too late, in fact only in June, when the Fed raised concerns of stretched valuations over some sectors like biotech, social media and small-cap stocks. The Fed also sounded worried over the valuation of the leveraged loan market too.
Though the U.S. economy gained enough strength, the global economy is far from standing on its own feet due to new concerns in Europe, geopolitical issues, and the emerging market slowdown (read: The Fed's Valuation Concerns Put These Growth ETFs in Focus).
If this was not enough, the International Monetary Fund (IMF) recently expressed concerns over investors' extreme risk taking activities. Per IMF, growth is yet to be full-fledged and investors are undervaluing the risk quotient in the market. IMF sees overvaluation in most asset classes against past standards.
In such a situation, it might be prudent for investors to reallocate their portfolios to low risk products. Below, we have highlighted three ETFs that investors could consider in their portfolios if the stock market continues to experience volatility (read: Hedge Your Portfolio with Low Volatility ETFs).
MSCI USA Minimum Volatility ETF (AMEX:USMV-Free Report)
This fund tracks the MSCI USA Minimum Volatility index providing exposure to low volatility stocks of the U.S. The product has managed asset base of $2.79 billion while trades in decent volume of more than 3,500,000 shares a day. Expense ratio comes in at 0.15%.
Holding 154 stocks, the fund is widely spread out across each sector and security. None of the securities holds more than 1.54%, while healthcare, IT and consumer staples and financials occupy the top four positions in terms of sector with double-digit allocations.
PowerShares S&P 500 Low Volatility Portfolio ETF (AMEX:SPLV-Free Report)
This ETF provides exposure to 100 U.S. stocks with the lowest realized volatility over the past 12 months by tracking the S&P 500 Low Volatility Index. The fund is widely spread across a number of securities and none of these hold more than 1.27% of assets (read: Buy These ETFs for Higher Returns and Lower Risk).
However, the product has a tilt toward financials at nearly 23.7% share while utilities, consumer staples and industrials round off the top five. SPLV is the largest and the most popular ETF in the low volatility space with AUM of $4.59 billion and average daily volume of around 850,000 shares. The fund charges 25 bps in annual fees.
PowerShares S&P 500 High Dividend Portfolio ETF (AMEX:SPHD-Free Report)
This fund follows the S&P 500 Low Volatility High Dividend Index, which includes U.S. stocks that historically provided high dividend yields and low volatility. The ETF holds 50 stocks in its basket and each security holds not more than 3.17% of assets. Sector-wise also, the fund is well diversified (read: Are There Really High-Dividend, Low-Risk ETFs?).
Here, utilities take the top spot from a sector look with around 18.34% share, closely followed by consumer staples (18.03%) and financials (16.21%). The product has amassed $175.2 million in its asset base while volume is also light. It charges 30 bps in annual fees from investors while it has an attractive dividend yield of 3.47%.
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