Pioneer Energy, Briggs & Stratton, JA Solar Holdings, Trina Solar and Qiwi highlighted as Zacks Bull and Bear of the Day
CHICAGO, May 16, 2014 Zacks Equity Research highlights Pioneer Energy (NYSE:PES-Free Report) as the Bull of the Day and Briggs & Stratton (NYSE:BGG-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onJA Solar Holdings Co., Ltd. (Nasdaq:JASO-Free Report), Trina Solar Ltd. (NYSE:TSL-Free Report) and Qiwi plc (Nasdaq:QIWI-Free Report).
Here is a synopsis of all five stocks:
Tough market yesterday. The Russell 2000 held at the February 5thlow of 1082 and caught a strong bid higher. At the same time the Russell held, the S&P 500 found support down at the 1864 level as well. In the aftermath of what had been an egregious sell-off in the morning I found myself tiptoeing through the daisies in the afternoon, looking for buying opportunities.
With my sleeves rolled up and my Research Wizard running, I dug in to look for a stock idea to stand in and buy in the face of this volatility. I wanted to find a stock with a great earnings story that has been outpacing this market and is in a strong sector. That's exactly what I found with today's Bull of the Day, Pioneer Energy (NYSE:PES-Free Report).
Pioneer is a Zacks Rank #1 (Strong Buy) in the Oil and Gas drilling services industry that ranks in the top 19% of our Zacks Industry Rank. The company provides contract land drilling services to independent and major oil and gas exploration and production company. Production services include well servicing, wireline, coiled tubing, and rental services. Pioneer has a fleet of over 60 electric and high-end mechanical drilling rigs throughout onshore oil and gas producing regions in the US and Colombia.
Last quarter, analysts were expecting a 4 cents a share loss for Pioneer. Then for the fourth quarter in a row Pioneer surprised to the upside and ended up posting a 4 cents per share gain. Analysts began to revise their forecasts for PES, raising the consensus for the current year from 4 cents to 19 cents per share and next year from 16 cents to 43 cents per share. A big reason for this has been the boom in the Bakken and business picking up in the Permian basin as well.
With the market in disarray it was easy for me to find a Bear of the Day to pick on. I'd say about 90% of the stocks I looked at during Thursday's trading session were down. But when I look for a Bear of the Day, I want to find a stock that may be trading too high for its current earnings picture. This way I could give somebody a warning and allow them to take a little closer look at a stock position they may not have investigated recently.
Today's Bear of the Day is Zacks Rank #5 (Strong Sell) Briggs & Stratton (NYSE:BGG-Free Report). BGG is in the farming machinery industry that ranks in the bottom 12% of our Zacks Industry Rank. I'm sure you've seen the brand on a lawnmower or leaf blower in the past. BGG is one of the world's largest producers of air cooled gasoline engines for outdoor power equipment. The company designs, manufactures, markets and services these products for original equipment manufacturers worldwide.
Last quarter BGG missed earnings by 6 cents, reporting 81 cents versus consensus estimates of 87 cents. This marked the third quarter in a row the company has missed. Over the last 30 days two analysts have dropped their estimates for the current year and next year, dropping consensus from $1.05 to 91 cents for this year and from $1.38 to $1.26 for next year.
The price and consensus chart shows the history of downward earnings revisions BGG has been dealing with since early 2013 when the stock was trading above $25. Since then, negative revisions have slashed these estimates in half and have put pressure on the stock price. Thursday Briggs & Stratton closed the trading day at $20.37. The stock and its earnings are cyclical in nature. The March quarter was supposed to be one of the stronger quarters for BGG. The disappointment there may translate to worse news in the coming months.
Additional content:
Bullish on Russia, China Stocks: 3 Jim Rogers Picks
In a recent interview, famed investor Jim Rogers offered insight into his investment strategy that appears to defy logic on the surface. However, a careful look into his investment idea offers a golden opportunity for investors seeking a higher ROI.
The author of Street Smarts: Adventures on the Road and in the Markets is more interested in 'beaten-up' stocks now. Instead of buying U.S. stocks when the Dow and the S&P 500 indices are trading near all-time highs, Rogers is aggressively shoring up shares in markets like China and Russia.
Why These Markets?
While justifying his decision to invest in a market that is down 65% from its zenith, Rogers argues that latest capital market reform guidelines in China make it a lucrative investment proposition in the long run. The new set of reforms aims to open up the tightly-controlled financial sector by developing a multi-layered equity market. There will be an improved share transfer system for small and medium-sized enterprises through a registration-based IPO system.
Local governments are likely to build regional equity-exchange markets, while its bonds connect the inter-bank bond market with stock exchanges. The proposed reforms are likely to protect the interests of investors and boost the beleaguered financial sector.
On his thoughts on the Russian market that is reportedly the "second-most hated stock market in the world," Rogers is candid in his confession to profit from a scenario when the stock market is down due to political crisis and is likely to move up in the long term. Although the stock market fell 10% in March, owing to the continued turmoil in Crimea and struggle for control of Ukraine, Rogers had invested heavily in Russian stocks. In fact, he even vows to continue doing so.
3 Stocks to Bet On
In order to profit from his strategic advice, we have picked three stocks from these markets that are likely to outperform the broader equity market. Along with a favorable Zacks Rank, these stocks belong to industries that have a 'Positive' Zacks Industry Rank. As a guideline, the outlook for industries with Zacks Industry Rank #88 and lower is 'Positive,' between #89 and #176 is 'Neutral' and #177 and higher is 'Negative.'
JA Solar Holdings Co., Ltd. (Nasdaq:JASO-Free Report)
Headquartered in Shanghai, the People's Republic of China, JA Solar develops photovoltaic solar cells and solar power products based on crystalline silicon technologies. Earnings estimate revisions for this Zacks Rank #1 (Strong Buy) stock have moved up in the last 7 days, implying bullish sentiment for the long-term growth of the company. JA Solar belongs to the Solar Industry that carries a Zacks Industry Rank #37. The company had an earnings surprise of 300.0% in the last reported quarter.
Trina Solar Ltd. (NYSE:TSL-Free Report)
Headquartered in Changzhou, the People's Republic of China, Trina Solar manufactures integrated solar-power products for use in residential, commercial, industrial and other solar power generation systems. Analysts have been moving their quarterly and full-year estimates higher of late, further suggesting a solid earnings momentum in the upcoming quarter. Trina Solar has a forward PE of 13.2x. It reported an earnings surprise of 225.0% in the last reported quarter. This Zacks Rank #1 (Strong Buy) stock belongs to the Solar Industry as well.
Qiwi plc (Nasdaq:QIWI-Free Report)
Based in Moscow, Qiwi operates electronic online payment systems primarily in the Russian Federation, Kazakhstan, Moldova, Belarus, Romania, the United States and the United Arab Emirates. Over the last 7 days, earnings estimates did not show any upward or downward revisions for the year. Despite a lack of estimate revisions, we see an uptrend for the stock backed by its strong growth potential. With a forward PE of 22.6x, PEG ratio of 1.1x and a year-over-year return of 97.4%, this Zacks Rank #3 (Hold) stock is a solid pick. Qiwi belongs to Financial Transaction Services Industry, which has a Zacks Industry Rank #85.
About the Bull and Bear of the Day
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