Royal Caribbean Cruises, King Digital Entertainment, Costco Wholesale, Rite AidandL Brandshighlighted as Zacks Bull and Bear of the Day
CHICAGO, Sept. 9, 2014 /PRNewswire/ -- Zacks Equity Research highlights Royal Caribbean Cruises (NYSE:RCL-Free Report) as the Bull of the Day and King Digital Entertainment (NYSE:KING-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onCostco Wholesale Corporation (Nasdaq:COST-Free Report), Rite Aid Corp. (NYSE:RAD-Free Report) and L Brands, Inc. (NYSE:LB-Free Report).
Here is a synopsis of all five stocks:
The leisure and travel industry has been underperforming for much of 2014, despite some relatively solid economic trends in the U.S. economy. In fact, the leisure and entertainment ETF, PEJ, has been underperforming the broad market by close to 800 basis points so far this year.
However, while the broad market trend has been relatively weak, the cruise industry has been shaping up pretty nicely as of late. Norwegian Cruises announced an acquisition which looks to further consolidate the sector, while Royal Caribbean Cruises (NYSE:RCL-Free Report) could take the industry by storm and be a great pick for investors starved for a leisure choice in this market.
Quantum of the Seas
One of the top reasons for high expectations for Royal Caribbean is its newest ship, the Quantum of the Seas. This brand new ship, which kicks off a fresh class of vessels for RCL, looks to really shift the landscape in the cruise industry, and possibly give the company a huge leg up.
That is because the Quantum will incorporate a variety of technological and entertainment features that are unseen on any other major cruise ship in the world today. These additions look to improve on a number of some of the worst parts of cruise ships, and generally just make the experience a whole lot better for everyone.
While providing these extra features are likely to bump up costs, they look to also help RCL charge more for each passenger. So hopefully the new ships will pull in higher paying customers and attract more types of people to cruises, thereby boosting RCL's prospects over the long term.
Candy Crush was easily one of the most popular games of 2013. The simple, but challenging, game had players match different colored candies in order to advance levels and proved highly addicting to many.
This game was pulling in over one million dollars a day in revenue for King Digital Entertainment (NYSE:KING-Free Report) and was one of the chief reasons for the company's recent IPO. However, many users (including myself) have abandoned the game in recent months, leading to questions about Candy Crush's longevity and its status as a revenue engine for KING.
For a lot of companies, this might not be a problem, as they could have other games in the pipeline ready to replace older games as they lose their luster. But KING really has nothing of consequence coming down the pike and many investors are getting very worried about the company's medium term prospects as a result.
These concerns are best evidenced by the company's recent earnings report, as well as KING's stock price movement as of late. After all, KING has seen its shares crater by over 25% in just the past three months, and given the company's near term outlook, this may just be the start of KING being crushed down before the end of this year.
Additional content:
Costco Rises as August Comps Beat Estimates
Shares of Costco Wholesale Corporation (Nasdaq:COST-Free Report) rose 4.7% following comparable-store sales results for the four weeks ended Aug 31, 2014 that fared better than analysts' expectations. On Sep 4, the warehouse retailer announced comparable-store sales growth of 7%, reflecting an increase of 7% in the U.S. and 6% at international locations.
Excluding the effect of deflation in gasoline prices and impact of foreign currency fluctuations, Costco's comparable-store sales for August rose 8%, reflecting comparable sales growth of 7% at its U.S. locations and 8% at international outlets.
Retailers benefited during the month under review from increasing consumer confidence, improving job prospects and back-to-school promotional strategies. Retailers such as Rite Aid Corp. (NYSE:RAD-Free Report) and L Brands, Inc. (NYSE:LB-Free Report) saw their comparable-store sales rise 3.9% and 5%, respectively, during the month.
Coming to Costco, comparable-store sales for the 16-week period increased 6%, buoyed by an equivalent percentage increase across the U.S. and international locations. Excluding the effect of gasoline prices and foreign currency fluctuations, comparable-store sales for the period jumped 7%. Comps increased 6% in the U.S. and 8% at international locations.
Comparable-store sales for the 52-week period increased 4% on the back of 5% growth in the U.S. and 3% increase at international locations. Excluding the effect of gasoline prices and foreign currency fluctuations, comparable-store sales for the period jumped 6% on the back of comps increase of 5% in the U.S. and 7% at international locations.
Costco's total net sales for August grew 10% to $8.8 billion from $8 billion in the year-ago period. Net sales for the 16-week and 48-week period increased 9% and 7% to $34.8 billion and $110.2 billion, respectively.
The company currently operates 663 warehouses, 468 in the United States and Puerto Rico, 88 in Canada, 33 in Mexico, 26 in the United Kingdom, 20 in Japan, 11 in Korea, 10 in Taiwan, 6 in Australia and 1 in Spain. Further, the company plans to open 9 more warehouses before the end of calendar-year 2014.
Costco, which is slated to report fourth quarter fiscal 2014 results on Oct 8, carries a Zacks Rank #3 (Hold).
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