CHICAGO, Aug. 1, 2014 /PRNewswire/ -- Zacks Equity Research highlights Silica Holdings (NYSE:SLCA-Free Report) as the Bull of the Day and Plum Creek Timber (NYSE:PCL-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on General Electric Company (NYSE:GE-Free Report), Ally Financial Inc. (NYSE:ALLY-Free Report) and Wal-Mart Stores Inc. (NYSE:WMT-Free Report).
Here is a synopsis of all five stocks:
Fracking is big business in the U.S., and it is the chief reason for the surge in oil and gas production over the past few years. This production boost has put a huge focus on a number of oil and gas exploration companies, and especially those that are tapping into once off-limits deposits of oil and gas.
Yet while many of these firms have done well in this environment, some of the auxiliary beneficiaries of the fracking boom have flown under the radar despite their potential or critical role in the industry. One exceptional example of this is US Silica Holdings (NYSE:SLCA-Free Report), a strong company that has not only surged as of late, but is primed for more gains this year too.
US Silica is a leading silica sand supplier that specializes in 'proppants' or solid materials that that assist in the fracking process. While this is arguably the company's focus, SLCA also has operations in the paint/coating field, as well as solar/wind power, so it is pretty diverse, and especially so considering it is, at the end of the day, selling sand.
The surge in fracking though, and SLCA's diverse lineup of proppants each with their own unique properties, is really what has been driving SLCA's stock as of late. This is particularly true considering the boom in the industry, as well as increased demand for fracking in new locations in order to open up fresh supplies.
Such trends have allowed SLCA to nearly double in the past six months, and truly soar over the past few years. Yet while some might think the stock is due for a longer term breather—especially given recent market volatility—earnings estimates suggest that more gains might be had in this stock in the medium term.
Strength in the housing industry was one of the main reasons for the economic recovery following the Great Recession, while big home price gains have done wonders for consumer confidence as well. Yet while this was one of the biggest stories over the last few years, it appears as though it might be coming to an end.
After all, home price gains have started to slow in many markets while demand for new housing is slipping too. Add in fears over higher interest rates coming down the pike eventually, and investors don't really have a great environment for homebuilders, at least in the near term.
Plum Creek is a Seattle-based REIT that owns and manages timberlands in the United States. The company's products include lumber, plywood, and related wood products such as wood chips. In terms of the location of its timberlands, it has a strong base in the Pacific Northwest (as well as Montana), while the South accounts for the bulk of its holdings, including several of its top states.
These wood products from such diverse locations really came in handy for PCL following the Great Recession and the return of housing demand, but as the market has begun to turn, concerns have begun to build over PCL and its near term outlook. While the stock is down a little bit YTD, the worries may really be starting to build following the company's latest earnings report.
GE's Synchrony Financial Raises $2.88B in IPO
General Electric Company (NYSE:GE-Free Report) spun off its consumer-lending arm Synchrony Financial in an initial public offering ("IPO"). The IPO raised $2.88 billion at $23 per share. Consequently, Synchrony Financial's market capitalization comes to around $19 billion. The divested unit will begin trading on New York Stock Exchange today under the ticker "SYF".
The IPO was priced at the lower end of the range indicated earlier by General Electric. However, it still trumped auto lender Ally Financial Inc.'s (NYSE:ALLY-Free Report) $2.6-billion IPO in April to become the biggest so far this year by a U.S. company.
Synchrony Financial sold 125 million shares at the lower end of the previously indicated $23–$26 range. This represents a 15% ownership stake in Synchrony Financial. (Read: General Electric to Raise $3B in Synchrony Financial IPO).
General Electric, which did not sell any share in the IPO, owns 85% of this company. The conglomerate's share will come down to 83%, if an over-allotment option is exercised. Synchrony Financial will use the proceeds to repay its debt to GE Capital, the conglomerate's financial arm.
General Electric has touted the spin-off as part of a planned, staged exit from the financial business. This Zacks Rank #3 (Hold) conglomerate is expected to divest its own shareholding late next year in a tax-free distribution to its stockholders.
Synchrony Financial, which caters to customers like Wal-Mart Stores Inc. (NYSE:WMT-Free Report), is a leading issuer of store credit cards and enjoys 42% of market share, according to the Nilson Report.
However, the company's net profits fell 6.6% to $1.98 billion last year, hurt by a spike in operating costs and increase in funds reserved for bad loans. The company's performance is somewhat pegged to the U.S. economy. If the economy gains traction in the second half of the year, the company's performance is likely to improve.
While Synchrony Financial is a relatively new name in the industry, its forerunner GE Capital's roots can be traced back to the Great Depression, when it financed consumers' purchases of General Electric's appliances. However, during the recent financial crisis, GE Capital endangered the health of its parent company, thereby compelling CEO Jeffrey Immelt to strategically reduce the conglomerate's dependence on the unit.
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