SYNNEX Corporation (NYSE:SNX-Free Report) delivered better-than-expected Q1 results on April 3 and provided bullish guidance for Q2, driven by strength in IT demand. This prompted analysts to revise their estimates significantly higher for both 2014 and 2015, sending the stock to a Zacks Rank #1 (Strong Buy).
Based on consensus estimates, analysts are projecting 37% EPS growth this year and 12% growth next year. Despite this, shares trade at less than 12x forward earnings.
SYNNEX Corporation is a business process services company, servicing resellers, retailers and original equipment manufacturers around the globe. SYNNEX provides services in IT distribution, supply chain management, contract assembly and global business services. It was founded in 1980.
SYNNEX reported its fiscal 2014 first quarter results on April 3. Revenue surged 23% year-over-year to $3.027 billion, well above the consensus of $2.751 billion. This was driven by strong IT demand.
Meanwhile, adjusted operating income increased 32% as the adjusted operating margin expanded 18 basis points to 2.53%.
These factors led to a whopping 37% surge in adjusted EPS to $1.25. This crushed the Zacks Consensus Estimate of $0.94.
Earnings estimates have plummeted for ICU Medical (Nasdaq:ICUI-Free Report) following its Q4 results in February.
It is a Zacks Rank #5 (Strong Sell) stock.
While shares of ICU Medical are down more than -10% so far this year, the stock could very well remain under pressure until its earnings momentum improves.
ICU Medical develops, manufactures and sells medical technologies used in vascular therapy, oncology, and critical care applications. Its complete product line includes custom IV systems, closed delivery systems for hazardous drugs, needlefree IV connectors, catheters and cardiac monitoring systems. It is headquartered in San Clemente, California.
ICU Medical reported its fourth quarter 2013 results on February 12. Revenue fell 6% year-over-year to $77.9 million, well short of the consensus of $84.0 million. Growth in international sales was more than offset by weakness in domestic sales.
Earnings per share came in at 86 cents, which was ahead of the Zacks Consensus Estimate of 74 cents. However, this "beat" was driven in large part by a lower tax rate thanks to a one-time benefit from a change in foreign tax legislation.
Tax Day Put These Stocks in Hot Water
A solid stock market performance in the about-to-close financial year has raised tax bills for many investors. So selling pressure in the markets is expected to be higher today than in the last few years.
So which are the ideal stocks that could witness significant selling pressure? Before we zero-in on a few, let's discuss how it works.
Long-term capital gains are often taxed at a lower rate than short-term capital gains. Furthermore, such taxes are paid only on the realization of capital gains (i.e., when the investment is sold).
This is one of the reasons that the stock market often plummets toward the end of the financial year as investors sell off their losing positions to offset the capital gains and lower their tax bills.
So stocks that have gained substantially in the past year or so and look overpriced now may witness selling pressure. Moreover, investors offload those stocks that have less potential to appreciate further.
We have highlighted three stocks here that saw substantial gains over the last 52 weeks, but have been witnessing negative earnings estimate revisions recently. Moreover, they don't have a favorable Zacks Rank.
Stocks to See Selling Pressure
Intuit Inc. (Nasdaq:INTU-Free Report): This Zacks Rank #3 (Hold) technology stock generated a modest 52-week return of around 14%. However, it started 2014 on a sluggish note and its performance deteriorated further in February.
It has delivered two negative earnings surprises in the last four quarters with an average miss of 152.9%. Moreover, over the last 60 days, 8 estimates for fiscal 2014 were revised downward, pushing the Zacks Consensus Estimate down by 1.3% to $3.13.
H&R Block, Inc. (NYSE:HRB-Free Report): This service sector stock carries a Zacks Rank #5 (Strong Sell). This is because the stock witnessed four downward revisions for fiscal 2014 over the last 60 days. The Zacks Consensus Estimate went down by 3% to $1.62 over the same time frame.
H&R Block has generated a return of 1.41% over the last 52 weeks. Recently, the company has been on a roller coaster ride with a negative year-to-date return of 4.6%
Baidu, Inc. (Nasdaq:BIDU-Free Report): Though the stock currently carries a Zacks Rank #5, it has had a terrific run over the last 52 weeks, scoring a gain of more than 70%. However, similar to many other technology stocks, BIDU had a moderate start in 2014 and finally resulted in a negative year-to-date return of 14.6%.
The Zacks Consensus Estimate for 2014 went down 16.7% to $5.38 with 8 estimates going down over the past 60 days.
So what you are waiting for? If you hold any of these stocks, this is the right time to offload them. Of course, it depends on your holding period of these stocks. But in any case, we don't see these stocks gaining in the near term as they don't have a favorable Zacks Rank.
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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