Tyler Tech, Randgold Resources, Best Buy, Amazon and Microsoft highlighted as Zacks Bull and Bear of the Day
CHICAGO, Sept. 17, 2014 /PRNewswire/ -- Zacks Equity Research highlights Tyler Tech (NYSE:TYL-Free Report) as the Bull of the Day and Randgold Resources (Nasdaq:GOLD-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onBest Buy Inc. (NYSE:BBY-Free Report), Amazon Inc. (Nasdaq:AMZN-Free Report) and Microsoft Corp. (Nasdaq:MSFT-Free Report).
Here is a synopsis of all five stocks:
Let's face it, consumers in America are especially finicky. What's the hot thing today is old news tomorrow. Tastes and trends change as fast as Chicago weather. That's why subscription-based business models are appealing to many investors. Subscriptions are what I like to call "sticky money." If you've already signed up for a monthly service, you basically have checked that off your list and you're on to the next item. And how many people go back and cancel subscriptions in a timely fashion? Some do, but most don't.
That's subscription service in the world of the individual consumer. Now imagine the slow moving world of municipalities. All their red tape, bureaucracy, and things that frustrate us about the government. But in the case of subscription services, that's in our favor and makes a subscription service you sell to municipalities just about the "stickiest money" you can imagine.
Zacks Rank #1 (Strong Buy) Tyler Tech (NYSE:TYL-Free Report) is the largest software company in the nation solely focused on providing integrated software and technology services to the public sector. Their mission-critical applications provide counties and municipalities with the ability to streamline and automate operations, resulting in improved productivity and reduced costs. Their professional services for local government clients include consulting, network design and management, installation, conversion, customization, training, and ongoing support.
Tyler is successfully building a fast-growing closed-based business inside a proven, profitable software license and maintenance business. Subscription revenues grew 39% in 2013.
With today's market, investors and traders have access to a greater variety of financial instruments than ever before. The availability of ETFs and closed-end funds have added liquidity to otherwise illiquid assets and given unprecedented flexibility. As a result there are a lot more ways to make money today, but also a lot of ways to lose money. One of the worst ways to lose money, in my opinion, is what I like to call "Falling on your own sword."
In the literal case I'm sure you can visualize the meaning of that sentence, but in the world of investing I relate it to stubbornly refusing to admit you're wrong. It's that investing sin of holding on to a losing trade for too long. The market can stay irrational longer than you can remain solvent. Over the long run you may be right about your stance on oil or that tech stock or real estate, whatever it is. But at what cost? There are so many other opportunities to make money in this market, it's just not worth it to fall on that sword.
I was wrong about gold. After doing research on the Qingdoa probe in China and the unwinding of the shadow banking system I was sure that gold prices would be on the rise this year. What I didn't take into account in my model was a surge of U.S. dollar strength in the face of a deteriorating Euro and a weakening Yen. As a result, gold had nowhere to go but down in U.S. dollar terms.
So I've avoided all things gold. Spot gold, gold futures, and gold miners. I've got one more thing to add to this list and that's the ticker (Nasdaq:GOLD-Free Report). Randgold Resources is a Zacks Rank #5 (Strong Sell) and has been a victim of lower gold prices and a stronger dollar. Randgold is an international gold mining and exploration business that owns goldmines in Mali and the Ivory Coast. The company has a portfolio of prospective exploration projects across Africa in Senegal, Burkina Faso, Ghana and Tanzania.
Over the last 60 days, estimates for the current year have dropped from $3.35 down to $2.94. Next year's numbers have been revised by six analysts, lowering consensus from $4.28 to $3.99. These latest downward revisions follow several disappointing changes to FY2015 numbers. Consensus has been as high as twice where it is now for both FY2014 and FY2015 as analysts made their initial projections during 2013.
Additional content:
Will Best Buy's Turnaround Efforts Beat Sector Weakness?
Persistent weakness in the consumer electronics segment remains a concern for Best Buy Inc. (NYSE:BBY-Free Report) as revenues and comps continue to dwindle. Second-quarter fiscal 2015 revenues of $8,896 million fell 4% and missed the Zacks Consensus Estimate, while comps dropped 2.7%. Moreover, absence of major product launches, weakness in the mobile category and stiff competition from online retailers like Amazon Inc. (Nasdaq:AMZN-Free Report) are factors affecting Best Buy's performance.
To combat its dismal financial run, Best Buy had reinforced a turnaround strategy called the Renew Blue transformation program to rein in escalating costs and increase online traffic as well as store conversion rate. Though industry trends do not look encouraging, we believe this strategy will help the retailer to bail it out. This was well reflected from the company's second-quarter earnings of 44 cents that topped the Zacks Consensus Estimate while rising 37.5% year over year.
Moreover, under the program, the company has already achieved $900 million in annualized savings against the targeted $1 billion. In the quarter, the company achieved $40 million in cost reductions. Also, domestic comparable online sales increased over 22% in the quarter driven by the company's "buy online – ship from store" and digital marketing capabilities.
Moving ahead, Best Buy remains focused to drive online traffic through a series of new initiatives, which include extension of its online fulfillment centers, proper inventory allocation, integrated viewing option across its online platforms, a new search platform, increasing assortment and reduced shipping costs.
Best Buy is also trying to take advantage of store-in-a-store concept. After building vendor partnerships with Microsoft Corp. (Nasdaq:MSFT-Free Report), Best Buy announced new vendor partnerships with Samsung and others.
About the Bull and Bear of the Day
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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