Friday, August 23, 2024

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Costco Wholesale Corp. (COST), Merck & Co., Inc. (MRK) and Linde plc (LIN), as well as two micro-cap stocks Hamilton Beach Brands Holding Co. (HBB) and Armanino Foods of Distinction, Inc. (AMNF). The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.

These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Costco’s shares have outperformed the Zacks Retail - Discount Stores industry over the year-to-date period (+34.2% vs. +23.2%). This company Being a consumer defensive stock, has been surviving the market turmoil pretty well. The discount retailer’s key strengths are strategic investments, a customer-centric approach, merchandise initiatives, and an emphasis on membership growth. 

These factors have been helping it register decent sales and earnings numbers. This outlook reflects Costco’s ability to navigate the challenging operating environment, generate solid sales, and register high membership renewal rates. 

A favorable product mix, steady store traffic, pricing power, and strong liquidity position should help Costco keep outperforming. While trading at a premium to its peers, its long-term growth prospects should help the stock see a solid upside.

(You can read the full research report on Costco here >>>)

Shares of Merck have gained +8.0% over the year-to-date period against the Zacks Large Cap Pharmaceuticals industry’s gain of +28.9%. The company is witnessing generic competition for several drugs and rising competitive pressure, mainly on the diabetes franchise, will continue to be overhangs on the top line. 

There are concerns about Merck’s ability to grow its non-oncology business ahead of Keytruda’s loss of exclusivity later in the decade. However, Merck beat second-quarter estimates for earnings and sales. Products like Keytruda and Gardasil have been driving sales. With continued label expansion into new indications, particularly earlier-stage launches, Keytruda is expected to see continued growth. 

Animal health and vaccine products are core growth drivers. Merck boasts a strong cancer pipeline, including Keytruda, which should drive long-term growth. Merck is investing in M&A activity to strengthen its pipeline.

(You can read the full research report on Merck here >>>)

Linde’s shares have outperformed the Zacks Chemical - Specialty industry over the year-to-date period (+14.6% vs. -17.5%). The company being a global leader in industrial gas manufacturing, supplies a wide range of essential gases to industries such as energy, steel, healthcare, manufacturing and electronics. 

The firm secures long-term contracts with key on-site clients that feature minimum purchase agreements. This helps stabilize earnings during economic downturns, supported by its robust business model. Linde reported strong second-quarter earnings, driven by higher pricing from the Americas segment. 

However, increasing competition for new projects poses a challenge to the company's return on investment. Additionally, the volatility of energy prices, particularly for natural gas and diesel fuel, presents a significant concern for profitability. An increasing regulatory burden may also negatively impact the industrial gas producer’s overall financial health.

(You can read the full research report on Linde here >>>)

Shares of Hamilton Beach Brands have outperformed the Zacks Household Appliances industry over the year-to-date period (+66.3% vs. -13.8%). This microcap company with market capitalization of $383.56 million reports robust second-quarter 2024 results, driven by a 590-bps year-over-year improvement in the gross profit margin to 25.9%, reflecting effective cost management and strategic pricing. 

Revenues grew 14% year over year to $156.2 million, fueled by a strong core market performance in the United States, Mexico and Latin America, and a strategic focus on flagship brands. HBB's financial position strengthened significantly in the second quarter, with net debt reduced to $12.8 million and cash reserves rising to $37.2 million. 

Sales in premium markets grew 20%, supported by innovation and strategic licensing. The company’s initiatives and solid global commercial market performance underpin a positive outlook for sustained growth.

(You can read the full research report on Hamilton Beach Brands here >>>)

Armanino Foods of Distinction’s shares have outperformed the Zacks Food - Miscellaneous industry over the year-to-date period (+19.8% vs. +3.0%). This microcap company with market capitalization of $179.57 million delivered record sales and profitability in second-quarter 2024, with a 16% year-over-year increase in net sales to $17.48 million and a 90% surge in pre-tax income, driven by cost efficiencies and margin improvements. 

Armanino Foods of Distinction boasts 84 consecutive profitable quarters and a solid balance sheet, with $21.39 million in cash reserves, supporting its growth initiatives. Armanino increased its dividend by 10% and launched a $7-million stock buyback program, highlighting management's confidence. 

Strategic geographic expansion, strong market penetration and product diversification, including a 65% market share in food service pesto, enhance its competitive edge. Armanino's commitment to quality, evidenced by its BRC Grade AA certification, underpins its market leadership and positions the company for continued growth.

(You can read the full research report on Armanino Foods of Distinction here >>>)

Other noteworthy reports we are featuring today include Chipotle Mexican Grill, Inc. (CMG), Truist Financial Corp. (TFC) and M&T Bank Corp. (MTB).

Mark Vickery
Senior Editor

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>