Wednesday, June 12, 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 Microsoft Corp. (MSFT), Apple Inc. (AAPL) and Alphabet Inc. (GOOGL), as well as a micro-cap stock CompX International Inc. (CIX). 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 >>>

Microsoft’s shares have outperformed the Zacks Computer - Software industry over the past year (+31.8% vs. +23.7%). The company is riding on strong growth from Intelligent Cloud and Productivity and Business Processes. Intelligent Cloud revenues are driven by growth in Azure and other cloud services.

Productivity and Business Processes revenues continue to rise due to the strong adoption of Office 365 Commercial solutions. Microsoft 365 Consumer subscribers grew to 80.8 million in the third quarter. Continued momentum in the small and medium businesses and frontline worker offerings, as well as a rise in revenue per user, drove top-line growth.

However, the office's declining commercial licensing has been a headwind due to the continued customer shift to cloud offerings. Higher operating expenses and spending on Azure enhancements amid stiff competition in the cloud space remain a concern.

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

Shares of Apple have outperformed the Zacks Computer - Mini computers industry over the past year (+17.4% vs. +13.5%). The company is benefiting from increasing customer engagement in the services segment. The expanding content portfolio of Apple TV+ and Apple Arcade helped in driving subscriber growth. Apple’s top-line benefits from strong growth in emerging markets and growing adoption of its devices among enterprises.

However, Apple’s near-term prospects remain foggy due to sluggish China sales amid stiff competition. It expects the June quarter’s (third-quarter fiscal 2024) revenues to grow low-single-digit year over year. Unfavorable forex is expected to hurt revenues by 2.5%.

Apple has been playing catch-up in the AI space compared with Alphabet, Microsoft and Amazon, its peers in the “magnificent seven” group. Following the launch of Apple Intelligence, its competitive position is expected to improve.

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

Alphabet’s shares have outperformed the Zacks Internet - Services industry over the year-to-date period (+28.4% vs. +22.2%). The company’s robust cloud division is aiding substantial revenue growth. Expanding data centers, cloud regions and availability zones will continue to bolster its presence in the cloud space.

Major search updates and removal of bad ads to enhance the search results continue to boost traffic on the company’s search engine. Growing momentum across Google’s mobile search is contributing further. Strengthening generative AI capabilities should aid business growth in the long term. Deepening focus on wearables category remains a tailwind. Expanding presence in the autonomous driving space is a plus.

However, sluggish Network advertisement business is a negative. Increasing litigation issues and expenses remain concerns. Rising cloud competition from Microsoft and Amazon is a concern.

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

Shares of CompX International have outperformed the Zacks Office Supplies industry over the past six months (+18.2% vs. +10.8%). This microcap company with market capitalization of $292.45 million have a strong cash and marketable securities balance of $75.6 million as of Mar 31, 2024, ensures robust liquidity for operations and growth.

CompX International also consistently pays dividends, with a recent 20% increase. The Security Products segment saw a 9% year-over-year sales increase in the first quarter of 2024, indicating strong demand. Efficient cost management in the Marine Components segment and aligning inventory with market conditions reflect operational efficiency.

However, CompX faces a challenging 2024 outlook, particularly in the Marine Components segment, due to reduced demand and OEM customers cutting production. Security Products’ sales are expected to be lower, as a significant government project from 2023 is not anticipated to recur. Also, intense competition and dependency on key customers pose additional risks.

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

Other noteworthy reports we are featuring today include NVIDIA Corp. (NVDA), Merck & Co., Inc. (MRK) and The Home Depot, Inc. (HD).

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>>>