We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Virtu Financial, Harley-Davidson, NVIDIA, ESPO and SOXX highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – February 24, 2021 – Zacks Equity Research Shares of Virtu Financial, Inc. (VIRT - Free Report) as the Bull of the Day, Harley-Davidson, Inc. (HOG - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corporation (NVDA - Free Report) , VanEck Vectors Video Gaming and eSports ETF (ESPO - Free Report) and iShares PHLX Semiconductor ETF (SOXX - Free Report) .
Virtu Financial is a highly esteemed high-frequency market maker, which handles roughly 25% of the swelling retail investing market's volume. Virtu is a play on impending market volatility and how you can take advantage of the retail trading revolution. The stock not only has a healthy long-term growth outlook but will create a volatility hedge for your broader portfolio in the short-run.
Following a blowout reported year, analysts raised their estimates for this HTF powerhouse, driving VIRT into a Zacks Rank #1 (Strong Buy).
Retail Trading Revolution
A Reddit revolution has taken Wall Street by storm. The Reddit message board r/wallstreetbets has taken the stock market by storm. Jim Cramer argued that this cohort of money-hungry Millennial and Gen Z traders is more powerful than any one Wall Street firm. The next generation of investors & traders is entering the market at a record pace. The entry barriers into stock have been torn down by our quickly advancing digital world. FOMO-driven and stir-crazy new retail players in the equity market are putting that extra "fun money" to work in the equity markets, catalyzing a wave of new investors like we have never seen before.
20% of the total market volume is now made up of retail investors, which is up from 10% in 2019. I only expect this level of retail trading volume to grow in the coming years as the US financial system's democratization is taken advantage of at every income level.
Dealer-brokers like Charles Schwab and the new favorite mobile-inclined trading platform Robinhood all sell orders to market makers like Virtu. The more retail trade orders that Virtu can secure, the more Virtu's best-in-class high-frequency trading (HFT) algorithm will profit, and as I said, the new wave of retail trading is only budding. This is a long-term tailwind that will continue to drive Virtu's share price growth.
Impending Volatility
Impending volatility is the other more short-term catalyst for the addition of VIRT into our portfolio. Volatility is the firm's friend, and over the past 4 quarters, the business has been booming. The company produced triple-digit annual revenue growth in 2020 amid one of the most volatile years in equity market history, proving its high-frequency tactics are reliable. Virtu's bottom-line exploded to $1 billion this past year, 438% more profitable than 2019.
The S&P 500 looks to be poised for another volatility infusion with the VIX (aka the fear index) sitting at $20, a support level that it has not been able to drop below since the pandemic sell-off began nearly 1-year ago. Now it looks like we may be poised to bounce off this VIX support level and experience a broader market pullback.
The equity markets are undergoing the correction that we have all been waiting for. Analysts across the board anticipated a 10-15% pullback, and we have already retracted 2.5% from our recent highs. This volatility means a profitable opportunity for VIRT and its volatility-powered HFT strategies. VIRT has a negative beta, which means that it is inversely correlated with the market, which hedges against looming volatility.
Where VIRT Is Trading At
VIRT is trading at a price to forward earnings figure below 10x, reflecting a sizable discount to its historical median and the broader market. There is some perceived risk related to a 'proposed' stock transaction tax, something that would be detrimental to this trading business as well as the broader equity markets and retail investors. The chances of this type of bill being passed are close to 0%. The equity markets are finally available to anyone and everyone. The last thing Congress wants to do is add barriers to entry.
VIRT bounced when it closed in on its 50-day moving average (blue line), which you can see in the candlestick chart below.
Final Thoughts
Virtu Financial is an investment in volatility and the retail trading revolution, which are just beginning to take flight. VIRT is trading at a discount, with strong upward driving energy behind it, and it's time to put a position on.
Harley-Davidson has been the symbol of the mid-life crisis for decades and has profited off the Baby Boomers, but there is a new group of consumers in town and their set of demands are shifting. The Chopper is going out of style and, unfortunately, leading its progenitor, Harley-Davidson, out with it. Analysts continue to pessimistically lower its already deflated EPS estimates for this seemingly antiquated stock, pushing HOG down to a Zacks Rank #5 (Strong Sell).
The End of an Era
Harley-Davidson hit its peak sales and profitability in 2014 and has since been experiencing a decline. The massive demographic shift in consumption is catalyzing this demand slump. Millennials recently overtook Boomers as the largest consuming generation, and they are making some profound changes to the retail landscape (e.g., the retail apocalypse). One of the unfortunate victims of this consumption change has been Harley and its iconic motorcycles.
This is not to say Harley isn't making an effort to shape their brand image around the evolving consumer. The company has come out with a line of fully electric bikes and has a pipeline of sleek new designs and an eBicycle, which are to be released next year.
These brand-changing efforts may be fruitless as millennials and younger generations turn against some of the brands of their parents' and grandparents' generations as they are no longer "fashionable." Unfortunately, I don't believe Harley will be able to shake its chopper brand association quickly.
COVID, Financials & Chart
Harley has experienced 9 straight quarters of topline declines, with its profits tumbling from $254 million in the second quarter of 2018 to a ($68) million decline this past quarter. COVID-19 pummeled Harley's sales and drove the company's bottom line to its lowest level in the company's public history.
This most recent recession was very different from the systemic financial downfall, and I would have thought Harley Davidson would have fared much better in this medically induced recession.
With mortality at the forefront of many consumers' minds, I think there is more demand for "exciting" purchases like Teslas and Malibu Boats, with their respective stocks reaching all-time highs this year.
This stock's drop accentuates the downward trend HOG has been experiencing since mid-2014, and its all-time high remains in 2006. HOG is trading 53% below that high. The stock has seen a recent boost on the implication of a recovery trade. HOG has marginally recovered to pre-COVID levels, despite its earning estimates not projecting to reach its 2019 levels for years.
Now is the time to pull profits off this mature Baby Boomer brand that is on its way out without significant system changes in its brand recognition. HOG has more than doubled since its 2020 bottom, and it's time to pull those profits.
Final Thoughts
People are no longer excited about Harley's anymore. The business appears to be hitting a level of obsolescence as it looks at its glory days in the rearview mirror.
There is still a glimmer of hope that this motorcycle giant will be able to rebrand itself into something millennial-friendly. The success of this year's product releases will be telling in whether the company can evolve with the progressing consumer.
Additional content:
Will NVIDIA Beat or Miss Earnings Estimates?
Graphics chipmaker NVIDIA is set to release fourth-quarter fiscal 2021 results on Feb 24, after market close. As it has been one of the hottest stocks in the semiconductor space, let's take a look at its fundamentals ahead of the earnings release.
NVIDIA has been rallying over the past three months, reaping gains of 10.8% but underperforming the industry average of 22.4% by a wide margin. This uptrend is likely to continue given the optimism surrounding the company's profitability, though an earnings surprise is difficult to predict this time.
Earnings Whispers
According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. NVIDIA currently has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
This videogame-gear specialist saw no earnings estimate revision over the past 30 days for the fourth quarter of fiscal 2021. The company's earnings surprise history is solid. It delivered an earnings surprise of 11.49%, on average, in the last four quarters. Additionally, it is expected to post substantial earnings and revenue growth of 48.1% and 55.4%, respectively, for the to-be-reported quarter.
The Zacks Consensus Estimate for the average target price is $585.56 with nearly 81% of the analysts giving a Strong Buy or a Buy rating ahead of the company's earnings.
What's Hot?
NVIDIA is expected to benefit from the stay-at-home trend, which continues to boost demand for cloud gaming chips. Additionally, the future of self-driving cars and a resurgence in crypto-mining led to increased demand for NVIDIA chips (read: ETFs to Ride the Bitcoin Rally on Rising Popularity).
ETFs in Focus
Ahead of the results, investors could focus on ETFs having the largest allocation to NVIDIA. Below are a couple ETFs with the highest allocation to NVIDIA that could make compelling plays ahead of its earnings report:
VanEck Vectors Video Gaming and eSports ETF
This fund offers exposure to global companies, involved in video game development, e-sports and related hardware and software by tracking the MVIS Global Video Gaming and eSports Index. It holds 25 stocks with NVIDIA taking the second spot with 7.5% share.
American firms account for one-third of the portfolio while China and Japan round off the next two with double-digit allocations each. The fund has gathered $945.4 million in its asset base while trading in average daily volume of 163,000 shares. It charges 55 bps in annual fees from investors (read: A Thorough Guide to Video Gaming ETFs).
iShares PHLX Semiconductor ETF
This ETF offers exposure to 30 U.S. companies that design, manufacture and distribute semiconductors by tracking the PHLX SOX Semiconductor Sector Index. Of these, NVIDIA takes the third position with 7.4% share.
The fund amassed $6 billion in its asset base and charges a fee of 46 bps a year. It trades in a solid volume of 626,000 shares and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook (read: 4 ETFs to Invest in Shining Semiconductor Stocks).
Want key ETF info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Virtu Financial, Harley-Davidson, NVIDIA, ESPO and SOXX highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – February 24, 2021 – Zacks Equity Research Shares of Virtu Financial, Inc. (VIRT - Free Report) as the Bull of the Day, Harley-Davidson, Inc. (HOG - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA Corporation (NVDA - Free Report) , VanEck Vectors Video Gaming and eSports ETF (ESPO - Free Report) and iShares PHLX Semiconductor ETF (SOXX - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Virtu Financial is a highly esteemed high-frequency market maker, which handles roughly 25% of the swelling retail investing market's volume. Virtu is a play on impending market volatility and how you can take advantage of the retail trading revolution. The stock not only has a healthy long-term growth outlook but will create a volatility hedge for your broader portfolio in the short-run.
Following a blowout reported year, analysts raised their estimates for this HTF powerhouse, driving VIRT into a Zacks Rank #1 (Strong Buy).
Retail Trading Revolution
A Reddit revolution has taken Wall Street by storm. The Reddit message board r/wallstreetbets has taken the stock market by storm. Jim Cramer argued that this cohort of money-hungry Millennial and Gen Z traders is more powerful than any one Wall Street firm. The next generation of investors & traders is entering the market at a record pace. The entry barriers into stock have been torn down by our quickly advancing digital world. FOMO-driven and stir-crazy new retail players in the equity market are putting that extra "fun money" to work in the equity markets, catalyzing a wave of new investors like we have never seen before.
20% of the total market volume is now made up of retail investors, which is up from 10% in 2019. I only expect this level of retail trading volume to grow in the coming years as the US financial system's democratization is taken advantage of at every income level.
Dealer-brokers like Charles Schwab and the new favorite mobile-inclined trading platform Robinhood all sell orders to market makers like Virtu. The more retail trade orders that Virtu can secure, the more Virtu's best-in-class high-frequency trading (HFT) algorithm will profit, and as I said, the new wave of retail trading is only budding. This is a long-term tailwind that will continue to drive Virtu's share price growth.
Impending Volatility
Impending volatility is the other more short-term catalyst for the addition of VIRT into our portfolio. Volatility is the firm's friend, and over the past 4 quarters, the business has been booming. The company produced triple-digit annual revenue growth in 2020 amid one of the most volatile years in equity market history, proving its high-frequency tactics are reliable. Virtu's bottom-line exploded to $1 billion this past year, 438% more profitable than 2019.
The S&P 500 looks to be poised for another volatility infusion with the VIX (aka the fear index) sitting at $20, a support level that it has not been able to drop below since the pandemic sell-off began nearly 1-year ago. Now it looks like we may be poised to bounce off this VIX support level and experience a broader market pullback.
The equity markets are undergoing the correction that we have all been waiting for. Analysts across the board anticipated a 10-15% pullback, and we have already retracted 2.5% from our recent highs. This volatility means a profitable opportunity for VIRT and its volatility-powered HFT strategies. VIRT has a negative beta, which means that it is inversely correlated with the market, which hedges against looming volatility.
Where VIRT Is Trading At
VIRT is trading at a price to forward earnings figure below 10x, reflecting a sizable discount to its historical median and the broader market. There is some perceived risk related to a 'proposed' stock transaction tax, something that would be detrimental to this trading business as well as the broader equity markets and retail investors. The chances of this type of bill being passed are close to 0%. The equity markets are finally available to anyone and everyone. The last thing Congress wants to do is add barriers to entry.
VIRT bounced when it closed in on its 50-day moving average (blue line), which you can see in the candlestick chart below.
Final Thoughts
Virtu Financial is an investment in volatility and the retail trading revolution, which are just beginning to take flight. VIRT is trading at a discount, with strong upward driving energy behind it, and it's time to put a position on.
Bear of the Day:
Harley-Davidson has been the symbol of the mid-life crisis for decades and has profited off the Baby Boomers, but there is a new group of consumers in town and their set of demands are shifting. The Chopper is going out of style and, unfortunately, leading its progenitor, Harley-Davidson, out with it. Analysts continue to pessimistically lower its already deflated EPS estimates for this seemingly antiquated stock, pushing HOG down to a Zacks Rank #5 (Strong Sell).
The End of an Era
Harley-Davidson hit its peak sales and profitability in 2014 and has since been experiencing a decline. The massive demographic shift in consumption is catalyzing this demand slump. Millennials recently overtook Boomers as the largest consuming generation, and they are making some profound changes to the retail landscape (e.g., the retail apocalypse). One of the unfortunate victims of this consumption change has been Harley and its iconic motorcycles.
This is not to say Harley isn't making an effort to shape their brand image around the evolving consumer. The company has come out with a line of fully electric bikes and has a pipeline of sleek new designs and an eBicycle, which are to be released next year.
These brand-changing efforts may be fruitless as millennials and younger generations turn against some of the brands of their parents' and grandparents' generations as they are no longer "fashionable." Unfortunately, I don't believe Harley will be able to shake its chopper brand association quickly.
COVID, Financials & Chart
Harley has experienced 9 straight quarters of topline declines, with its profits tumbling from $254 million in the second quarter of 2018 to a ($68) million decline this past quarter. COVID-19 pummeled Harley's sales and drove the company's bottom line to its lowest level in the company's public history.
This most recent recession was very different from the systemic financial downfall, and I would have thought Harley Davidson would have fared much better in this medically induced recession.
With mortality at the forefront of many consumers' minds, I think there is more demand for "exciting" purchases like Teslas and Malibu Boats, with their respective stocks reaching all-time highs this year.
This stock's drop accentuates the downward trend HOG has been experiencing since mid-2014, and its all-time high remains in 2006. HOG is trading 53% below that high. The stock has seen a recent boost on the implication of a recovery trade. HOG has marginally recovered to pre-COVID levels, despite its earning estimates not projecting to reach its 2019 levels for years.
Now is the time to pull profits off this mature Baby Boomer brand that is on its way out without significant system changes in its brand recognition. HOG has more than doubled since its 2020 bottom, and it's time to pull those profits.
Final Thoughts
People are no longer excited about Harley's anymore. The business appears to be hitting a level of obsolescence as it looks at its glory days in the rearview mirror.
There is still a glimmer of hope that this motorcycle giant will be able to rebrand itself into something millennial-friendly. The success of this year's product releases will be telling in whether the company can evolve with the progressing consumer.
Additional content:
Will NVIDIA Beat or Miss Earnings Estimates?
Graphics chipmaker NVIDIA is set to release fourth-quarter fiscal 2021 results on Feb 24, after market close. As it has been one of the hottest stocks in the semiconductor space, let's take a look at its fundamentals ahead of the earnings release.
NVIDIA has been rallying over the past three months, reaping gains of 10.8% but underperforming the industry average of 22.4% by a wide margin. This uptrend is likely to continue given the optimism surrounding the company's profitability, though an earnings surprise is difficult to predict this time.
Earnings Whispers
According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. NVIDIA currently has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
This videogame-gear specialist saw no earnings estimate revision over the past 30 days for the fourth quarter of fiscal 2021. The company's earnings surprise history is solid. It delivered an earnings surprise of 11.49%, on average, in the last four quarters. Additionally, it is expected to post substantial earnings and revenue growth of 48.1% and 55.4%, respectively, for the to-be-reported quarter.
The stock belongs to a top-ranked Zacks industry (placed at the top 28% of 250+ industries) (see: all the Technology ETFs here).
The Zacks Consensus Estimate for the average target price is $585.56 with nearly 81% of the analysts giving a Strong Buy or a Buy rating ahead of the company's earnings.
What's Hot?
NVIDIA is expected to benefit from the stay-at-home trend, which continues to boost demand for cloud gaming chips. Additionally, the future of self-driving cars and a resurgence in crypto-mining led to increased demand for NVIDIA chips (read: ETFs to Ride the Bitcoin Rally on Rising Popularity).
ETFs in Focus
Ahead of the results, investors could focus on ETFs having the largest allocation to NVIDIA. Below are a couple ETFs with the highest allocation to NVIDIA that could make compelling plays ahead of its earnings report:
VanEck Vectors Video Gaming and eSports ETF
This fund offers exposure to global companies, involved in video game development, e-sports and related hardware and software by tracking the MVIS Global Video Gaming and eSports Index. It holds 25 stocks with NVIDIA taking the second spot with 7.5% share.
American firms account for one-third of the portfolio while China and Japan round off the next two with double-digit allocations each. The fund has gathered $945.4 million in its asset base while trading in average daily volume of 163,000 shares. It charges 55 bps in annual fees from investors (read: A Thorough Guide to Video Gaming ETFs).
iShares PHLX Semiconductor ETF
This ETF offers exposure to 30 U.S. companies that design, manufacture and distribute semiconductors by tracking the PHLX SOX Semiconductor Sector Index. Of these, NVIDIA takes the third position with 7.4% share.
The fund amassed $6 billion in its asset base and charges a fee of 46 bps a year. It trades in a solid volume of 626,000 shares and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook (read: 4 ETFs to Invest in Shining Semiconductor Stocks).
Want key ETF info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.