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The market roared back to start the week and the buying continued Wednesday, driven once again by tech. Optimism that the new Omicron variant will be milder than some initially feared sent the bulls charging back, as cash pours in to buy seemingly every big drop.
The S&P 500 is once again trading within touching distance of its records and the Nasdaq is only about 2% below its November highs. The positivity and the strength of mega-cap tech stocks does cloud the fact that many big covid winners tumbled to new 52-week lows last week.
The falls come amid rate hike and tapering concerns. But even when the Fed starts to raise rates, which could be sooner than expected as Jay Powell moves away from ‘transitory’ inflation phrasing, they will likely stay low enough historically to prolong there is no alternative investing.
Plus, let’s not forget how high many stocks climbed in such a short period of time last year. Therefore, Wall Street was always going to take profits and recalibrate the names that got way out of whack. And many of these stocks have started to find buyers again.
Even though there could be more selling and volatility in December. The last few weeks showcase how crucial it is to stay exposed. There is clearly a need to take some gains off the table. But the movers and shakers also utilize pullbacks and periods of quick selling as an opportunity to buy strong stocks at lower prices…
Image Source: Zacks Investment Research
Callaway Golf Company
Golf equipment and apparel maker Callaway has expanded through acquisitions in recent years. Its portfolio features multiple brands beyond its namesake, including TravisMathew. Callaway in March made its biggest splash when it closed its merger with fast-growing, high-tech driving range company Topgolf.
Callaway is now in the entertainment business and Topgolf has found success by attracting tons of “non-golfers” by making it more about fun and friends than traditional driving ranges. Topgolf could help slowly convert some customers into more avid golfers, while also providing potential far beyond the relatively niche golfer space.
Callaway did post strong double-digit revenue growth in FY17-FY19 before its Topgolf deal, including 36% revenue expansion prior to the pandemic—FY20 sales slipped 6%. Zacks estimates call for ELY’s FY21 revenue to soar 96% from $1.6 billion to $3.1 billion, driven by Topgolf’s inclusion. ELY is then projected to post another 18% growth in FY22.
Image Source: Zacks Investment Research
Callaway’s adjusted earnings are projected to slip around 6% this year and then easily surge above its FY20 levels in FY22. The company’s EPS estimates have soared since it topped our Q3 estimates in early November, with its FY21 consensus 62% higher and more importantly FY22 up 83% to $0.75 per share—including a recent pop. This positivity helps Callaway land a Zacks Rank #2 (Buy) right now alongside its “A” grade for Growth in our Style Scores system.
Callaway executives are very pleased with the Topgolf deal and noted how much room there is for growth as people crave a return to fun, with the golf-based entertainment center benefitting from strong walk-in traffic and social events. Callaway is also part of a highly-ranked industry and nine of the 11 brokerage recommendations Zacks has are “Strong Buys.”
Callaway is up 23% in the last year to easily outpace its broader Zacks econ sector, but it closed regular trading Wednesday 22% below its summer highs. Better still, ELY’s current Zacks consensus price target represents 45% upside vs. its current levels.
Callaway stock recently climbed above its 50-day moving average (under its 200-day). And its valuation has improved dramatically even though some might still find it a bit rich in terms of forward earnings. That said, the company did fundamentally reshape its business through Topgolf.
Target cemented its place as a retail and Wall Street titan during the pandemic and it’s continued to grow even as it faces very tough to compete against periods. Last year, its comparable digital sales soared 145%, driven by same-day offerings. This helped total 2020 sales jump 20%, adding $15 billion to its top-line, or “greater than its total sales growth over the prior 11 years.” Meanwhile, its adjusted earnings jumped nearly 50%.
Alongside its successful e-commerce offerings, Target stands out through constant innovations inside its in-house brands for fashion, furniture, food, and more. This will help it continue to grow as one-stop-shopping pushes smaller retailers aside. Target, like ELY, topped our Q3 estimates in November, with comparable sales up another 13% YoY as shoppers flocked back to stores.
Target has also been able to keep its margins relatively strong, especially compared to its peers, even in the face of rising labor costs and supply chain setbacks. In fact, TGT said in November that it continues to expect its full-year operating income margin rate will be 8% or higher. And it raised its guidance for the vital holiday shopping quarter.
Zacks estimates call for Target to post 14% higher sales against its banner year and 40% stronger adjusted earnings. It is then projected to post higher sales in FY22 and its upward bottom-line revisions help it grab a Zacks Rank #2 (Buy) right now next to an “A” grade for Momentum.
Image Source: Zacks Investment Research
Target was on a big run before the initial pandemic selloff and it’s now soared 250% in the past three years to blow away its industry and the S&P 500. It has cooled down recently, up only 3% in the trailing six months vs. the benchmark’s 11%. The stock closed regular trading Wednesday around 11% below its records and some recent selling has it trading below neutral RSI levels at 40 even as the S&P 500 sits closer to overbought at 60.
Despite its huge run, Target’s valuation is far from stretched at the moment. The stock trades at a 25% discount to both its own two-year highs and its industry’s average at 18.6X forward 12-month earnings. TGT is even trading at a slight discount to where it was at the end of 2019.
On top of that, Target in early June raised its dividend by 32% to $0.90 a share and its 1.50% yield tops the S&P 500 and matches the 10-year U.S. Treasury. And 14 of the 17 brokerage recommendations Zacks has for TGT are “Strong Buys.”
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2 Top Stocks to Buy on the Dip for 2022 Growth
The market roared back to start the week and the buying continued Wednesday, driven once again by tech. Optimism that the new Omicron variant will be milder than some initially feared sent the bulls charging back, as cash pours in to buy seemingly every big drop.
The S&P 500 is once again trading within touching distance of its records and the Nasdaq is only about 2% below its November highs. The positivity and the strength of mega-cap tech stocks does cloud the fact that many big covid winners tumbled to new 52-week lows last week.
The falls come amid rate hike and tapering concerns. But even when the Fed starts to raise rates, which could be sooner than expected as Jay Powell moves away from ‘transitory’ inflation phrasing, they will likely stay low enough historically to prolong there is no alternative investing.
Plus, let’s not forget how high many stocks climbed in such a short period of time last year. Therefore, Wall Street was always going to take profits and recalibrate the names that got way out of whack. And many of these stocks have started to find buyers again.
Even though there could be more selling and volatility in December. The last few weeks showcase how crucial it is to stay exposed. There is clearly a need to take some gains off the table. But the movers and shakers also utilize pullbacks and periods of quick selling as an opportunity to buy strong stocks at lower prices…
Callaway Golf Company
Golf equipment and apparel maker Callaway has expanded through acquisitions in recent years. Its portfolio features multiple brands beyond its namesake, including TravisMathew. Callaway in March made its biggest splash when it closed its merger with fast-growing, high-tech driving range company Topgolf.
Callaway is now in the entertainment business and Topgolf has found success by attracting tons of “non-golfers” by making it more about fun and friends than traditional driving ranges. Topgolf could help slowly convert some customers into more avid golfers, while also providing potential far beyond the relatively niche golfer space.
Callaway did post strong double-digit revenue growth in FY17-FY19 before its Topgolf deal, including 36% revenue expansion prior to the pandemic—FY20 sales slipped 6%. Zacks estimates call for ELY’s FY21 revenue to soar 96% from $1.6 billion to $3.1 billion, driven by Topgolf’s inclusion. ELY is then projected to post another 18% growth in FY22.
Callaway’s adjusted earnings are projected to slip around 6% this year and then easily surge above its FY20 levels in FY22. The company’s EPS estimates have soared since it topped our Q3 estimates in early November, with its FY21 consensus 62% higher and more importantly FY22 up 83% to $0.75 per share—including a recent pop. This positivity helps Callaway land a Zacks Rank #2 (Buy) right now alongside its “A” grade for Growth in our Style Scores system.
Callaway executives are very pleased with the Topgolf deal and noted how much room there is for growth as people crave a return to fun, with the golf-based entertainment center benefitting from strong walk-in traffic and social events. Callaway is also part of a highly-ranked industry and nine of the 11 brokerage recommendations Zacks has are “Strong Buys.”
Callaway is up 23% in the last year to easily outpace its broader Zacks econ sector, but it closed regular trading Wednesday 22% below its summer highs. Better still, ELY’s current Zacks consensus price target represents 45% upside vs. its current levels.
Callaway stock recently climbed above its 50-day moving average (under its 200-day). And its valuation has improved dramatically even though some might still find it a bit rich in terms of forward earnings. That said, the company did fundamentally reshape its business through Topgolf.
Target (TGT - Free Report)
Target cemented its place as a retail and Wall Street titan during the pandemic and it’s continued to grow even as it faces very tough to compete against periods. Last year, its comparable digital sales soared 145%, driven by same-day offerings. This helped total 2020 sales jump 20%, adding $15 billion to its top-line, or “greater than its total sales growth over the prior 11 years.” Meanwhile, its adjusted earnings jumped nearly 50%.
Alongside its successful e-commerce offerings, Target stands out through constant innovations inside its in-house brands for fashion, furniture, food, and more. This will help it continue to grow as one-stop-shopping pushes smaller retailers aside. Target, like ELY, topped our Q3 estimates in November, with comparable sales up another 13% YoY as shoppers flocked back to stores.
Target has also been able to keep its margins relatively strong, especially compared to its peers, even in the face of rising labor costs and supply chain setbacks. In fact, TGT said in November that it continues to expect its full-year operating income margin rate will be 8% or higher. And it raised its guidance for the vital holiday shopping quarter.
Zacks estimates call for Target to post 14% higher sales against its banner year and 40% stronger adjusted earnings. It is then projected to post higher sales in FY22 and its upward bottom-line revisions help it grab a Zacks Rank #2 (Buy) right now next to an “A” grade for Momentum.
Target was on a big run before the initial pandemic selloff and it’s now soared 250% in the past three years to blow away its industry and the S&P 500. It has cooled down recently, up only 3% in the trailing six months vs. the benchmark’s 11%. The stock closed regular trading Wednesday around 11% below its records and some recent selling has it trading below neutral RSI levels at 40 even as the S&P 500 sits closer to overbought at 60.
Despite its huge run, Target’s valuation is far from stretched at the moment. The stock trades at a 25% discount to both its own two-year highs and its industry’s average at 18.6X forward 12-month earnings. TGT is even trading at a slight discount to where it was at the end of 2019.
On top of that, Target in early June raised its dividend by 32% to $0.90 a share and its 1.50% yield tops the S&P 500 and matches the 10-year U.S. Treasury. And 14 of the 17 brokerage recommendations Zacks has for TGT are “Strong Buys.”