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Construction Partners and AGCO have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – August 15, 2024 – Zacks Equity Research shares Construction Partners (ROAD - Free Report) as the Bull of the Day and AGCO Corporation (AGCO - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on UGI Corp. (UGI - Free Report) , Northwest Natural Holding Co. (NWN - Free Report) and Veolia Environnement SA (VEOEY - Free Report) .
Construction Partners, a Zacks Rank #1 (Strong Buy), is engaged in the construction of roadways across several southern U.S. states. ROAD shares are widely outperforming the market this year with the backing of a leading industry group. The stock is hitting a series of 52-week highs and displaying relative strength as buying pressure accumulates in this top-ranked stock.
ROAD stock is part of the Zacks Building Products – Miscellaneous industry group, which ranks in the top 36% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months.
Historical research studies suggest that approximately half of a stock's price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It's no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Construction Partners, a civil infrastructure company, builds and maintains roadways across Alabama, Florida, Georgia, North Carolina, and South Carolina. The company provides various products and services to public and private infrastructure projects with a focus on highways, roads, bridges, airports, and commercial and residential developments.
A vertically integrated company, Construction Partners is also engaged in manufacturing and distribution of hot-mix asphalt, paving activities, and site development, the latter of which includes the installation of utility and drainage systems. Formerly known as SunTx CPI Growth Company, Construction Partners was incorporated in 1999 and is headquartered in Dothan, Alabama.
Earlier in August, CEO Fred Smith announced that the company acquired Georgia-based Robinson Paving Company. As a result of the transaction, Construction Partners added three hot-mix asphalt plants along with related crews and equipment.
Earnings Trends and Future Estimates
The construction company has put together an impressive earnings history, surpassing earnings estimates in each of the past six quarters. Just last week, the company reported fiscal third-quarter earnings of $0.59/share, a 9.3% surprise over the $0.54/share consensus estimate. Construction Partners has delivered a trailing four-quarter average earnings surprise of 35.1%.
ROAD shares received a boost as analysts covering the company have been increasing their fiscal 2025 earnings estimates lately. For the upcoming fiscal year, earnings estimates have risen 8.09% in the past 60 days. The Zacks Consensus EPS Estimate now stands at $1.87/share, reflecting a staggering potential growth rate of 29.5% relative to the prior year.
Let's Get Technical
ROAD stock has advanced nearly 40% this year alone. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of 52-week highs, widely outperforming the major indices. With both strong fundamental and technical indicators, ROAD stock is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Construction Partners has recently witnessed positive revisions. As long as this trend remains intact (and ROAD continues to deliver earnings beats), the stock will likely continue its bullish run into the end of this year and beyond.
Bottom Line
Construction Partners is ranked favorably by our Zacks Style Scores, with a second-best 'B' mark in our Growth category. This indicates that further upside is likely based on favorable earnings and sales metrics.
Backed by a top industry group and impressive history of earnings beats, it's not difficult to see why this company is a compelling investment. Robust fundamentals combined with an appealing technical trend certainly justify adding shares to the mix. The future looks bright for this highly-ranked, leading stock.
AGCO Corporation is a global manufacturer and distributor of agricultural equipment and related replacement parts. The company offers horsepower tractors for row crop production, soil cultivation, planting, land leveling, and seeding operations.
The machinery manufacturer also provides smart farming technologies and products such as loader wagons, spreaders, mowers, ventilation and watering systems, and field cultivators.
AGCO markets its products under the Fendt, GSI, Massy Ferguson, Precision Planting, and Valtra brands through a network of independent dealers and distributors. The company was founded in 1990 and is based in Duluth, Georgia.
The Zacks Rundown
AGCO, a Zacks Rank #5 (Strong Sell), is a component of the Zacks Manufacturing – Farm Equipment industry group, which currently ranks in the bottom 1% out of approximately 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months, just as it has over the past year.
Candidates in the bottom tiers of industries can often be intriguing short candidates. While individual stocks have the ability to outperform even when included in a lackluster industry, the inclusion in a weaker group serves as a headwind for any potential rallies and the journey forward is that much more difficult.
Along with many other farm equipment stocks, AGCO shares have been struggling this year while the general market returned to new heights. The stock is hitting a series of lower lows and represents a compelling short opportunity as we head deeper into the latter half of the year.
Recent Earnings Misses & Deteriorating Outlook
The agricultural machinery company has fallen short of earnings estimates in two of the past three quarters. Back in July, AGCO reported second-quarter earnings of $2.53/share, missing the $2.88/share Zacks Consensus estimate by -12.2%. Consistently falling short of earnings estimates is a recipe for underperformance, and AGCO is no exception.
AGCO has been on the receiving end of negative earnings estimate revisions as of late. Looking at the full year, analysts have slashed estimates by -35.05% in the past 60 days. The 2024 Zacks Consensus Estimate is now $7.93/share, reflecting negative growth of -49% relative to the prior year.
Falling earnings estimates are a huge red flag and need to be respected. Negative growth year-over-year is the type of trend that bears like to see.
Technical Outlook
As illustrated below, AGCO stock is in a sustained downtrend. Notice how the stock has continued to meet resistance at important technical levels in the 50-day moving average (blue line) and the 200-day moving average (red line). Also note how both moving averages are sloping down – another good sign for the bears.
AGCO stock has experienced what is known as a "death cross," whereby the stock's 50-day moving average crosses below its 200-day moving average. The stock would have to make an outsized move to the upside and show increasing earnings estimate revisions to warrant taking any long positions. Shares have fallen more than 27% this year alone.
Final Thoughts
A deteriorating fundamental and technical backdrop show that this stock is not set to make its way to new highs anytime soon. The fact that AGCO is included in one of the worst-performing industry groups provides yet another headwind to a long list of concerns. A history of earnings misses and falling future earnings estimates will likely serve as a ceiling to any potential rallies, nurturing the stock's downtrend.
Potential investors may want to give this stock the cold shoulder, or perhaps include it as part of a short or hedge strategy. Bulls will want to steer clear of AGCO until the situation shows major signs of improvement.
Additional content:
3 Utility Stocks to Buy on an Imminent September Rate Cut
The utilities sector is known to offer investors a steady source of income in the form of dividends. This makes the sector a fallback option for investors during recessions and economic downturns. Alternatively, utility stocks usually fall out of favor during times of economic growth, with growth stocks driving the markets.
These are defensive stocks that are not affected or very slightly affected by market volatility. Demand for these stocks is not impacted much when markets are volatile because of the very nature of the stocks. Even during the 2008 financial crisis, they had held the fort. Utility stocks are examples of such defensive instruments that protect investments when the goings are not good. Whatever the state of the economy, a household or a business needs its electricity, water, or gas supplies.
Currently, the market expects interest rate cuts in September to mark the first loosening of grip on monetary policy since tightening started in early 2022. The central bank wants to analyze further economic data on jobs, inflation and various sectors before embarking on rate cuts. However, after a recent spate of data from the labor market warning of an economic slowdown, expectations are that there would be at least two rate cuts announced this year.
Inflation has cooled down significantly in recent months. The jobs market has slowed down as well, albeit remaining robust and resilient. It looks very likely that once the Fed takes the plunge, rates will come down fast. After the 2008 sub-prime crisis, the Fed cut interest rates to stimulate the economy. On cue, investors flocked to utilities, which are viable defensive choices during macroeconomic downturns. There is no reason why history will not repeat itself. The sector has done very well this year already, with the S&P 500 Select Sector SPDR (XLU) advancing 16.7% year to date as of Jul 31, 2024.
In addition, utilities are usually considered long-term buy-and-hold options as they regularly declare dividends, and dividend yields on utility stocks are generally higher than those paid by other equities. In this environment, utility stocks provide much-required stability and growth potential. Hence, astute investors should consider such stocks at present.
Our Choices
The stocks below flaunt a Zacks Rank #1 (Strong Buy) or Rank #2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here, V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today's Zacks #1 Rank stocks here.
UGI Corp. is an integrated gas distributor and markets energy products and related services. UGI's expected earnings growth rate for the current year is 2.8%. The Zacks Consensus Estimate for its current-year earnings has remained unchanged over the past 60 days. This Zacks Rank #2 company has a VGM Score of B.
Northwest Natural Holding Co. is a natural gas distribution, pipeline and storage company. NWN's expected earnings growth rate for the next year is 2.5%. The Zacks Consensus Estimate for its next-year earnings has improved 26.3% over the past 60 days. This Zacks Rank #2 company has a VGM Score of B.
Veolia Environnement SA provides water, waste and energy management solutions globally. VEOEY's expected earnings growth rate for the current year is 207%. The Zacks Consensus Estimate for its current-year earnings has improved 0.5% over the past 60 days. This Zacks Rank #1 company has a VGM Score of B.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
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/performancefor information about the performance numbers displayed in this press release.
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Construction Partners and AGCO have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – August 15, 2024 – Zacks Equity Research shares Construction Partners (ROAD - Free Report) as the Bull of the Day and AGCO Corporation (AGCO - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on UGI Corp. (UGI - Free Report) , Northwest Natural Holding Co. (NWN - Free Report) and Veolia Environnement SA (VEOEY - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
Construction Partners, a Zacks Rank #1 (Strong Buy), is engaged in the construction of roadways across several southern U.S. states. ROAD shares are widely outperforming the market this year with the backing of a leading industry group. The stock is hitting a series of 52-week highs and displaying relative strength as buying pressure accumulates in this top-ranked stock.
ROAD stock is part of the Zacks Building Products – Miscellaneous industry group, which ranks in the top 36% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months.
Historical research studies suggest that approximately half of a stock's price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It's no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Construction Partners, a civil infrastructure company, builds and maintains roadways across Alabama, Florida, Georgia, North Carolina, and South Carolina. The company provides various products and services to public and private infrastructure projects with a focus on highways, roads, bridges, airports, and commercial and residential developments.
A vertically integrated company, Construction Partners is also engaged in manufacturing and distribution of hot-mix asphalt, paving activities, and site development, the latter of which includes the installation of utility and drainage systems. Formerly known as SunTx CPI Growth Company, Construction Partners was incorporated in 1999 and is headquartered in Dothan, Alabama.
Earlier in August, CEO Fred Smith announced that the company acquired Georgia-based Robinson Paving Company. As a result of the transaction, Construction Partners added three hot-mix asphalt plants along with related crews and equipment.
Earnings Trends and Future Estimates
The construction company has put together an impressive earnings history, surpassing earnings estimates in each of the past six quarters. Just last week, the company reported fiscal third-quarter earnings of $0.59/share, a 9.3% surprise over the $0.54/share consensus estimate. Construction Partners has delivered a trailing four-quarter average earnings surprise of 35.1%.
ROAD shares received a boost as analysts covering the company have been increasing their fiscal 2025 earnings estimates lately. For the upcoming fiscal year, earnings estimates have risen 8.09% in the past 60 days. The Zacks Consensus EPS Estimate now stands at $1.87/share, reflecting a staggering potential growth rate of 29.5% relative to the prior year.
Let's Get Technical
ROAD stock has advanced nearly 40% this year alone. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of 52-week highs, widely outperforming the major indices. With both strong fundamental and technical indicators, ROAD stock is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Construction Partners has recently witnessed positive revisions. As long as this trend remains intact (and ROAD continues to deliver earnings beats), the stock will likely continue its bullish run into the end of this year and beyond.
Bottom Line
Construction Partners is ranked favorably by our Zacks Style Scores, with a second-best 'B' mark in our Growth category. This indicates that further upside is likely based on favorable earnings and sales metrics.
Backed by a top industry group and impressive history of earnings beats, it's not difficult to see why this company is a compelling investment. Robust fundamentals combined with an appealing technical trend certainly justify adding shares to the mix. The future looks bright for this highly-ranked, leading stock.
Bear of the Day:
AGCO Corporation is a global manufacturer and distributor of agricultural equipment and related replacement parts. The company offers horsepower tractors for row crop production, soil cultivation, planting, land leveling, and seeding operations.
The machinery manufacturer also provides smart farming technologies and products such as loader wagons, spreaders, mowers, ventilation and watering systems, and field cultivators.
AGCO markets its products under the Fendt, GSI, Massy Ferguson, Precision Planting, and Valtra brands through a network of independent dealers and distributors. The company was founded in 1990 and is based in Duluth, Georgia.
The Zacks Rundown
AGCO, a Zacks Rank #5 (Strong Sell), is a component of the Zacks Manufacturing – Farm Equipment industry group, which currently ranks in the bottom 1% out of approximately 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months, just as it has over the past year.
Candidates in the bottom tiers of industries can often be intriguing short candidates. While individual stocks have the ability to outperform even when included in a lackluster industry, the inclusion in a weaker group serves as a headwind for any potential rallies and the journey forward is that much more difficult.
Along with many other farm equipment stocks, AGCO shares have been struggling this year while the general market returned to new heights. The stock is hitting a series of lower lows and represents a compelling short opportunity as we head deeper into the latter half of the year.
Recent Earnings Misses & Deteriorating Outlook
The agricultural machinery company has fallen short of earnings estimates in two of the past three quarters. Back in July, AGCO reported second-quarter earnings of $2.53/share, missing the $2.88/share Zacks Consensus estimate by -12.2%. Consistently falling short of earnings estimates is a recipe for underperformance, and AGCO is no exception.
AGCO has been on the receiving end of negative earnings estimate revisions as of late. Looking at the full year, analysts have slashed estimates by -35.05% in the past 60 days. The 2024 Zacks Consensus Estimate is now $7.93/share, reflecting negative growth of -49% relative to the prior year.
Falling earnings estimates are a huge red flag and need to be respected. Negative growth year-over-year is the type of trend that bears like to see.
Technical Outlook
As illustrated below, AGCO stock is in a sustained downtrend. Notice how the stock has continued to meet resistance at important technical levels in the 50-day moving average (blue line) and the 200-day moving average (red line). Also note how both moving averages are sloping down – another good sign for the bears.
AGCO stock has experienced what is known as a "death cross," whereby the stock's 50-day moving average crosses below its 200-day moving average. The stock would have to make an outsized move to the upside and show increasing earnings estimate revisions to warrant taking any long positions. Shares have fallen more than 27% this year alone.
Final Thoughts
A deteriorating fundamental and technical backdrop show that this stock is not set to make its way to new highs anytime soon. The fact that AGCO is included in one of the worst-performing industry groups provides yet another headwind to a long list of concerns. A history of earnings misses and falling future earnings estimates will likely serve as a ceiling to any potential rallies, nurturing the stock's downtrend.
Potential investors may want to give this stock the cold shoulder, or perhaps include it as part of a short or hedge strategy. Bulls will want to steer clear of AGCO until the situation shows major signs of improvement.
Additional content:
3 Utility Stocks to Buy on an Imminent September Rate Cut
The utilities sector is known to offer investors a steady source of income in the form of dividends. This makes the sector a fallback option for investors during recessions and economic downturns. Alternatively, utility stocks usually fall out of favor during times of economic growth, with growth stocks driving the markets.
These are defensive stocks that are not affected or very slightly affected by market volatility. Demand for these stocks is not impacted much when markets are volatile because of the very nature of the stocks. Even during the 2008 financial crisis, they had held the fort. Utility stocks are examples of such defensive instruments that protect investments when the goings are not good. Whatever the state of the economy, a household or a business needs its electricity, water, or gas supplies.
Currently, the market expects interest rate cuts in September to mark the first loosening of grip on monetary policy since tightening started in early 2022. The central bank wants to analyze further economic data on jobs, inflation and various sectors before embarking on rate cuts. However, after a recent spate of data from the labor market warning of an economic slowdown, expectations are that there would be at least two rate cuts announced this year.
Inflation has cooled down significantly in recent months. The jobs market has slowed down as well, albeit remaining robust and resilient. It looks very likely that once the Fed takes the plunge, rates will come down fast. After the 2008 sub-prime crisis, the Fed cut interest rates to stimulate the economy. On cue, investors flocked to utilities, which are viable defensive choices during macroeconomic downturns. There is no reason why history will not repeat itself. The sector has done very well this year already, with the S&P 500 Select Sector SPDR (XLU) advancing 16.7% year to date as of Jul 31, 2024.
In addition, utilities are usually considered long-term buy-and-hold options as they regularly declare dividends, and dividend yields on utility stocks are generally higher than those paid by other equities. In this environment, utility stocks provide much-required stability and growth potential. Hence, astute investors should consider such stocks at present.
Our Choices
The stocks below flaunt a Zacks Rank #1 (Strong Buy) or Rank #2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here, V stands for Value, G for Growth and M for Momentum. The score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today's Zacks #1 Rank stocks here.
UGI Corp. is an integrated gas distributor and markets energy products and related services. UGI's expected earnings growth rate for the current year is 2.8%. The Zacks Consensus Estimate for its current-year earnings has remained unchanged over the past 60 days. This Zacks Rank #2 company has a VGM Score of B.
Northwest Natural Holding Co. is a natural gas distribution, pipeline and storage company. NWN's expected earnings growth rate for the next year is 2.5%. The Zacks Consensus Estimate for its next-year earnings has improved 26.3% over the past 60 days. This Zacks Rank #2 company has a VGM Score of B.
Veolia Environnement SA provides water, waste and energy management solutions globally. VEOEY's expected earnings growth rate for the current year is 207%. The Zacks Consensus Estimate for its current-year earnings has improved 0.5% over the past 60 days. This Zacks Rank #1 company has a VGM Score of B.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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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/performancefor information about the performance numbers displayed in this press release.