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.
Abercrombie & Fitch and British Petroleum have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL –October 8, 2024 – Zacks Equity Research shares Abercrombie & Fitch (ANF - Free Report) , as the Bull of the Day and British Petroleum (BP - Free Report) , as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Baker Hughes Co. (BKR - Free Report) , EOG Resources Inc. (EOG - Free Report) and Diamondback Energy (FANG - Free Report) .
Zacks Rank #1 (Strong Buy) stock Abercrombie & Fitch is a fashion brand specializing in creating and distributing laid-back clothes and accessories tailored to teenagers and young adults. Renowned for its trendy aesthetic, the label features a variety of clothing items, including denim bottoms, tops, dresses, and outerwear that prioritize both comfort and fashion. The company conducts its business via brick-and-mortar stores and has a popular website. A&F sustains its popularity by using high-quality materials and offering stylish designs influenced by current trends.
A&F’s Ability to Adapt
Billionaire investing legend Paul Tudor Jones once proclaimed, “You adapt, evolve, compete, or die.” Though PTJ was referring to Wall Street and the investing world, his quote is also highly relevant to the ever-changing fashion industry. Fashion trends are consistently changing due to the dynamic influence of cultural shifts, seasonal variations, and evolving consumer preferences. No better example of successful evolution exists on Wall Street than A&F. The company has transitioned its brand from a once elitist image to a welcoming and approachable one. For instance, in August, Abercrombie’s popular Hollister brand unveiled a suite of collegiate graphics products representing more than 30 universities nationwide.
ANF Expanding Profit Margins
ANF’s margins are expanding in 2024 following a multi-year downtrend. Abercrombie’s gross margin expanded 240 basis points to 64.9% in the second quarter and are some of the highest in the industry.
Abercrombie Store-Optimization Strategy
Abercrombie’s management is also not settling regarding its store location strategy. Management has closed underperforming locations and is repositioning to smaller omnichannel enabled stores. Thus far, new and remodeled locations have outperformed management’s expectations.
Wall Street is Bullish on Abercrombie
Zacks Consensus Estimates suggest that ANF’s earnings will explode by 63.38% for the full year 2025.
If recent history is any clue, ANF will not only meet Wall Street’s expectations but blow them away. Over the past four quarters, ANF has beat Zacks Consensus Estimates by a robust 27.99%.
ANF 1sT 200-day Visit
ANF is retreating to its 200-day moving average for the first time after ripping more than 140% over the past year. The first tag of the 200-day MA in a leading stock like ANF is typically a very attractive reward-to-risk zone.
Bottom Line
Abercrombie & Fitch is thriving in fashion by constantly evolving its brand. A popular product line, new locations, and expanding margins are reasons to be long the stock into 2025.
Zacks Rank #5 (Strong Sell) stock British Petroleum is a global energy corporation focusing on oil and gas activities such as exploration, production, refining and distribution. BP, among the leading players in the oil industry worldwide, engages in all aspects of the petroleum supply chain –from extracting oil to transforming it into fuel and chemicals before selling it through its retail outlets. Moreover, BP is also venturing into other energy fields, like wind and solar power as part of its overarching strategy to adopt an environmentally sustainable energy approach.
BP Oil Spill Expenses Weigh
The BP oil spill of 2010, also known as the “Deepwater Horizon” oil spill, was one of the largest environmental disasters of all-time. Caused by an oil explosion on a deepwater oil platform, the BP oil spill resulted in more than 200 million gallons of oil discharged into the Gulf of Mexico. The accident not only had a disastrous effect on the eleven people who perished and the environment, but it also had a long-lasting impact on BP. Though BP has finally resolved litigation surrounding the incident, the incident continues to plague the company in three significant ways:
1. Reputation: Because of the scope of the disaster, BP’s reputation will always be tarnished.
2. Expenses: BP is still paying damages from the incident, with a hefty $1.2 billion pre-tax bill in 2024.
3. Divestitures: The expenses related to the incident mean that BP has a higher debt-to-capitalization ratio than its peers. The company has also been forced to sell assets, potentially limiting its future cash generation.
BP’s long-term debt capital of 38.22% is far higher than the oil industry’s 21.02%.
BP to Sell Wind Business
BP is selling its ~$2 billion renewable wind business as the company continues offloading underperforming assets to pay expenses. However, the company will be negotiating the sale of the business from a position of weakness. Last year, BP wrote down the business by more than $1 billion, and the company’s former renewables head warned, “Ultimately, offshore wind in the US is fundamentally broken.” Meanwhile, the landmark nuclear deal to reopen “Three Mile Island” between Microsoft (MSFT - Free Report) and Constellation Energy (CEG - Free Report) suggests that the market is moving more toward nuclear energy as a reliable, more efficient, and renewable source of energy.
Geopolitical Events Are “Sell the News” Events for Oil
While geopolitical impacts can have short-term impacts on markets, history suggests that those impacts are often short-lived. For example, the War in Ukraine started in February 2022. Though most investors would expect a war in an oil-producing country like Russia to drive energy prices higher, since that time, most oil stocks, the Energy Select SPDR ETF XLE, and the US Oil Fund ETF USO, have actually been lower.Despite tensions rising between Iran and Israel recently, I expect the same outcome this time around.
BP Underperformance
BP has fallen short of Wall Street expectations in four of the past five quarters. From a price perspective, BP is down for the year while the S&P 500 Index is up more than 20% - evidence of relative weakness.
Bottom Line
Oil and oil stocks like BP have underperformed despite rising geopolitical tensions. Meanwhile, BP’s high relative debt levels and poor price action make the stock an avoid in the oil patch.
Additional content:
U.S. Rig Count Falls: Keep an Eye on EOG and FANG Stocks?
In its last weekly release, Baker Hughes Co. stated that the U.S. rig count was lower than the prior week’s figure. The rotary rig count, issued by BKR, is usually published in major newspapers and trade publications.
Baker Hughes’ data, issued at the end of every week since 1944, helps energy service providers gauge the overall business environment of the oil and gas industry. The number of active rigs and its comparison with the week-ago figure indicates the demand trajectory for the company’s oilfield services from exploration and production companies.
Amid a declining weekly rig count, should investors keep an eye on leading oil and gas exploration companies like EOG Resources Inc. and Diamondback Energy? Before diving into that, let's explore the latest rig count data details.
Baker Hughes’ Data: Rig Count in Detail
Total U.S. Rig Count Drops: The number of rigs engaged in the exploration and production of oil and natural gas in the United States was 585 in the week ended Oct. 4, lower than the week-ago count of 587. Moreover, the current national rig count declined from the year-ago level of 619, reflecting the fact that there has been a slowdown in drilling activities.
Some analysts see this downside as a sign of increased efficiency among shale producers, who may need fewer rigs. However, there are doubts among a few about whether certain producers have sufficient promising land for drilling.
Onshore rigs in the week that ended on Oct. 4 totaled 566, lower than the prior week's count of 567. In offshore resources, 18 rigs were operating, a decrease from the week-ago count of 19.
U.S. Oil Rig Count Falls: The oil rig count was 479 in the week ending Oct. 4, lower than the week-ago figure of 484. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — was also down from the year-ago figure of 497.
U.S. Natural Gas Rig Count Rises: The natural gas rig count of 102 exceeded the week-ago figure of 99. However, the count of rigs exploring the commodity was below the year-ago week’s tally of 118. Per the latest report, the number of natural gas-directed rigs is 94% lower than the all-time high of 1,606 recorded in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 14 units, in line with the week-ago count. The horizontal/directional rig count (encompassing new drilling technology with the ability to drill and extract gas from dense rock formations, also known as shale formations) of 571 was lower than the prior-week level of 573.
Rig Tally in the Most Prolific Basin
Permian — the most prolific basin in the United States — recorded a weekly oil and gas rig count of 304, which was lower than the week-ago figure of 306. The count was also below the prior-year level of 309.
Strong Oil Prices Bolster Resilience: EOG, FANG to Gain
West Texas Intermediate (WTI) crude is currently trading at more than $75 per barrel, presenting a favorable landscape for exploration and production. Despite moderation in drilling activity as upstream companies prioritize stockholder returns over production growth, the strong pricing environment remains advantageous for energy producers.
U.S. oil and gas companies benefit from significantly lower breakeven WTI prices across all shale plays, particularly for existing wells. Furthermore, the average breakeven price for most new wells remains below current market levels, positioning upstream players for continued profitability in the current environment.
Breakeven WTI Price for US Producers
Amid the backdrop, investors seeking medium to long-term gains may keep an eye on energy stocks like EOG Resources and Diamondback Energy.
In the United States, EOG Resources is one of the foremost explorers and producers of oil and gas, with its crude reserves spanning across the United States and Trinidad. The company, carrying a Zacks Rank #3 (Hold), possesses an extensive inventory of high-quality drilling wells in low-cost, premium resources, ensuring a strong business outlook.
Diamondback Energy, a leading pure-play Permian operator, has reported ongoing enhancements in the average productivity per well in the Midland Basin. Thus, the exploration and production company, carrying a Zacks Rank #3, is likely to continue witnessing increased production volumes. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The recent Endeavor merger has expanded FANG's presence in the Permian Basin, bringing its total pro forma footprint to about 838,000 net acres. As a result, the company now has a larger inventory of prime drilling locations, with a breakeven oil price below $40 per barrel.
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/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
Abercrombie & Fitch and British Petroleum have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL –October 8, 2024 – Zacks Equity Research shares Abercrombie & Fitch (ANF - Free Report) , as the Bull of the Day and British Petroleum (BP - Free Report) , as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Baker Hughes Co. (BKR - Free Report) , EOG Resources Inc. (EOG - Free Report) and Diamondback Energy (FANG - Free Report) .
Here is a synopsis of all three stocks:
Bull of the Day:
Zacks Rank #1 (Strong Buy) stock Abercrombie & Fitch is a fashion brand specializing in creating and distributing laid-back clothes and accessories tailored to teenagers and young adults. Renowned for its trendy aesthetic, the label features a variety of clothing items, including denim bottoms, tops, dresses, and outerwear that prioritize both comfort and fashion. The company conducts its business via brick-and-mortar stores and has a popular website. A&F sustains its popularity by using high-quality materials and offering stylish designs influenced by current trends.
A&F’s Ability to Adapt
Billionaire investing legend Paul Tudor Jones once proclaimed, “You adapt, evolve, compete, or die.” Though PTJ was referring to Wall Street and the investing world, his quote is also highly relevant to the ever-changing fashion industry. Fashion trends are consistently changing due to the dynamic influence of cultural shifts, seasonal variations, and evolving consumer preferences. No better example of successful evolution exists on Wall Street than A&F. The company has transitioned its brand from a once elitist image to a welcoming and approachable one. For instance, in August, Abercrombie’s popular Hollister brand unveiled a suite of collegiate graphics products representing more than 30 universities nationwide.
ANF Expanding Profit Margins
ANF’s margins are expanding in 2024 following a multi-year downtrend. Abercrombie’s gross margin expanded 240 basis points to 64.9% in the second quarter and are some of the highest in the industry.
Abercrombie Store-Optimization Strategy
Abercrombie’s management is also not settling regarding its store location strategy. Management has closed underperforming locations and is repositioning to smaller omnichannel enabled stores. Thus far, new and remodeled locations have outperformed management’s expectations.
Wall Street is Bullish on Abercrombie
Zacks Consensus Estimates suggest that ANF’s earnings will explode by 63.38% for the full year 2025.
If recent history is any clue, ANF will not only meet Wall Street’s expectations but blow them away. Over the past four quarters, ANF has beat Zacks Consensus Estimates by a robust 27.99%.
ANF 1sT 200-day Visit
ANF is retreating to its 200-day moving average for the first time after ripping more than 140% over the past year. The first tag of the 200-day MA in a leading stock like ANF is typically a very attractive reward-to-risk zone.
Bottom Line
Abercrombie & Fitch is thriving in fashion by constantly evolving its brand. A popular product line, new locations, and expanding margins are reasons to be long the stock into 2025.
Bear of the Day:
Zacks Rank #5 (Strong Sell) stock British Petroleum is a global energy corporation focusing on oil and gas activities such as exploration, production, refining and distribution. BP, among the leading players in the oil industry worldwide, engages in all aspects of the petroleum supply chain –from extracting oil to transforming it into fuel and chemicals before selling it through its retail outlets. Moreover, BP is also venturing into other energy fields, like wind and solar power as part of its overarching strategy to adopt an environmentally sustainable energy approach.
BP Oil Spill Expenses Weigh
The BP oil spill of 2010, also known as the “Deepwater Horizon” oil spill, was one of the largest environmental disasters of all-time. Caused by an oil explosion on a deepwater oil platform, the BP oil spill resulted in more than 200 million gallons of oil discharged into the Gulf of Mexico. The accident not only had a disastrous effect on the eleven people who perished and the environment, but it also had a long-lasting impact on BP. Though BP has finally resolved litigation surrounding the incident, the incident continues to plague the company in three significant ways:
1. Reputation: Because of the scope of the disaster, BP’s reputation will always be tarnished.
2. Expenses: BP is still paying damages from the incident, with a hefty $1.2 billion pre-tax bill in 2024.
3. Divestitures: The expenses related to the incident mean that BP has a higher debt-to-capitalization ratio than its peers. The company has also been forced to sell assets, potentially limiting its future cash generation.
BP’s long-term debt capital of 38.22% is far higher than the oil industry’s 21.02%.
BP to Sell Wind Business
BP is selling its ~$2 billion renewable wind business as the company continues offloading underperforming assets to pay expenses. However, the company will be negotiating the sale of the business from a position of weakness. Last year, BP wrote down the business by more than $1 billion, and the company’s former renewables head warned, “Ultimately, offshore wind in the US is fundamentally broken.” Meanwhile, the landmark nuclear deal to reopen “Three Mile Island” between Microsoft (MSFT - Free Report) and Constellation Energy (CEG - Free Report) suggests that the market is moving more toward nuclear energy as a reliable, more efficient, and renewable source of energy.
Geopolitical Events Are “Sell the News” Events for Oil
While geopolitical impacts can have short-term impacts on markets, history suggests that those impacts are often short-lived. For example, the War in Ukraine started in February 2022. Though most investors would expect a war in an oil-producing country like Russia to drive energy prices higher, since that time, most oil stocks, the Energy Select SPDR ETF XLE, and the US Oil Fund ETF USO, have actually been lower.Despite tensions rising between Iran and Israel recently, I expect the same outcome this time around.
BP Underperformance
BP has fallen short of Wall Street expectations in four of the past five quarters. From a price perspective, BP is down for the year while the S&P 500 Index is up more than 20% - evidence of relative weakness.
Bottom Line
Oil and oil stocks like BP have underperformed despite rising geopolitical tensions. Meanwhile, BP’s high relative debt levels and poor price action make the stock an avoid in the oil patch.
Additional content:
U.S. Rig Count Falls: Keep an Eye on EOG and FANG Stocks?
In its last weekly release, Baker Hughes Co. stated that the U.S. rig count was lower than the prior week’s figure. The rotary rig count, issued by BKR, is usually published in major newspapers and trade publications.
Baker Hughes’ data, issued at the end of every week since 1944, helps energy service providers gauge the overall business environment of the oil and gas industry. The number of active rigs and its comparison with the week-ago figure indicates the demand trajectory for the company’s oilfield services from exploration and production companies.
Amid a declining weekly rig count, should investors keep an eye on leading oil and gas exploration companies like EOG Resources Inc. and Diamondback Energy? Before diving into that, let's explore the latest rig count data details.
Baker Hughes’ Data: Rig Count in Detail
Total U.S. Rig Count Drops: The number of rigs engaged in the exploration and production of oil and natural gas in the United States was 585 in the week ended Oct. 4, lower than the week-ago count of 587. Moreover, the current national rig count declined from the year-ago level of 619, reflecting the fact that there has been a slowdown in drilling activities.
Some analysts see this downside as a sign of increased efficiency among shale producers, who may need fewer rigs. However, there are doubts among a few about whether certain producers have sufficient promising land for drilling.
Onshore rigs in the week that ended on Oct. 4 totaled 566, lower than the prior week's count of 567. In offshore resources, 18 rigs were operating, a decrease from the week-ago count of 19.
U.S. Oil Rig Count Falls: The oil rig count was 479 in the week ending Oct. 4, lower than the week-ago figure of 484. The current number of oil rigs — far from the peak of 1,609 attained in October 2014 — was also down from the year-ago figure of 497.
U.S. Natural Gas Rig Count Rises: The natural gas rig count of 102 exceeded the week-ago figure of 99. However, the count of rigs exploring the commodity was below the year-ago week’s tally of 118. Per the latest report, the number of natural gas-directed rigs is 94% lower than the all-time high of 1,606 recorded in 2008.
Rig Count by Type: The number of vertical drilling rigs totaled 14 units, in line with the week-ago count. The horizontal/directional rig count (encompassing new drilling technology with the ability to drill and extract gas from dense rock formations, also known as shale formations) of 571 was lower than the prior-week level of 573.
Rig Tally in the Most Prolific Basin
Permian — the most prolific basin in the United States — recorded a weekly oil and gas rig count of 304, which was lower than the week-ago figure of 306. The count was also below the prior-year level of 309.
Strong Oil Prices Bolster Resilience: EOG, FANG to Gain
West Texas Intermediate (WTI) crude is currently trading at more than $75 per barrel, presenting a favorable landscape for exploration and production. Despite moderation in drilling activity as upstream companies prioritize stockholder returns over production growth, the strong pricing environment remains advantageous for energy producers.
U.S. oil and gas companies benefit from significantly lower breakeven WTI prices across all shale plays, particularly for existing wells. Furthermore, the average breakeven price for most new wells remains below current market levels, positioning upstream players for continued profitability in the current environment.
Breakeven WTI Price for US Producers
Amid the backdrop, investors seeking medium to long-term gains may keep an eye on energy stocks like EOG Resources and Diamondback Energy.
In the United States, EOG Resources is one of the foremost explorers and producers of oil and gas, with its crude reserves spanning across the United States and Trinidad. The company, carrying a Zacks Rank #3 (Hold), possesses an extensive inventory of high-quality drilling wells in low-cost, premium resources, ensuring a strong business outlook.
Diamondback Energy, a leading pure-play Permian operator, has reported ongoing enhancements in the average productivity per well in the Midland Basin. Thus, the exploration and production company, carrying a Zacks Rank #3, is likely to continue witnessing increased production volumes. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The recent Endeavor merger has expanded FANG's presence in the Permian Basin, bringing its total pro forma footprint to about 838,000 net acres. As a result, the company now has a larger inventory of prime drilling locations, with a breakeven oil price below $40 per barrel.
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 >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
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.