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The Zacks Analyst Blog Highlights: U.S. Silica, Chevron, AngloGold, Kinross and Barrick Gold
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For Immediate Release
Chicago, IL –August 20, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: U.S. Silica Holdings , Chevron Corp. (CVX - Free Report) , AngloGold Ashanti Ltd. (AU - Free Report) , Kinross Gold Corp. (KGC - Free Report) and Barrick Gold Corp. (GOLD - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Oil Prices Rise on Saudi Oilfield Attack: Winners & Losers
The recent Organization of the Petroleum Exporting Countries’ (OPEC) report raising concerns about growth in oil demand should have hurt oil prices. For instance, OPEC trimmed global oil demand growth projection for this year by 40,000 barrels per day (bpd) to 1.10 million bpd.
However, despite the bearish view, oil prices moved north. The West Texas Intermediate (WTI) crude went up 0.7%, to $54.87 a barrel on Aug 16. And when it comes to Brent crude, the global oil benchmark increased 0.7% to $58.64.
So, what’s driving oil higher? Oil prices edged up for the week ending Aug 16 amid a weekend attack on a Saudi oilfield by Yemeni separatists and easing concerns about Sino-U.S. trade worries. Yemen's Houthi group has been recently responsible for a drone attack on an oilfield in eastern Saudi Arabia, resulting in a fire at a gas plant. Saudi oilfield attack has, thus, added to West Asian turmoil. Needless to say, oil prices rallied after such an attack raised concerns about supply disruption.
White House economic adviser Larry Kudlow, in the meantime, said that officials from both the United States and China would interact within 10 days, and could make significant progress about ending trade disputes. By the way, Chinese official Yang Jiechi met U.S. Secretary of State Mike Pompeo in New York last week to discuss China-U.S. trade relations.
Increasing optimism in U.S.-China trade negotiations is likely to drive global growth. And more growth means more oil consumption. Lest we forget, these economies imposed billions of dollars of tariffs on each other’s goods over the past year, battering equity markets, souring business and consumer sentiments as well as hampering economic growth.
Concerns about economic recession were also weighing on crude prices for quite some time. But, strong consumer spending data has eased worries about an impending economic recession. Retail sales that measure outlays at stores, online-shopping websites and restaurants increased at a seasonally adjusted rate of 0.7% in July from June, easily topping projections, according to the Commerce Department. Retail sales reading, in fact, was the strongest since March. A healthy labor market and low unemployment rate are cited as reasons behind the uptick in retail sales (read more: 5 Best Stocks to Buy on Booming Retail Sales).
Oil Jump: A Boon for These Stocks
Corporations that are into hydraulic fracturing for oil were affected the most at the end of last year due to a drop in oil prices. This is because when oil is cheap, the cost structure of such corporations loses appeal and the incentive to pump dies. But now, with oil prices increasing, fracking related service stocks including U.S. Silica Holdings are sure to make a comeback. The Zacks Rank #3 (Hold) company’s expected earnings growth rate for the next quarter is 50%, more than the Oil and Gas - Mining - Miscellaneous industry’s projected rise of nearly 35%.
Rise in oil prices of course bodes well for oil majors. Chevron Corp. is specially positioned to benefit as this Zacks Rank #3 company has a stable cash position and balance sheet when compared to peers. Moreover, it’s a dividend aristocrat as it has rewarded stockholders with a dividend hike over the past 25 years. Shares of Chevron, in the meantime, have advanced 6.5% on a year-to-date basis against the Oil and Gas - Integrated - International industry’s decline of 5.5%.
Gold prices are also expected to move north on higher oil prices. This is because as crude prices rise, prices of essential goods and commodities follow suit. And value of gold rises when inflation picks up. After all, it acts as a hedge against inflation. In fact, theoretically, more than 60% of the time gold and crude oil have a direct relationship. Given this bullishness, one should consider gold mining companies. Notable among them are AngloGold Ashanti Ltd., Kinross Gold Corp. and Barrick Gold Corp.
AngloGold Ashanti operates as a gold mining company. The company has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has moved up 14.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 118.9% compared with the Mining - Gold industry’s estimated rally of 14.9%. The company has outdone the broader industry over the past year (+186.3% vs +64.4%).
Kinross Gold engages in the acquisition, exploration and development of gold properties in the United States. The stock currently has a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its current-year earnings has climbed more than 100% in the past 60 days. The company’s expected earnings growth rate for the current year is 150%. The company has outpaced the broader industry over the past year (+66.6% vs +64.4%). You can see the complete list of today’s Zacks #1 Rank stocks here.
Barrick Gold explores and develops mineral properties. The company primarily explores gold, copper, and silver deposits. The stock currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has soared 25.6% in the past 60 days. The company’s expected earnings growth rate for the current year is 40%. The company has outperformed the broader industry over the past one-year period (+81.4% vs +64.4%).
Aviation, Refiners to Take a Hit
Aviation stocks traditionally have an inverse relationship with oil price. So, it isn’t surprising that shares of aviation firms will decline after a rise in crude oil prices. After all, fuel costs are major part of the operating costs of aviation firms.
Refineries also stand to lose from higher prices of crude oil, which is their raw material. Naturally, refineries’ net cash flow declines when crude oil prices rise.
Oil Price Rise to Affect Emerging Markets
Rise in oil prices is also likely to hamper importers like Turkey, South Africa and India. Expensive black gold will affect their balance of payments and won’t support GDP growth.
Capital Economics had said that with every $10 per barrel drop in the oil price, oil importing emerging economies’ income gains by 0.5-0.7% of GDP. But, with oil prices moving up in the current scenario, emerging economies won’t be expecting any income gains.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: U.S. Silica, Chevron, AngloGold, Kinross and Barrick Gold
For Immediate Release
Chicago, IL –August 20, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: U.S. Silica Holdings , Chevron Corp. (CVX - Free Report) , AngloGold Ashanti Ltd. (AU - Free Report) , Kinross Gold Corp. (KGC - Free Report) and Barrick Gold Corp. (GOLD - Free Report) .
Here are highlights from Monday’s Analyst Blog:
Oil Prices Rise on Saudi Oilfield Attack: Winners & Losers
The recent Organization of the Petroleum Exporting Countries’ (OPEC) report raising concerns about growth in oil demand should have hurt oil prices. For instance, OPEC trimmed global oil demand growth projection for this year by 40,000 barrels per day (bpd) to 1.10 million bpd.
However, despite the bearish view, oil prices moved north. The West Texas Intermediate (WTI) crude went up 0.7%, to $54.87 a barrel on Aug 16. And when it comes to Brent crude, the global oil benchmark increased 0.7% to $58.64.
So, what’s driving oil higher? Oil prices edged up for the week ending Aug 16 amid a weekend attack on a Saudi oilfield by Yemeni separatists and easing concerns about Sino-U.S. trade worries. Yemen's Houthi group has been recently responsible for a drone attack on an oilfield in eastern Saudi Arabia, resulting in a fire at a gas plant. Saudi oilfield attack has, thus, added to West Asian turmoil. Needless to say, oil prices rallied after such an attack raised concerns about supply disruption.
White House economic adviser Larry Kudlow, in the meantime, said that officials from both the United States and China would interact within 10 days, and could make significant progress about ending trade disputes. By the way, Chinese official Yang Jiechi met U.S. Secretary of State Mike Pompeo in New York last week to discuss China-U.S. trade relations.
Increasing optimism in U.S.-China trade negotiations is likely to drive global growth. And more growth means more oil consumption. Lest we forget, these economies imposed billions of dollars of tariffs on each other’s goods over the past year, battering equity markets, souring business and consumer sentiments as well as hampering economic growth.
Concerns about economic recession were also weighing on crude prices for quite some time. But, strong consumer spending data has eased worries about an impending economic recession. Retail sales that measure outlays at stores, online-shopping websites and restaurants increased at a seasonally adjusted rate of 0.7% in July from June, easily topping projections, according to the Commerce Department. Retail sales reading, in fact, was the strongest since March. A healthy labor market and low unemployment rate are cited as reasons behind the uptick in retail sales (read more: 5 Best Stocks to Buy on Booming Retail Sales).
Oil Jump: A Boon for These Stocks
Corporations that are into hydraulic fracturing for oil were affected the most at the end of last year due to a drop in oil prices. This is because when oil is cheap, the cost structure of such corporations loses appeal and the incentive to pump dies. But now, with oil prices increasing, fracking related service stocks including U.S. Silica Holdings are sure to make a comeback. The Zacks Rank #3 (Hold) company’s expected earnings growth rate for the next quarter is 50%, more than the Oil and Gas - Mining - Miscellaneous industry’s projected rise of nearly 35%.
Rise in oil prices of course bodes well for oil majors. Chevron Corp. is specially positioned to benefit as this Zacks Rank #3 company has a stable cash position and balance sheet when compared to peers. Moreover, it’s a dividend aristocrat as it has rewarded stockholders with a dividend hike over the past 25 years. Shares of Chevron, in the meantime, have advanced 6.5% on a year-to-date basis against the Oil and Gas - Integrated - International industry’s decline of 5.5%.
Gold prices are also expected to move north on higher oil prices. This is because as crude prices rise, prices of essential goods and commodities follow suit. And value of gold rises when inflation picks up. After all, it acts as a hedge against inflation. In fact, theoretically, more than 60% of the time gold and crude oil have a direct relationship. Given this bullishness, one should consider gold mining companies. Notable among them are AngloGold Ashanti Ltd., Kinross Gold Corp. and Barrick Gold Corp.
AngloGold Ashanti operates as a gold mining company. The company has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has moved up 14.9% over the past 60 days. The company’s expected earnings growth rate for the current year is 118.9% compared with the Mining - Gold industry’s estimated rally of 14.9%. The company has outdone the broader industry over the past year (+186.3% vs +64.4%).
Kinross Gold engages in the acquisition, exploration and development of gold properties in the United States. The stock currently has a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its current-year earnings has climbed more than 100% in the past 60 days. The company’s expected earnings growth rate for the current year is 150%. The company has outpaced the broader industry over the past year (+66.6% vs +64.4%). You can see the complete list of today’s Zacks #1 Rank stocks here.
Barrick Gold explores and develops mineral properties. The company primarily explores gold, copper, and silver deposits. The stock currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has soared 25.6% in the past 60 days. The company’s expected earnings growth rate for the current year is 40%. The company has outperformed the broader industry over the past one-year period (+81.4% vs +64.4%).
Aviation, Refiners to Take a Hit
Aviation stocks traditionally have an inverse relationship with oil price. So, it isn’t surprising that shares of aviation firms will decline after a rise in crude oil prices. After all, fuel costs are major part of the operating costs of aviation firms.
Refineries also stand to lose from higher prices of crude oil, which is their raw material. Naturally, refineries’ net cash flow declines when crude oil prices rise.
Oil Price Rise to Affect Emerging Markets
Rise in oil prices is also likely to hamper importers like Turkey, South Africa and India. Expensive black gold will affect their balance of payments and won’t support GDP growth.
Capital Economics had said that with every $10 per barrel drop in the oil price, oil importing emerging economies’ income gains by 0.5-0.7% of GDP. But, with oil prices moving up in the current scenario, emerging economies won’t be expecting any income gains.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
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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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.