For Immediate Release
Chicago, IL – April 13, 2023 – 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: PVH Corp. PVH, On Holding AG ONON, PlayAGS, Inc. AGS, Skillz Inc. SKLZ and Bragg Gaming Group Inc. BRAG.
Here are highlights from Wednesday’s Analyst Blog:
Consumer Discretionary Stocks Are In Play: 5 Picks
As you might expect from the still-strong employment numbers, consumer spending remains amazingly resilient amidst uncertain macro conditions. And that means good news for retail, restaurants, hospitality, airlines and so on. Consumer Discretionary spending in general will remain as long as the labor market is supportive.
Additionally, the CPI data for March shows the smallest increase (5.0%) in overall inflation since May 2021. What is even more encouraging for consumers is that food prices did not increase from February, although they were up 8.5% from last year, as declines in food at home were offset by food away from home.
Energy prices were down overall and it remains to be seen what happens as a result of the OPEC cuts. As regards the other items, new vehicles, services, shelter and transportation were the sticking points and these are the items the Fed will likely focus on.
NY Fed President Williams recently commented that they are closely monitoring the latest data, including on credit availability. In all probability there will be a 25 bps increase in rates when the Fed meets next month. But April Fed minutes could shed more light.
Therefore, there's every reason to think that consumer discretionary spending will continue. And the following picks allow you to play the sector:
New York-based PVH Corp. is an apparel company offering men's, women's and children's apparel and accessories, fragrance, bed and bath furnishings, small leather goods and other products under well-known brands like Tommy Hilfiger, Calvin Klein, Van Heusen, IZOD, ARROW, Warner's, Olga, Geoffrey Beene and True&Co. It sells products under these and other owned, licensed and private label brands in the U.S. and internationally.
Products are sold at wholesale, in department, chain and specialty stores, as well as through warehouse clubs, mass market, and off-price and independent retailers. They're also sold through company-operated stores and online.
The shares carry a Zacks Rank #2 (Buy) and Value, Growth and Momentum Scores of A, B and B, respectively. They belong to the Textile-Apparel industry, which is in the top 41% of Zacks-classified industries. Buy-ranked stocks in the top 50% of industries generally outperform the bottom 50%.
Analyst estimates are encouraging considering the environment. For the years ending January 2024 and 2025, PVH will grow both revenue and profits. Its 2024 estimate is up $1.02 (11.6%) and its 2025 estimate is up 90 cents (9.0%) in the last 60 days.
Since its surprise history is robust with an average beat of 23.4% in the last four quarters, it's safe to say that estimates err on the side of conservatism. This makes the shares particularly attractive.
On Holding AG
Zurich, Switzerland-based On Holding develops and distributes sports products like athletic footwear, apparel and accessories. The company offers its products through independent retailers and distributors, online, and in stores across the world.
The Zacks Rank #2 stock belongs to the Leisure and Recreation Products industry (bottom 29%). Therefore, we can say that industry-wide factors aren't particularly conducive to its growth. Zacks has allotted an A for both Growth and Momentum, which means that it isn't all bad news.
Analyst estimates support this view. Analysts currently expect the company to generate 44.7% revenue growth and 89.7% earnings growth this year, followed by 32.3% revenue growth and 44.7% earnings growth in the next. The 2023 estimate is up 9 cents (19.6%) in the last 60 days. The 2024 estimate is up 8 cents (11.3%).
While the surprise history is not exciting (On Holding has missed estimates in the last two quarters), the four quarter average surprise is +354.2%, which should be a consideration.
Las Vegas-based PlayAGS designs and supplies gaming products and services in the U.S. and internationally. It operates through three segments: Electronic Gaming Machines (EGM), Table Products and Interactive Games. The Table Products brands include In Bet Gaming, Buster Blackjack, Double Draw Poker and Criss Cross Poker. The Interactive segment is a platform for business-to-business content aggregation used by real-money gaming and sports-betting partners. It also offers business-to-consumer social casino games through its mobile app, Lucky Play Casino.
The Zacks Rank #2 stock has an A each for Value, Growth and Momentum. The Gaming Industry to which it belongs is in the top 27% of Zacks-classified industries.
The company's estimates had been going down, but in the last 60 days they've changed course. The 2023 estimate is now flat with the prior year while the 2024 estimate is up from a loss of 2 cents 60 days ago to a profit of 19 cents today.
It has a solid history of beating estimates and has topped analyst expectations in each of the last four quarters at an average rate of 133.33%.
San Francisco-based Skillz is a mobile game platform with operations in the U.S. and internationally. The company primarily develops and supports a proprietary technology platform that enables independent game developers to host tournaments and competitive games for end-users. Skillz distributes games through direct app downloads from its website, as well as through third-party platforms.
The Zacks Rank #1 (Strong Buy) stock has an F for Value but Growth and Momentum Scores of B and A, respectively. Like PlayAGS, Skillz too belongs to the Gaming industry.
Despite a substantial decline in revenue, it is expected to halve its losses this year. Revenues are expected to grow strong double-digits in 2024, with losses down slightly. Loss estimates for 2023 and 2024 are down 41.3% and 33.3%, respectively in the last 60 days.
The company has a good history of beating estimates. It has topped the Zacks Consensus Estimate in each of the last four quarters at an average rate of 10.6%.
Bragg Gaming Group Inc.
Toronto, Canada-based Bragg Gaming is an online gaming content supplier offering slot, table, card, video bingo, scratch card and virtual sports, as well as live dealer games. Through content distribution agreements with leading studios, it provides proprietary third-party gaming content. It also operates a player account management platform under iCasino and sportsbook brands.
#2 ranked Bragg is another member of the Gaming industry and has a B for Value and A for momentum.
Analysts expect the company to generate double-digit revenue growth and triple-digit earnings growth in both 2023 and 2024. Its 2023 estimate has gone from a loss of 3 cents to a profit of 5 cents in the last 60 days. The 2024 estimate is up from 10 cents to 23 cents.
Its surprise history leaves something to be desired however with the company missing in two of the last four quarters and the four-quarter average surprise at -102.1%.
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