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SOURCE Zacks Investment Research, Inc.
CHICAGO, May 23, 2014 /PRNewswire/ -- 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 the Brown-Forman Corporation (NYSE:BF.B-Free Report), SVB Financial Group (Nasdaq:SIVB-Free Report), Constellation Brands Inc. (NYSE:STZ-Free Report), Comcast Corp. (Nasdaq:CMCSA-Free Report) and Time Warner Cable Inc. (NYSE:TWC-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Thursday's Analyst Blog:
Raise a Toast to These Wine Stocks
With expectations of modest GDP growth in the vicinity of 3% and recovery in the U.S. job market after a dreadful winter, the focus has shifted to other indicators of the economic well-being amid continued QE3 tapering. While a number of industries are still struggling to gain stability, the wine industry looks bright. It has further caught investors' fancy with a bullish outlook for a strong harvest and balanced inventory position.
Data from International Organization of Vine and Wine (OIV) suggests that the U.S. is one of the largest growing wine markets in the world by volume, consuming about 769 million gallons of wine a year compared with the France's 742 million gallons. It is no wonder then that leading beverage companies like Brown-Forman Corporation (NYSE:BF.B-Free Report), Castle Brands Inc. (ROX)and Truett-Hurst, Inc. (THST) have outperformed the overall equity market so far this year, despite the fact that the Dow and the S&P 500 indices are trading near all-time highs.
According to an industry report by Silicon Valley Bank, the commercial banking division of diversified financial services company SVB Financial Group (Nasdaq:SIVB-Free Report), fine wine sales in the U.S. will improve 6-10% year over year in 2014 after three consecutive years of decline in growth rate. By product category, luxury wines are anticipated to witness the largest demand as the Euro is expected to lag the U.S. recovery, thereby resulting in higher bottled imports and additional pricing competition from offshore.
The wine industry is also viewed to be passing through a transitional phase with a marked change in the U.S. demography. The consumption pattern is likely to evolve with a continued growth in overall demand as Boomers reach retirement and Millennials replace them as dominant purchasers of wine. The Millennials are also found to consume more foreign wines than other cohorts. Bulk imports are likely to continue to dominate the lowest price-point wine categories.
With a more predictable monetary and fiscal policy, stable interest rates and a pick-up in job creation, consumer discretionary spending for items like wine is likely to grow. A balanced inventory in all segments further makes the cellars well-positioned to capitalize on the growth potential. Despite the euphoria, high levels of student debt and intermittent job market improvements remain possible headwinds for the sustained growth in the industry.
2 Top Wine Picks
Amid such strong industry fundamentals, there are a couple of wine stocks with attractive valuation metrics backed by a favorable Zacks Rank. Let's take a closer look at these companies that appear to be well positioned to benefit from the solid sector dynamics.
Constellation Brands is the leading wine company in the world with a strong portfolio of premium wine brands complemented by spirits, imported beer and other select beverage alcohol products. Since its inception in 1945, this Victor, NY-based firm has evolved as a significant player in the beverage alcohol industry with over 100 brands in its portfolio. Constellation Brands primarily focuses on premium wine brands, which includes Robert Mondavi, Clos du Bois, Arbor Mist and Blackstone.
In 2013, Constellation Brands was one of the best performing stocks in the S&P 500. Earnings estimate revision for the current quarter and fiscal for this Zacks Rank #2 (Buy) stock has moved up in the last 60 days, implying bullish sentiments for the long-term growth of the company. With a forward PE of 19.9x, long-term earnings growth expectations of 17.3% and a one-year return of 60.3%, Constellation Brands is surely a solid pick.
Truett-Hurst, Inc. (THST)
Based in Healdsburg, CA, Truett-Hurst produces a range of varietals of wine products, including Pinot Noir, Chardonnay, Sauvignon Blanc, Merlot, Cabernet Sauvignon and Zinfandel wines primarily in the U.S. and Canada.
With long-term earnings growth expectation of 40.0% and a year-to-date return of 20.5%, this Zacks Rank #3 (Hold) stock has managed to outperform the broader equity market. Furthermore, earnings estimate revisions for the current quarter have been moving up, implying bullish sentiments for the long-term growth of the company.
According to conservative estimates, worldwide luxury goods spending are expected to grow by about 2% year over year in 2014, tapered by the sedate recovery in Europe and China. However, global growth in luxury cars, wine and spirits, and hotels are billed to outpace personal luxury goods spending with 6% growth in these categories in 2014. Consequently, this is the most opportune time to bet on these wine stocks.
Cable Outrunning Telecom in Race for Broadband
U.S. cable MSOs (multi service operators) have a reason to smile as the cable TV industry commands the majority share of the high-speed broadband (Internet) market in the U.S., steering past the telecom industry.
This came as a respite for the cable TV operators who have been gradually losing their foothold in the core video market to fiber-based telecom operators and online video streaming service providers.
Recently, research firm Leichtman Research Group Inc. reported that around 1.2 million high-speed Internet net subscribers were added by both telecom and cable TV operators in the first quarter of 2014. Of this, ten major cable TV operators netted an astounding 970,000 subscribers. This reflects a 21% increase year over year.
At present, the U.S. accounts for approximately 85.5 million high-speed broadband subscribers. Cable TV operators now command about 59% market share (50.3 million Internet customers) while the telecom operators hold the remaining 41% with 35.2 million Internet subscribers.
In the first quarter of 2014, largest cable MSO Comcast Corp. (Nasdaq:CMCSA-Free Report) added a net 383,000 high-speed broadband subscribers which elevated its total Internet base to nearly 21.1 million.
Time Warner Cable Inc. (NYSE:TWC-Free Report) added another 283,000 high-speed broadband subscribers which brings its total Internet base to nearly 11.9 million. Moreover, Charter Communications Inc. gained 109,000 high-speed Internet customers, lifting its subscriber base to almost 4.1 million.
Leichtman Research also reported that seven major telecom operators gained 200,000 high-speed broadband subscribers in first-quarter 2014, highlighting a decrease of 57.5% year over year.
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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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.
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