Brokers Have a Buy Rating on These 4 Stocks – June 2, 2022
The JOLTS report is in and we now know that the number of job openings shrank about half a million to 11.4 million in the month of April. But it was still way higher than the 5.94 million people looking for work. Wage growth over the 12 months to April remains in the +11% range. So it’s reasonable to assume that the tightness in the labor market has continued into the second quarter of the year.
The ISM manufacturing report for May shows a contraction in the employment index, which would indicate fewer hires. But the report clarified that “despite the Employment Index contracting in May, companies improved their progress on addressing moderate-term labor shortages at all tiers of the supply chain.”
It added that “panelists indicated improvement in ability to hire in May compared to April. Challenges with turnover (quits and retirements) and resulting backfilling continue to plague efforts to adequately staff organizations, but to a slightly lesser extent compared to April.”
The bottom line on the employment front seems to be that the market is still pretty tight although improving.
So far, demand continues to increase, according to the ISM report, notwithstanding the effects of rate hikes, which usually take a year or so to kick in. Sentiment was describe as being “strongly optimistic regarding demand, with five positive growth comments for every cautious comment. Panelists continue to note supply chain and pricing issues as their biggest concerns.”
Given this backdrop, there should not be a dearth of stocks to choose from. But if you’d rather be cautious given the impending softness as rate hikes take their toll on demand, you’d do well to go with what the experts say.
And for that purpose, I’ve picked a few stocks on which all of the covering analysts have a Strong Buy, or at least a Buy recommendation. And Zacks methodology also supports their selection as detailed below-
A member of the Oil and Gas – Refining and Marketing industry (top 8% of Zacks-classified industries), Valero has an impressive track record of beating analyst expectations in each of the last four quarters at an average rate of 84.3%. Analysts have been raising their estimates enthusiastically: from $7.33 90 days ago to $8.69 a month later to $12.75 thereafter and then the current level of $14.30. This works out to a 12.2% increase for the 2022 estimate in just the past 30 days.
Estimates for the following year have also been rising and were up 16.9% in the last 30 days. The Zacks Rank #2 (Buy) stock with Value, Growth and Momentum Scores of B, A and A, respectively is expected to grow its revenue and earnings a respective 33.0% and 408.9%.
Univar has a Zacks Rank #2 and Value, Growth and Momentum scores of A, D and B, respectively. It belongs to the Chemical – Diversified industry (top 28%). Univar’s surprise history is also good at 28.5% and analysts continue to raise its estimates.
The last 30 days have seen the Zacks Consensus Estimate on this stock jump 63 cents, or 24.0%. The 2023 estimate is also up 28 cents (10.1%) in the same time period. Univar’s revenue and earnings are expected to increase 16.7% and 46.9% this year.
#1 (Strong Buy) ranked Cumulus Media belongs to the Broadcast Radio and Television industry (top 40%) and Zacks has allotted Value, Growth and Momentum Scores of A, A and D to it. While the company missed estimates in one of the four preceding quarters, the average positive surprise was still a whopping 108.1%.
In the last 30 days, the Zacks Consensus Estimate for 2022 has increased 18 cents, or 9.6%. The 2023 estimate has dropped 21 cents (7.4%). But analysts continue to expect the company to grow revenue and earnings in both years. In 2022, growth is expected to be a respective 9.1% and 441.7%. Increases in the following year are expected to be a respective 2.8% and 28.1%.
#1 ranked Gray Television belongs to the same industry. It has Value, Growth and Momentum scores of A, C and A, respectively. The company started surprising positively a couple of quarters ago and its four-quarter positive average surprise is 37.5%.
Analysts have turned optimistic about the company’s prospects 30 days ago. Since then, its 2022 estimate has climbed $1.12 (27.0) while its 2023 estimate jumped $1.17 (50.9%). However, current estimates still represent declines in 2023 revenue and earnings after solid growth of 55.7% in revenue and 1,217.5% in earnings this year.
One-Month Price Performance
Image Source: Zacks Investment Research