Here we go! Earnings season is underway and the economic re-opening gets closer every day. Ask any investor (even the nervous ones) and they’ll tell you we’re in store for a big boom as this pandemic loses its grip.
Our Zacks #1 Rank Uptrends screen finds stocks on their way up in normal times… so just imagine the type of upward momentum we could see in this environment! The screen seeks out Zacks Rank #1s (Strong Buys) with upward price momentum and market-beating relative price strength. These stocks are also trading in the top third of their 52-week price range… and have even further to go.
Below are three stocks that recently passed this screen’s test. Check them out:
Here’s something you really shouldn’t forget moving forward: The surging cloud computing space and the rapid adoption of 5G has sparked a surge in demand for memory chips. In fact, the Semiconductor Memory space is in the Top 1% of the Zacks Industry Rank!
That makes Micron (MU) the #1 company in the #1 industry on the market, so it might as well be the #1 stock featured in this screening article. MU’s leadership in both DRAM and NAND puts it in an enviable position to capitalize on a whole new frontier of technology… and analysts have certainly taken notice.
The Zacks Consensus Estimate for next fiscal year (ending August 2022) is $10.89, which suggests year-over-year profit growth of nearly 100%! Investors have noticed the potential of this semiconductor memory solutions leader too. Shares of MU are up more than 19% year-to-date and approximately 95% over the past 12 months.
In its fiscal second quarter report from late last month, earnings per share of 98 cents jumped over 100% from the previous year and beat the Zacks Consensus Estimate by nearly 3.2%. This marked the fifth straight quarter with a positive surprise.
Revenues of $6.24 billion improved 30% year over year and inched past the Zacks Consensus Estimate. DRAM revenues accounted for 71% of total revenues and jumped 44%, while NAND revenues accounted for 26% and were up 9%.
MU also offered a positive fiscal third quarter guidance with revenues of $7.1 billion (+/- $200 million) and adjusted earnings per share of $1.62 (+/- 7 cents).
The Zacks Consensus Estimate for this fiscal year (ending August 2021) jumped nearly 41% in the past two months to $5.48, while next fiscal year improved more than 42% to the aforementioned $10.89.
MU just reported its quarterly results, so it won’t be going to the plate again until July.
Western Digital Corp. (WDC)
Not all infrastructure has to do with bridges and roads. An increasing amount of infrastructure in this age of technology has to do with data, which is what Western Digital Corp. (WDC) is all about.
The company is one of the largest producers of hard disk drives (HDD) and solid state drives (SSD), which are used in all kinds of electronic devices like desktop PCs, servers, network-attached storage devices, video game consoles, digital video recorders and many others. WDC’s Client Devices account for 54.1% of revenues, while Client Solutions make up 25.5% and Data Center Devices & Solutions comes to 20.4%.
There’s a lot of opportunity in the storage space these days, and analysts seem to think that WDC will capture a good amount of it. The Zacks Consensus Estimate for next fiscal year (ending June 2022) is over 140% better than expectations for this fiscal year (ending in June).
But let’s backtrack a little bit and talk about its fiscal second quarter report. WDC earned 69 cents, which was more than 30% better than the Zacks Consensus Estimate and up 11% from the previous year. Revenues of about $3.9 billion declined year over year due to a slip in its Data Center Devices & Solutions end market, but it still topped our expectations by about 1.4%.
The company forecasted fiscal third-quarter revenues between $3.85 billion and $4.05 billion, along with non-GAAP earnings of 55 cents to 75 cents. Both of these forecasts left plenty of upside potential for Zacks Consensus Estimates at the time, which convinced analysts to revise their earnings expectations higher.
Over the past 90 days, expectations for this fiscal year are up approximately 19.6% to $2.99, while next year has jumped 16.2% in that time to $7.25 (which is where you get the 140%+ profit growth mentioned above).
WDC plans to release its fiscal third-quarter report after the market closes on Thursday, April 29. Shares are up 24% so far this year and more than 57% over the past 12 months.
Levi Strauss & Company (LEVI)
Given all the events that have been canceled over the past year and the millions of people working from home these days; you wouldn’t think that pants are in high demand right now. However, Levi Strauss & Company (LEVI) is a Zacks Rank #1 (Strong Buy) with earnings estimates on the rise after a strong fiscal first quarter performance.
Technically, LEVI is an apparel company, which puts it in the top 35% of the Zacks Industry Rank. But come on… we all know it as a jeans company. In fact, LEVI is THE jeans company. It’s one of those brands that lots of people use interchangeably with the product itself… like Band-Aid, Kleenex and Coke.
LEVI reported fiscal first quarter earnings per share of 34 cents on net revenues of approximately $1.31 billion. Now, these results are down year-over-year due to the pandemic, as most of the brick-and-mortar stores that sell Levi’s apparel were closed.
However, earnings topped the Zacks Consensus Estimate more than 41% for its eighth straight positive surprise. The four-quarter average beat is now north of 54%. And revenues also surpassed our expectations.
There’s no need to guess how the company managed to offset these challenges. Global digital net revenues jumped 41% year over year and made up 26% of total revenues in the quarter. Last year, it accounted for only 16% of total revenues.
With the pandemic on its last legs, LEVI raised its outlook for the first half. It now expected revenue growth of 24% to 25%, along with earnings of 41 cents to 42 cents.
Analysts have also raised their expectations for LEVI in the days since its quarterly report. The Zacks Consensus Estimate for this year (ending November 2021) are up 14.4% in the past seven days to $1.11. Expectations for next year (ending November 2022) climbed 5.6% in that time to $1.32.
Therefore, analysts currently expect year-over-year profit growth of 18.9%.
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don’t buy now, you may kick yourself in 2022.
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Western Digital Corporation (WDC): Free Stock Analysis Report
Micron Technology, Inc. (MU): Free Stock Analysis Report
Levi Strauss & Co. (LEVI): Free Stock Analysis Report
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