Thursday, July 26, 2018

The Zacks Research Daily presents the best research output of our analyst team. Today’s Research Daily features new research reports on 16 major stocks, including PayPal (PYPL), Occidental Petroleum (OXY) and Southern Company (SO). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

PayPal’s shares have outperformed the Zacks Internet Software industry over the last year (+51.9% vs. +38.2%). PayPal reported second quarter results wherein both earnings and revenues have reflected impressive year over year growth.

The company continued to witness an expanding customer base with help of its robust Venmo, Choice and One Touch. Also, the company’s tie-up with MasterCard aided the adoption rate of Venmo. Further, the company’s ongoing partnership with ShinhanCard remained positive throughout the quarter and aided its presence in South Korea.

Its extended partnership with Google and eBay will continue to strengthen its customer base further. This will keep adding strength to PayPal’s total payments volume. The Zacks analyst thinks an expanding product & services portfolio and global presence will continue to benefit the company’s market share.

However, exposure to foreign exchange and interest rate risks are major concerns. Also, intensifying competition remains a headwind.

(You can read the full research report on PayPal here >>>).

Shares of Buy-ranked Occidental Petroleum have outperformed the Zacks Domestic Integrated Oil industry in the last three months, gaining +9.5% vs. +8.6%. As oil prices continue to improve, Occidental Petroleum gains from more oil production in the Permian Resources and concentrating on high-margin production region.

The Zacks analyst thinks ongoing capital investment will further strengthen the existing operation of the company. The company generates stable cash flow and its Chemical plant will further improve its cash flow. However, Occidental Petroleum, like other oil and natural gas companies, faces the risks of cost overruns and development interruptions due to delays in drilling and other approvals.

(You can read the full research report on Occidental Petroleum here >>>).

Southern Company‘s shares have outperformed the Zacks Electric Power industry in the last six months, gaining +8.1% vs +0.7%. The Zacks analyst thinks that Southern Company is one of the largest and best-managed electric utility holding companies in the United States, dominating the power business across the southeastern region. With good rate base growth and constructive regulation, it is expected to generate steady earnings and dividend growth in the coming years through long-term power contracts.

Additionally, the $12 billion AGL Resources buy has significantly increased its customer base and diversified offerings. However, continued timing and cost overrun issues over two large construction projects – Vogtle and Kemper – are major overhangs.

While the $20 billion Vogtle nuclear plant has gone notably over budget and is years behind schedule, Southern’s Kemper project suffered yet another setback with the suspension of all coal gasification operations amid additional cost burden. The interplay of these factors leads to a conservative investment thesis.

(You can read the full research report on Southern Company here >>>).

Other noteworthy reports we are featuring today include Delta (DAL), Pioneer Natural (PXD) and Petrobras (PBR).

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Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>

Featured Reports

New Program Wins, Global Expansion Benefits Plexus (PLXS)

According to the Zacks analyst, Plexus benefits from new program wins as well as continuing global expansion.

Delivery Network Strength & Diner Growth Aids Grubhub (GRUB)

Per the Zacks analyst, Grubhub is winning from efficient delivery network and new quality-focused restaurant partners. Addition of new diners also bode well for the company.

Cadence (CDNS) Rides on Product Adoption, Risks Persist

Per the Zacks analyst, robust adoption of Cadence’s digital and signoff, custom and analog, and IP solutions remains a positive. However, company faces stiff competition from peers.

NCI Building (NCS) To Gain From Higher Bookings And Backlog

The Zacks analyst stresses that growth in bookings and backlog, along with cost-structure improvements will boost NCI Building’s fiscal 2018 results.

Dividends & Buybacks Aid Delta (DAL), Fuel Costs Ail

The Zacks analyst appreciates the company’s efforts to reward shareholders. Its unit revenue-related performance is also impressive.

Loan Originations Aid Ares Capital (ARCC), High Costs a Woe

Per the Zacks analyst, Ares Capital is poised for growth given its robust loan originations supported by an improving economy.

Loan Growth Aids Credit Acceptance (CACC), High Costs a Woe

Per the Zacks analyst, continued growth in consumer loans is likely to aid Credit Acceptance’s revenues.

New Upgrades

Pioneer Natural (PXD) to Gain from Oil-Rich Permian Acreage

Strong focus on the low-cost and lucrative Permian Basin will help Pioneer Natural generate significant cash flow, according to the Zacks analyst.

Rising Demand Aids Lincoln Electric (LECO) Amid Inflation

Per the Zacks analyst, Lincoln Electric will gain from accelerating global industrial demand in its three major end markets. However, rising steel and aluminum prices due to tariffs will hurt margins.

Strong Freight Demand & Dividends Buoy J.B. Hunt (JBHT)

The Zacks analyst likes the company’s efforts to reward shareholders. Increased freight rates and robust shipping demand are added positives.

New Downgrades

Keryx’s (KERX) Dependance on Auryxia Remains a Concern

Per the Zacks analyst, with Auryxia being the only approved product in Keryx’s portfolio, the company is entirely dependent on Auryxia for growth which remains a concern for the company.

Petrobras (PBR) Grapples With High Leverage and Lawsuits

Per the Zacks analyst, Petrobras’ recent wage lawsuit defeat along with Vantage Drilling dispute come as a huge blow to the company, which is already struggling with $81 billion of debt.

Dril-Quip (DRQ) Hurt By Declining Backlog & Free Cashflow

Declining contract backlog of drilling and production equipment will hurt Dril-Quip’s profit. Contracting free cashflow raises concerns, per the Zacks analyst.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Southern Company (The) (SO): Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
Pioneer Natural Resources Company (PXD): Free Stock Analysis Report
Petroleo Brasileiro S.A.- Petrobras (PBR): Free Stock Analysis Report
Occidental Petroleum Corporation (OXY): Free Stock Analysis Report
Delta Air Lines, Inc. (DAL): Free Stock Analysis Report
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