For Immediate Release
Chicago, IL – July 30, 2020 – 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 Lam Research Corp. LRCX, NVIDIA Corporation NVDA, Baker Hughes Company BKR, Kinross Gold Corp. KGC and BorgWarner Inc. BWA.
Here are highlights from Wednesday’s Analyst Blog:
Here’s the Best Way to Play a Weakening Dollar
The U.S. dollar continues to hover near a two-year low, with currency strategists apprehending more declines ahead. The U.S. dollar index has slipped nearly 7% in the last three-month period. In fact, the index that measures the greenback against six other major currencies is down nearly 9% from its March highs and is on track for its worst month since 2011. Notably, currency strategists at Goldman Sachs now predict a 5% weaker dollar compared to other major currencies in the world next year.
But why is the U.S. dollar weakening? Primarily, the dollar has been more or less 20% overvalued before May, which eventually led to the slide in the past three months. What’s more, gains in other currencies, especially the euro, as Europe’s economic recovery from the coronavirus pandemic outpaced that of the United States, resulted in a weaker dollar.
And why not? The United States has certainly struggled to contain the spike in coronavirus cases, dashing hopes of a V-shaped economic recovery. U.S. consumer confidence took a beating this month, losing steam following two months of recovery. New cases of COVID-19 infections, no doubt, dampened consumer consumption. Four U.S. states on Jul 28 reported a one-day record of COVID-19 deaths while nationwide cases continue to surge.
Also, uncertainties related to the additional fiscal stimulus package to pep up the economy are weighing on the dollar. Some of the Republicans in the U.S. Senate were against its own party’s $1-trillion coronavirus relief proposal, while Democrats continue to ask for an extension of a $600-per-week coronavirus jobless benefit.
What does a weaker dollar mean for investors? Obviously, a weak dollar led to a rush to gold, which last stood at $1,963.5 per ounce on Jul 28, almost close to its record high of $1,980.5 per ounce. This is because when the value of dollar decreases relative to other currencies throughout the globe, the price of gold tends to rise in dollar terms.
And with gold prices near an all-time high, it seems prudent for investors to pick gold mining stocks. One of the prominent names is Kinross Gold Corp., which engages in the acquisition, exploration and development of gold properties in the United States along with several other countries.
Kinross Gold currently has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has moved up 14.5% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 125% and 85.3%, respectively. Shares of Kinross Gold have surged 85.2% so far this year compared with the Mining – Gold industry’s rise of 53.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
By the way, a weaker dollar is also good for the broader stock market. Per Goldman’s David Kostin, a 10% fall in the value of dollar collectively increases S&P 500 company’s earnings per share by almost 3%. And when it comes to share price movement, since 1980, the S&P 500 has gained an average 2.6% in months when the dollar declined versus 0.7% gain in months when dollar increased sharply.
But most importantly, the biggest gainers would be companies that derive a majority of their earnings from overseas. After all, such companies are exposed to foreign exchange risks between the United States and other countries they are operating in. Thus, if dollar gains strength, it tends to hamper foreign sales of such companies.
According to Goldman Sachs, companies that generate a majority of sales from abroad include information technology players like Lam Research Corp. and NVIDIA Corporation; energy bigwig Baker Hughes Company; and discretionary stocks such as BorgWarner Inc. Thus, keeping an eye on such stocks undoubtedly seems judicious at the moment.
The Zacks Consensus Estimate for Lam Research’s current-year earnings has moved up 0.1% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 32.4% and 5.8%, respectively.
Similarly, the Zacks Consensus Estimate for NVIDIA’s current-year earnings has risen 1.2% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 55.7% and 36.4%, respectively (read more: 4 Cloud Stocks to Win Big on Microsoft’s Stellar Earnings Show).
Baker Hughes’ consensus estimate for current-year earnings has also risen 10% over the past 60 days. The company’s expected earnings growth rate for the next year is a whopping 109.1%.
Meanwhile, the Zacks Consensus Estimate for BorgWarner’s current-year earnings has moved 5.5% north over the past 60 days. The company’s expected earnings growth rate for the next year is a solid 67%.
Lam Research, NVIDIA, Baker Hughes and BorgWarner currently possess a Zacks Rank #3 (Hold).
Today’s Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained an impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>
Join us on Facbook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
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/performancefor information about the performance numbers displayed in this press release.
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
To read this article on Zacks.com click here.
Zacks Investment Research