The Zacks Analyst Blog Highlights: Vector Group, Archer Daniels Midland, McCormick, American Electric Power and Pinnacle West Capital
For Immediate Release
Chicago, IL – December 11, 2018 – 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: Vector Group Ltd. VGR , Archer Daniels Midland Co. ADM , McCormick & Company, Inc. MKC , American Electric Power Company, Inc. AEP and Pinnacle West Capital Corp. PNW .
Here are highlights from Monday’s Analyst Blog:
5 Safe Stocks to Survive a Turbulent Market
Last week, Wall Street witnessed the worst start to a December in a decade, owing to an array of macroeconomic issues that dragged the equity markets down. Fresh tensions following signs of a yield curve inversion, poor November job gains coupled with prolonged nervousness among investors about U.S.-China trade relations dampened Wall Street’s performance significantly.
Last week, the Dow Jones Industrial Average fell 4.5%, the broader S&P 500 declined 4.6% and the tech-laden Nasdaq Composite Index slipped 4.9%. Per the Dow Jones Market Data, these dips marked the biggest weekly losses for the indexes since March. The fall pushed Dow and S&P 500 back into negative territory for the rest of the year while Nasdaq has managed to gain 1% year to date.
Given the current market scenario, it would be prudent to invest in low-beta, safe stocks that can generate decent dividends. Beta measures the tendency of a stock’s returns to respond to market swings. Low correlation stocks provide protection during turbulent times as these are less prone to day-to-day fluctuations.
Unimpressive November Employment Data
Less-than-expected increase in new job additions and monthly wages in November have made investors jittery, sparking fears of a slowing economy. Non-farm payrolls increased by 155,000 compared with the consensus estimate of 198,000.
While unemployment rate remained unchanged at its 49-year low of 3.7% in November, real unemployment rate in the country, called U6, rose from 7.4% in October to 7.6%. The yearly increase in average hourly earnings remained flat at 3.1% while monthly wage growth of 0.2% fell behind economists’ expectations of 0.3%.
Yield-Curve Inversion Spooks Bourses
On Dec 3, U.S. government bond yield on its 3-year Treasury note surpassed its return on the 5-year Treasury note. The trend continued the next day, with the benchmark 2-year Treasury note hovering at 2.799% against the 5-year Treasury note’s return of 2.79%. Returns on other longer-dated securities declined too, with the 10-year Treasury yield dipping below 3%.
Such a scenario, termed as a yield curve inversion, is usually indicative of a serious economic slowdown since short-term returns are higher than long-term ones. This yield curve inversion is the result of investors betting on longer-dated bonds, which reflects their pessimism about short-term economic growth.
In an expanding economy, investors are confident about the future, which enables them to borrow money at low interest rates and invest it in securities that they believe will grow, thus giving profitable returns.
Although recent volatility in equity markets has not deferred Fed from its path of rate hikes, backed by low unemployment and strong economic growth, the central bank is likely to be cautious regarding the pace of rate hikes after December.
U.S.-China Trade War Affecting Investor Sentiment
While the United States and China agreed to a three-month tariff ceasefire, investors seek an end to the tariff war.
Recent comments from U.S. Trade Representative Robert Lighthizer however reduce expectations of any extensions in the negotiation period and could be indicative of further tariff impositions on Chinese products by the United States.
In addition, the recent detention of Meng Wanzhou, Chinese electronics giant Huawei’s chief financial officer, has enraged China. The Asian nation summoned the U.S. ambassador to Beijing on Dec 9 to object her arrest by Canada, which was carried out at Washington’s order.
Stocks to Buy
It would be ideal to add stocks from sectors like utilities and consumer staples to your portfolio at the moment as these are safe investments. The following stocks either carry a Zacks Rank #1 (Strong Buy) or #2 (Buy) and have beta value lower than 1.
Vector Group Ltd. primarily engages in the manufacturing and sale of cigarettes and the sale of information processing systems.. Vector Group has a beta of 0.27 anda dividend yield of 13.8%. The company’s Zacks Consensus Estimate for the current year has witnessed 23.8% increase over the past two months. The company carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Archer Daniels Midland Co. procures, transports, stores, processes, and merchandises agricultural commodities and products. The company carries a Zacks Rank #2. Archer Daniels has a beta of 0.98 and a dividend yield of 3%. The company’s Zacks Consensus Estimate for the current year has witnessed 3.8% rise over the past 60 days.
McCormick & Company, Inc. manufactures, sells and distributes seasoning mixes, spices, condiments, and other similar products. The company carries a Zacks Rank #2. McCormick has a beta of 0.36 and a dividend yield of 1.4%. The company’s Zacks Consensus Estimate for the current year has remained unchanged in the past two months.
American Electric Power Company, Inc. is one of the largest investor-owned electric public utility holding companies in the United States. The company carries a Zacks Rank #2. American Electric Power has a beta of 0.01 and a dividend yield of 3.4%. The company’s Zacks Consensus Estimate for the current year has witnessed 1% increase over the past 60 days.
Pinnacle West Capital Corp. is an investor-owned electric utility holding company based in Phoenix, AZ. The company carries a Zacks Rank #2. Pinnacle West Capital has a beta of 0.08 and a dividend yield of 3.3%. The company’s Zacks Consensus Estimate for the current year has witnessed 0.7% rise over the past two months.
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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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