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The Zacks Analyst Blog Highlights: CAI International, Applied Optoelectronics, OraSure Technologies, KEMET and Chemours

For Immediate Release

Chicago, IL – July 06, 2017 – 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 CAI International Inc (NYSE: CAI Free Report ), Applied Optoelectronics Inc (NASDAQ: AAOI Free Report ), OraSure Technologies, Inc. (NASDAQ: OSUR Free Report ), KEMET Corporation (NYSE: KEM Free Report ) and Chemours Co (NYSE: CC Free Report ).

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Here are highlights from Wednesday’s Analyst Blog:

Best First-Half for Wall Street Since 2013: Top 5 Gainers

U.S. stocks saw the strongest first half of a year since 2013 on expectations that the Trump administration will deliver on the much-awaited policy changes. But as prospects for such initiatives dwindled in the later part of the first half, the gains were driven by strong corporate earnings, more confident consumers and a 16-year low unemployment rate.

Tech companies were some of the best performers in the first half, resulting in the splendid performance for the Nasdaq in almost eight years, while the financials space also gave healthy returns on the back of solid stress test results.

Stocks also benefited from improving global economics, particularly, in the Eurozone. The European economy is looking up, with factories in the first half ramping up at the fastest rate for over six years. Thanks to this bullish trend, it seems prudent to take a look at the best performers in the first half, which also have the potential to move further north.

Dow and S&P 500 Post Best First-Half Gains Since 2013

The Dow Jones and the S&P 500 each gained around 8% in the first six months of the year, their best performance since 2013. The rally was initially boosted by expectations that the Trump administration will be able to deliver on its pro-business policies, including “massive” tax cuts, deregulation and uptick in infrastructure outlays.

However, as chances of Trump getting his policies through Congress ebbed, gains have continued on the back of solid corporate earnings and U.S. consumers showing signs of confidence about their finances.

Q1 Sees Highest Earnings Growth Level in 5 Years

Total earnings for the S&P 500 members that have reported quarterly results already are up 13.4% from the same period last year on 7.1% higher revenues, with 72.5% beating EPS estimates and 65.5% beating revenue estimates.

Earnings growth scaled the highest level in over five years and growth was driven by almost all the sectors. Significant number of companies beat the consensus estimate, including revenue estimates. While the Financial sector lead the earnings space earlier in the reporting cycle, the baton was ultimately handed over to a host of other spaces like tech, industrials, basic materials and energy (read more: Taking Stock of the Earnings Picture ).

Consumer Confidence High, Jobs Market Upbeat

Consumers, in the meanwhile, are more confident about their ability to pay bills and cover other necessary expenditures. The Consumer Confidence index rebounded to 118.9 in June from 117.6 in May. The Present Situation Index also rose from 140.6 to 146.3. Consumers’ estimation of prevailing business conditions has also improved this month. The Conference Board’s Director of Economic Indicators said that consumers’ outlook on the economy touched a near 16-year high in June (read more: Consumers Remain Confident: Buy These 5 Top-Rated Picks ).

Stable employment numbers also lifted investors’ sentiments. The unemployment rate declined from 4.4% to 4.3% in May, marking the lowest since 2001. Since January, the unemployment rate has seen a decrease of 0.5%. The U-6, considered a broader measure of unemployment since it includes those who work part time for purely economic reasons, declined to 8.4%. This also marks the lowest level since mid-2007.

Job additions in May were 138,000, much lower than the consensus estimate of 184,000. Despite the decline in job additions, several economists believe that the situation is not as bad as it seems. With full employment within reach, the economy may need to add only 100,000 jobs on a regular basis to maintain growth levels (read more: 5 Stocks to Buy as Jobless Rate Hits 16-Year Low ).

Nasdaq’s Best First Half Since 2009

The Nasdaq Composite Index carved its best first half of a year since 2009, rising 14.1%. During the stretch, the tech-laden index registered 38 all-time closing highs, the most at the first half since 1986 when it logged 52 record closes. The Nasdaq 100 Index was also in the headlines, whose combined value swelled by $500 billion in the first quarter, the highest since the tech bubble peak in 2000.

If we consider the “FAANGtastic five” – Facebook, Apple, Amazon, Netflix and Alphabet – each of them gained between 16% and 28% in the first half of this year. Amazon, in particular, at one point topped the $1000-a-share level, highlighting the stellar show put up by tech stocks in the said period. Internet and tech companies scaled higher on hopes that potential tax reforms will get eventually implemented. Many tech companies have, in fact, boosted earnings without the help of government policies. Notably, Apple and Microsoft are riding high on growing demand for smartphones and web-based services.

Tech has been the best-performing sector for most of 2017, catapulting to a price-to-earnings ratio that is four times the level achieved in 2001. But, on a price-to-earnings basis, the sector still lags its 20-year average, as per MKM Partners. Hence, if its high valuation is a concern, trust the sector’s profits to scale higher in the days ahead (read more: Silicon Valley Is Richer Than Ever: 4 Hot Tech Picks).

Financials Got a Boost in June, Investors Prefer Stocks Over Bonds

Financial stocks got a lift in June after all 34 of the largest banks passed the stress tests by the Federal Reserve, mandated by the Dodd-Frank regulation. The findings have been encouraging, with all the banks appearing to have sufficient capital balances, which will help them keep lending even at times of a severe recession. Their ability to also return billions in cash to investors by raising dividends or buying back shares helped bank shares gain traction (read more: Big Banks Pass Fed's "Stress Test": 3 Top Winners ).

While the Fed has also hiked its benchmark interest rates twice this year, rates on long-term bonds still remain low. This will boost companies as they can borrow money at a less expensive rate. Moreover, low payouts for bonds also make it highly unlikely for investors to ditch stocks and buy bonds.

5 Top Gainers in First Half

While the U.S. stock market finished the first half on a strong note, improvement in other parts of the globe, particularly the Eurozone, are putting investors at ease. These calls for investing in the best performers of the first half of this year that are not only fundamentally sound but also have the potential to gain further.

We have thus selected five solid stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of ‘A’ or ‘B.’ Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.

CAI International Inc (NYSE:CAI Free Report ) is a transportation finance and logistics company. The company has a Zacks Rank #1 and a VGM Score of ‘B’. The Zacks Consensus Estimate for its current year earnings soared 74.8% over the last 90 days.

The company rose over 160% in the first half of this year. The company is projected to gain 352.2% this year, in contrast to the Transportation - Equipment and Leasing industry’ projected decline of 20.8%.

Applied Optoelectronics Inc (NASDAQ:AAOI Free Report ) is a vertically integrated provider of fiber-optic networking products. The company has a Zacks Rank #2 and a VGM Score of ‘B’. The Zacks Consensus Estimate for its current year earnings surged 38.2% over the last 90 days.

The company has climbed around 160% in the first half of this year. The company is expected to rise 271.2% this year, higher than the Electronics - Semiconductors industry’s estimated gain of 12.5%.

OraSure Technologies, Inc. (NASDAQ:OSUR Free Report ) is involved in the development, manufacture, marketing and sale of oral fluid diagnostic products. The company has a Zacks Rank #2 and a VGM Score of ‘B’. The Zacks Consensus Estimate for its current year earnings climbed 22.2% over the last 90 days.

The company has rallied more than 90% in the first half of this year. The company is projected to increase 27.1% this year, more than the Electronics - Semiconductors industry’s projected gain of 7.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.

KEMET Corporation (NYSE:KEM Free Report ) is a manufacturer of passive electronic components. The company has a Zacks Rank #1 and a VGM Score of ‘A’. The Zacks Consensus Estimate for its current year earnings rose 131.6% over the last 90 days.

The company has gained about 90% in the first half of this year. The company is projected to increase 152.4% this year, more than the Electronics - Miscellaneous Components industry’s projected gain of 16.1%.

Chemours Co (NYSE:CC Free Report ) is a provider of performance chemicals. The company operates through three segments: Titanium Technologies, Fluoroproducts and Chemical Solutions. Chemours has a Zacks Rank #2 and a VGM Score of ‘B’. The Zacks Consensus Estimate for its current year earnings jumped 131.6% over the last 90 days.

The company has rose more than 70% in the first half of this year. The company is projected to rise 228.4% this year, higher than the Chemical - Diversified industry’s projected gain of 8.3%.

Strong Stocks that Should Be in the News

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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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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