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The Zacks Analyst Blog Highlights: Newell Brands, Hormel Foods, Shire and PAREXEL International

For Immediate Release

Chicago, IL – April 28, 2016 – 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 Newell Brands Inc. (NWL), Hormel Foods Corporation (HRL), Shire plc (SHPG) and PAREXEL International Corporation (PRXL).

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Here are highlights from Wednesday’s Analyst Blog:

4 Stocks to Avoid "Sell in May" Syndrome

Markets are on the verge of entering a period which is historically considered to be one where stocks suffer their most grievous losses for the year. This period, extending from May to October, has given rise to the old adage “Sell in May and go away.” It advises investors to offload their stock holdings in May and reenter markets when fall arrives.

There is quite a bit of evidence and logic supporting this piece of market advice. But it may not be a good idea to quit the market altogether given that stocks are having a good year overall up to now. Instead, picking stocks from defensive sectors like consumer staples and healthcare may be a smarter option.

Historical Trends, Overbought Markets

The logic behind this adage is that the summer vacation season hampers sales and negatively affects business. This in turn leads to weak earnings during the July to September quarter. Following from this logic, the second half of October generally witnesses disappointing numbers, which in turn pulls down markets. This is why it may be a good idea to cash in on May Day and return to the bourses on Halloween.

Theoretically, there is little sense to this since it defies the efficient market hypothesis. But recent market signals indicate that stocks may be overbought. The Dow and the S&P 500 are up 3.2% and 2.3%, respectively. Both of these indexes also moved above their 50-day moving averages last week. This is because several taxpayers allocated funds to their pension funds before the deadline on Apr 15.

Volatile Oil, ECB Panic

The situation on oil remains increasingly unclear. Oil prices declined following the lack of agreement among major oil producing nations at a meeting in Doha. Subsequently, a workers strike in Kuwait led to a fall in production. This was reversed once the strike ended and Saudi Arabia announced expansion plans for a major oilfield.

Meanwhile, the latest domestic data indicate that massive inventories continue to remain a problem. Prices may once again decline when demand falls in September in keeping with a seasonal pattern.

Additionally, the ECB has refrained from providing any stimulus measures following the steps announced in March. However, ECB president Mario Draghi said last Thursday that he was willing to utilize all the measures at his disposal in case the Eurozone’s economic situation worsened further.

This announcement is another indication that it is willing to do whatever is necessary to boost the region’s economy. Additionally, the threat of a Brexit continues to loom over the economic union indicating more instability may be forthcoming across the pond.

Our Choices

Stocks seem to be up against some trouble from next month onward. But completely exiting the markets may not be a smart option given the gains notched up this year.

Instead, it may be a good idea to add defensive options like healthcare and consumer staples, which have the artillery to stand up to seasonal sluggishness. At the same time, it is important to remember that picking winning stocks may not be easy.

This is where our VGM score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.

We have narrowed down our search to the following stocks based on a good Zacks Rank and VGM score.

Newell Brands Inc. (NWL) is a global manufacturer and marketer of consumer and commercial products.

Newell Brands has a Zacks Rank #1 (Strong Buy) and a VGM Score of B. The company has expected earnings growth of 30.7% for the current year. The forward price-to-earnings (P/E) ratio for the current financial year (F1) is 15.58, lower than the industry average of 24.43. Its earnings estimate for the current year has improved by 23.6% over the last 30 days.

Hormel Foods Corporation (HRL) is a leading manufacturer and marketer of various meat and food products in the U.S. and international markets.

Hormel Foods has a Zacks Rank #1 and a VGM Score of B. The company has expected earnings growth of 18.7% for the current year. Its earnings estimate for the current year has improved by 0.3% over the last 30 days.

Shire plc (SHPG) is a specialty biopharmaceutical company catering to diverse medical needs through research and development, manufacture, sale and distribution of pharmaceutical products.

Shire has a Zacks Rank #1 and a VGM Score of A. The company has expected earnings growth of 8.9% for the current year. It has a P/E (F1) of 14.43, which is lower than the industry average of 34.40.

PAREXEL International Corporation (PRXL) is a biopharmaceutical outsourcing organization which provides knowledge-based contract research, medical marketing and consulting services.

PAREXEL has a Zacks Rank #1 and a VGM Score of A. The company has expected earnings growth of 25.1% for the current year. Its earnings estimate for the current year has improved by 0.1% over the last 30 days.

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NEWELL BRANDS (NWL): Free Stock Analysis Report
 
HORMEL FOODS CP (HRL): Free Stock Analysis Report
 
SHIRE PLC-ADR (SHPG): Free Stock Analysis Report
 
PAREXEL INTL CP (PRXL): Free Stock Analysis Report
 
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