|By PR Newswire||
|January 17, 2014 09:30 AM EST||
CHICAGO, Jan. 17, 2014 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: Southwest Airlines Co. (NYSE:LUV-Free Report), Norfolk Southern Corporation (NYSE:NSC-Free Report) and Canadian Pacific Railway Limited (NYSE:CP-Free Report).
Wheels Roll in Transportation, 3 Stocks Set to Beat
In the wake of the World Bank's revised outlook on the global economy, we are hopeful that the fourth quarter results of the U.S. stocks will bring the mojo back for investors, who have otherwise endured significant volatilities throughout 2013. Further, encouraging U.S. retail data that uplifted the greenback leaves little scope for any pessimism going forward.
The transportation sector too will benefit from the broader optimism and we look forward to outperformance by some of its stocks. Not only does the current momentum in the macro economy work in favour of these stocks, the industry fundamentals also continue to improve. From a modest beginning to a strong third quarter, these stocks have proved their mettle, driving us to crown them as our top picks.
Why Transportation is an Attractive Bet?
While fourth quarter results are underway, we are yet to see the major actions in Transportation with only 9.1% of the sector participants having reported. Overall, the sector is expected to register a double-digit (17%) earnings improvement, stemming from steady growth in airlines and railroad stocks.
According to the International Air Transport Association (IATA), the 2014 outlook on the global airline industry looks promising with profitability estimated at $16.4 billion on a passenger count of 3.30 billion. Net profit margin is also expected to grow 2.2%. Economic recovery and the resultant surge in air travel demand, disciplined capacity and many new and enhanced ancillary revenue opportunities would contribute to growth this year.
Railroads' operating performance too seems to have bounced back amid coal woes thanks to operational efficiency, increased market demand for intermodal services as well as shipment of key commodities like petroleum products, automotives and grain crop.
In such a scenario, it might be a good idea to zero-in on a handful of transportation stocks that are poised to beat earnings estimates this quarter. An earnings surprise should help these stocks outperform in the near term.
How to Find a Top Pick
Stock diversity in the transportation arena could muddle up your picking power. An easy way to narrow down the list for your portfolio is to take a look at stocks with solid Zacks Rank and favorable Zacks Earnings ESP.
Earnings ESP is our proprietary methodology for determining stocks having the best chance to surprise with their next earnings announcement. The earnings ESP shows the percentage difference between the Most Accurate estimate and the Zacks Consensus.
The combination of a positive to neutral Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive earnings ESP, is usually a harbinger of earnings beat.
For investors seeking to benefit by applying this strategy, we have chosen three transportation stocks that we believe will exhibit significant upward potential following their upcoming earnings announcement.
Southwest Airlines Co. (NYSE:LUV-Free Report): Dallas-based Southwest Airlines provides low cost passenger air transportation services in the U.S. It primarily provides short-haul, high frequency, point-to-point airline services covering many secondary or downtown airports such as Dallas Love Field, Houston Hobby, Chicago Midway, Baltimore/Washington International, Burbank, Manchester, Oakland and San Jose. In May 2011, Southwest completed the acquisition of AirTran Holdings, which now operates as a wholly owned subsidiary under the name AirTran Airways. As of Sep 30, 2013, Southwest operated 696 Boeing aircraft and served 97 destinations along with AirTran.
The Zacks Consensus Estimates for fourth-quarter is 28 cents, representing robust growth over the year-ago quarter. The company registered an average earnings surprise of 41.40% over the trailing 12 months.
The company presently carries a Zacks Rank #1 and has an earnings ESP of +7.14%. Southwest Airlines is set to report its fourth quarter results on Jan 23, before the opening bell.
Norfolk Southern Corporation (NYSE:NSC-Free Report): Headquartered in Norfolk, Virginia, Norfolk Southern Corp. owns a major freight railroad Norfolk Southern Railway, which also represents a Class I railroad in the U.S. The company operates over 20,000 route miles across 22 Eastern states in the U.S. The company offers rail transportation of commodities like coal and other raw materials, intermediate products and finished goods. It also offers comprehensive logistics and most extensive intermodal services on the Eastern part of the U.S. and caters to overseas freight through several Atlantic and Gulf Coast ports.
The Zacks Consensus Estimate for the fourth quarter is $1.50. This represents a year-over-year improvement of 15.7%. The company delivered average earnings surprise of 5.01% over the trailing 12 months.
Norfolk Southern has an earnings ESP of +0.67% and retains a Zacks Rank #3 (Hold). The company is slated to release its fourth quarter results on Jan 22.
Canadian Pacific Railway Limited (NYSE:CP-Free Report): Based in Calagary, Alberta, Canadian Pacific is another Class I railroad that provides rail freight transportation services to the principal business centers of Canada from Montreal to Vancouver, as well as the U.S. covering major cities like Chicago, New York City, Detroit and Minneapolis. The company has extended its network through collaborations with other Class I railways in North America, which allows it to provide services and access to markets across North America beyond its own rail network.
Currently, the Zacks Consensus Estimate for fourth-quarter is $1.87 with growth expectation of 46.3% from the prior-year quarter. The company boasts an average earnings surprise of 1.49% over the trailing 12 months.
Canadian Pacific currently holds a Zacks Rank #3 and has an earnings ESP of +1.60%. The carrier is slated to report its fourth quarter financial results on Jan 29, before market opens.
Conscious efforts to turn around are evident in the economy at large. The transportation sector is also riding on the upturn with palpable improvements in the fundamentals of airline and railroad stocks.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Follow us on Twitter: http://twitter.com/ZacksResearch
Join us on Facebook: http://www.facebook.com/ZacksInvestmentResearch
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.
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.
SOURCE Zacks Investment Research, Inc.
Sensors and effectors of IoT are solving problems in new ways, but small businesses have been slow to join the quantified world. They’ll need information from IoT using applications as varied as the businesses themselves. In his session at @ThingsExpo, Roger Meike, Distinguished Engineer, Director of Technology Innovation at Intuit, showed how IoT manufacturers can use open standards, public APIs and custom apps to enable the Quantified Small Business. He used a Raspberry Pi to connect sensors...
Feb. 14, 2016 04:30 AM EST Reads: 401
The cloud promises new levels of agility and cost-savings for Big Data, data warehousing and analytics. But it’s challenging to understand all the options – from IaaS and PaaS to newer services like HaaS (Hadoop as a Service) and BDaaS (Big Data as a Service). In her session at @BigDataExpo at @ThingsExpo, Hannah Smalltree, a director at Cazena, will provide an educational overview of emerging “as-a-service” options for Big Data in the cloud. This is critical background for IT and data profes...
Feb. 14, 2016 04:00 AM EST Reads: 258
Father business cycles and digital consumers are forcing enterprises to respond faster to customer needs and competitive demands. Successful integration of DevOps and Agile development will be key for business success in today’s digital economy. In his session at DevOps Summit, Pradeep Prabhu, Co-Founder & CEO of Cloudmunch, covered the critical practices that enterprises should consider to seamlessly integrate Agile and DevOps processes, barriers to implementing this in the enterprise, and pr...
Feb. 14, 2016 04:00 AM EST Reads: 485
Eighty percent of a data scientist’s time is spent gathering and cleaning up data, and 80% of all data is unstructured and almost never analyzed. Cognitive computing, in combination with Big Data, is changing the equation by creating data reservoirs and using natural language processing to enable analysis of unstructured data sources. This is impacting every aspect of the analytics profession from how data is mined (and by whom) to how it is delivered. This is not some futuristic vision: it's ha...
Feb. 14, 2016 03:45 AM EST Reads: 476
The principles behind DevOps are not new - for decades people have been automating system administration and decreasing the time to deploy apps and perform other management tasks. However, only recently did we see the tools and the will necessary to share the benefits and power of automation with a wider circle of people. In his session at DevOps Summit, Bernard Sanders, Chief Technology Officer at CloudBolt Software, explored the latest tools including Puppet, Chef, Docker, and CMPs needed to...
Feb. 14, 2016 03:30 AM EST Reads: 388
With the Apple Watch making its way onto wrists all over the world, it’s only a matter of time before it becomes a staple in the workplace. In fact, Forrester reported that 68 percent of technology and business decision-makers characterize wearables as a top priority for 2015. Recognizing their business value early on, FinancialForce.com was the first to bring ERP to wearables, helping streamline communication across front and back office functions. In his session at @ThingsExpo, Kevin Roberts...
Feb. 14, 2016 02:00 AM EST Reads: 433
Let’s face it, embracing new storage technologies, capabilities and upgrading to new hardware often adds complexity and increases costs. In his session at 18th Cloud Expo, Seth Oxenhorn, Vice President of Business Development & Alliances at FalconStor, will discuss how a truly heterogeneous software-defined storage approach can add value to legacy platforms and heterogeneous environments. The result reduces complexity, significantly lowers cost, and provides IT organizations with improved effi...
Feb. 14, 2016 01:15 AM EST Reads: 292
Cognitive Computing is becoming the foundation for a new generation of solutions that have the potential to transform business. Unlike traditional approaches to building solutions, a cognitive computing approach allows the data to help determine the way applications are designed. This contrasts with conventional software development that begins with defining logic based on the current way a business operates. In her session at 18th Cloud Expo, Judith S. Hurwitz, President and CEO of Hurwitz & ...
Feb. 13, 2016 11:15 PM EST Reads: 314
It's easy to assume that your app will run on a fast and reliable network. The reality for your app's users, though, is often a slow, unreliable network with spotty coverage. What happens when the network doesn't work, or when the device is in airplane mode? You get unhappy, frustrated users. An offline-first app is an app that works, without error, when there is no network connection.
Feb. 13, 2016 09:00 PM EST Reads: 258
Data-as-a-Service is the complete package for the transformation of raw data into meaningful data assets and the delivery of those data assets. In her session at 18th Cloud Expo, Lakshmi Randall, an industry expert, analyst and strategist, will address: What is DaaS (Data-as-a-Service)? Challenges addressed by DaaS Vendors that are enabling DaaS Architecture options for DaaS
Feb. 13, 2016 08:45 PM EST Reads: 400
One of the bewildering things about DevOps is integrating the massive toolchain including the dozens of new tools that seem to crop up every year. Part of DevOps is Continuous Delivery and having a complex toolchain can add additional integration and setup to your developer environment. In his session at @DevOpsSummit at 18th Cloud Expo, Miko Matsumura, Chief Marketing Officer of Gradle Inc., will discuss which tools to use in a developer stack, how to provision the toolchain to minimize onboa...
Feb. 13, 2016 08:00 PM EST Reads: 153
SYS-CON Events announced today that Catchpoint Systems, Inc., a provider of innovative web and infrastructure monitoring solutions, has been named “Silver Sponsor” of SYS-CON's DevOps Summit at 18th Cloud Expo New York, which will take place June 7-9, 2016, at the Javits Center in New York City, NY. Catchpoint is a leading Digital Performance Analytics company that provides unparalleled insight into customer-critical services to help consistently deliver an amazing customer experience. Designed...
Feb. 13, 2016 07:00 PM EST Reads: 421
With the proliferation of both SQL and NoSQL databases, organizations can now target specific fit-for-purpose database tools for their different application needs regarding scalability, ease of use, ACID support, etc. Platform as a Service offerings make this even easier now, enabling developers to roll out their own database infrastructure in minutes with minimal management overhead. However, this same amount of flexibility also comes with the challenges of picking the right tool, on the right ...
Feb. 13, 2016 04:45 PM EST Reads: 208
CIOs and those charged with running IT Operations are challenged to deliver secure, audited, and reliable compute environments for the applications and data for the business. Behind the scenes these tasks are often accomplished by following onerous time-consuming processes and often the management of these environments and processes will be outsourced to multiple IT service providers. In addition, the division of work is often siloed into traditional "towers" that are not well integrated for cro...
Feb. 13, 2016 04:00 PM EST Reads: 513
SYS-CON Events announced today that FalconStor Software® Inc., a 15-year innovator of software-defined storage solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. FalconStor Software®, Inc. (NASDAQ: FALC) is a leading software-defined storage company offering a converged, hardware-agnostic, software-defined storage and data services platform. Its flagship solution FreeStor®, utilizes a horizonta...
Feb. 13, 2016 02:30 PM EST