Dj Republic Services Inc. Stock Outperforms Competitors On Strong Trading Day

While the final House votes are still being tallied, the latest projections indicate that Republicans are set to take control of the lower chamber of Congress alongside the Senate, clearing the path a full GOP sweep of the executive and legislative branches. Investors have been quick to cheer an expected pro-business agenda from President-elect Trump, which is broadly anticipated to feature investments in domestic manufacturing and infrastructure, widespread deregulation, and fresh tax incentives. Additionally, shifts in environmental policies could affect the renewable energy and waste management industries.

Against this backdrop, analysts at Oppenheimer have highlighted three stocks that could benefit from anticipated policy changes under the incoming “Red Wave” in Washington, D.C.: Caterpillar , a leader in heavy equipment manufacturing expected to benefit from infrastructure spending and reshoring trends; Tesla , the domestic electric vehicle (EV) leader whose CEO Elon Musk is a close ally of Trump's; and Republic Services , a top player in waste management and recycling that could see a boost for its landfill biogas initiatives. Here's a closer look at all three.

#1. Tesla

Tesla has already experienced a meteoric rise following Donald Trump's election win. The stock has surged 32% in the past week, reaching a 52-week high above $358 in the process and reclaiming a $1 trillion market cap. TSLA is now up 33.8% on a YTD basis after spending most of 2024 in the red, although the shares remain down about 15% from their 2021 highs.

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What are the Zacks Style Scores?

The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value Score

Finding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.

Growth Score

Growth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.

Momentum Score

Momentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.

VGM Score

If you want a combination of all three Style Scores, then the VGM Score will be your friend. It rates each stock on their combined weighted styles, helping you find the companies with the most attractive value, best growth forecast, and most promising momentum. It's also one of the best indicators to use with the Zacks Rank.

How Style Scores Work with the Zacks Rank

A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.

#1 (Strong Buy) stocks have produced an unmatched +25.41% average annual return since 1988, which is more than double the S&P 500's performance over the same time frame. However, the Zacks Rank examines a ton of stocks, and there can be more than 200 companies with a Strong Buy rank, and another 600 with a #2 (Buy) rank, on any given day.

With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.

That's where the Style Scores come in.

To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.

Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Republic Services (RSG)

Republic Services is a leading provider of non-hazardous solid waste collection, transfer, disposal, recycling, and energy services. As of Dec 31, 2023, the company operated through 364 collection operations, 246 transfer stations, 207 active landfills, 74 recycling centers, three treatment, recovery and disposal facilities, 22 treatment, storage and disposal facilities, 12 deep injection wells, 1 polymer center and 6 salt water disposal wells, across the United States and Canada. The company is engaged in 76 landfill gas-to-energy and renewable energy projects and had post-closure responsibility for 126 closed landfills.

RSG is a #3 (Hold) on the Zacks Rank, with a VGM Score of B.

Momentum investors should take note of this Business Services stock. RSG has a Momentum Style Score of B, and shares are up 2.9% over the past four weeks.

Eight analysts revised their earnings estimate higher in the last 60 days for fiscal 2024, while the Zacks Consensus Estimate has increased $0.06 to $6.24 per share. RSG also boasts an average earnings surprise of 8.2%.

With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, RSG should be on investors' short list.

Zacks Investment Research

Avis Budget Group, Inc. CAR reported lower-than-expected third-quarter 2024 results.

See Zacks Earnings Calendar to stay ahead of market-making news.

Despite the earnings miss, the stock has gained 12% since the earnings release on Oct. 31, 2024.

CAR’s earnings of $6.7 per share missed the Zacks Consensus Estimate by 22.2% and decreased 60.4% from the year-ago quarter’s actual. Total revenues of $3.5 billion missed the consensus estimate by 2.3% and declined 2.4% on a year-over-year basis.

Avis Budget’s shares have declined 47.6% in the year-to-date period compared with 4.6% decrease of the industry and 27.7% growth of the Zacks S&P 500 composite.

YTD Price Performance

Avis Budget’s Segmental Revenues

Revenues from the Americas amounted to $2.6 billion, indicating a fall of 4% from the year-ago quarter. The metric missed our estimate of $2.7 billion.

International revenues were $840 million, up 1% on a year-over-year basis. However, the figure missed our expectation of $845.6 million. Strong international inbound and intra-European cross-border travel drove this region’s revenues.

CAR’s Profitability

Adjusted EBITDA was $503 million, down 45% from third-quarter 2023. The Americas segment reported adjusted EBITDA of $384 million, which declined 48% from the year-ago quarter. Internationally, adjusted EBITDA of $139 million decreased 29%.

Balance Sheet and Cash Flow of CAR

Avis Budget exited the third quarter with cash and cash equivalents of $602 million compared with $511 million at the end of the second quarter of 2024. Corporate debt amounted to $6 billion compared with $5.3 billion reported in the preceding quarter.

CAR generated $1.3 billion in net cash from operating activities. Adjusted free cash flow utilized amounted to $600 million. Capital expenditures were $40 million.

Avis Budget currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshot of CAR’s Peers

Republic Services, Inc. RSG reported mixed third-quarter 2024 results.

RSG’s earnings per share (excluding 1 cent from non-recurring items) of $1.8 outpaced the Zacks Consensus Estimate by 11.7% and grew 17.5% from the year-ago quarter. Revenues of $4.1 billion missed the consensus mark by a slight margin but increased 6.5% on a year-over-year basis.

Omnicom Group Inc. OMC reported impressive third-quarter 2024 results.

OMC's earnings of $2 per share beat the consensus estimate by 3.1% and rose 9.1% from the year-ago quarter. Total revenues of $3.9 billion outpaced the consensus mark by 2.3% and grew 8.5% on a year-over-year basis.

Fiserv, Inc. FI reported mixed third-quarter 2024 results.

FI’s adjusted earnings per share (excluding $1.3 from non-recurring items) of $2.3 beat the consensus mark by 2.2% and gained 17.4% year over year. Adjusted revenues of $4.9 billion missed the consensus estimate by a slight margin but rose a tad on a year-over-year basis.

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