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Hyatt Hotels Corporation H selected Oracle OPERA Cloud as the property management system for its global operations. The platform will help standardize operations and manage data across more than 1,000 hotels and all-inclusive resorts.
This move reflects Hyatt's efforts to enhance efficiency by centralizing its processes on a secure cloud-based system. Built on Oracle Cloud Infrastructure, OPERA Cloud will allow Hyatt to streamline data management across its global properties. The system offers insights for better planning and delivers personalized guest experiences. With mobile access, Hyatt colleagues can assist guests from any location, which will improve overall service and operational consistency.
Hyatt will enhance its operations by using the Oracle Hospitality Integration Platform (OHIP). This platform enables properties to access more than 1,000 pre-integrated services, allowing quick customization and innovation. With Oracle's cloud, H can better adapt to the unique needs of its guests and properties across different markets.
H’s shares rose 2.4% during the trading session and 1.1% in the after-hours trading session on Sep. 17, 2024.
Hyatt’s YTD Price Performance
Shares of the company have gained 13.8% in the year-to-date period compared with the Zacks Hotels and Motels industry’s 9.1% growth. The company is benefiting from a gradual increase in demand, new hotel openings and acquisition initiatives. Also, consistent focus on an asset-light model initiative and strategic partnerships bode well.
The company continues to expand its global footprint, contributing to its growth strategy. In second-quarter 2024, it added 18 new hotels, which included more than 3,200 rooms, marking a 4.6% increase in net room growth. H anticipates net room growth to increase in the range of 5.5-6% year over year in 2024.
The company reported steady improvements in business transient revenues in second-quarter 2024. It remains optimistic due to strong group bookings, confidence in the recovery of business transient demand and steady leisure transient demand levels. It anticipates group and business transient revenue growth to exceed leisure transient revenues in the second half of the year.
Zacks Rank & Key Picks
Hyatt currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Consumer Discretionary sector.
DoubleDown Interactive Co., Ltd. DDI currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DDI has a trailing four-quarter earnings surprise of 22.1%, on average. The stock has increased 46.6% in the past year. The Zacks Consensus Estimate for DDI’s 2024 sales and earnings per share (EPS) indicates an increase of 12.6% and 15.8%, respectively, from the year-ago levels.
Norwegian Cruise Line Holdings Ltd. NCLH currently flaunts a Zacks Rank of 1. NCLH has a trailing four-quarter earnings surprise of 5.7%, on average. The stock has moved up 14% in the past year.
The Zacks Consensus Estimate for NCLH’s 2024 sales and EPS indicates an increase of 9.8% and 125.7%, respectively, from the year-ago levels.
Royal Caribbean Cruises Ltd. RCL currently carries a Zacks Rank #2 (Buy). RCL has a trailing four-quarter earnings surprise of 18.5%, on average. The stock has gained 71.3% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates growth of 18.1% and 71.2%, respectively, from the year-ago levels.
Zacks Investment Research
The S&P 500 Index today is up by +0.05%, the Dow Jones Industrials Index is down by -0.11%, and the Nasdaq 100 Index is up by +0.11%.
Stocks today are slightly higher ahead of the FOMC’s decision on interest rates this afternoon. Today’s reports showed US housing starts and building permits for August were better than expected, bolstering the prospects for a soft landing and boosting stocks.
The markets will look to the 2-day FOMC meeting that concludes this afternoon to see whether policymakers will decide that a -25 bp cut in the fed funds target range would be adequate for a US economy that has shown signs of losing momentum or whether they will decide on a larger -50 bp rate cut instead. Also, fresh quarterly projections in the form of the Fed’s “dot plot” will offer further insight into the path of interest rates and the economy. In addition, today’s post-meeting comments from Fed Chair Powell will be scrutinized regarding the Fed’s future policy intentions.
US MBA mortgage applications rose +14.2% in the week ended September 13, with the purchase mortgage sub-index rising +5.4% and the refinancing mortgage sub-index rising +24.2%. The average 30-year fixed rate mortgage fell -14 bp to a 2-year low of 6.15% from 6.29% in the prior week.
US Aug housing starts rose +9.6% m/m to a 4-month high of 1.356 million, stronger than expectations of 1.318 million. Aug building permits, a proxy for future construction, rose +4.9% m/m to a 5-month high of 1.475 million, stronger than expectations of 1.410 million.
The markets are discounting the chances at 100% for a -25 bp rate cut at the conclusion of today’s FOMC meeting and at 66% for a -50 bp rate cut at that meeting.
Overseas stock markets today are mixed. The Euro Stoxx 50 is down -0.36%. China's Shanghai Composite recovered from a 7-1/4 month low and closed up +0.49%. Japan's Nikkei Stock 225 closed up +0.49%.
Interest Rates
December 10-year T-notes (ZNZ24) today are down -9 ticks. The 10-year T-note yield is up +3.8 bp at 3.683%. Dec T-notes today are moderately lower on negative carryover from a slide in European government bonds to 1-week lows. Also, position squaring and long liquidation are weighing on T-notes ahead of this afternoon’s decision by the FOMC on interest rates. T-notes extended their losses after US Aug housing starts and building permits rose more than expected.
European government bond yields today are moving higher. The 10-year German bund yield climbed to a 1-week high of 2.185% and is up +4.1 bp at 2.184%. The 10-year UK gilt yield rose to a 1-week high of 3.837% and is up +6.8 bp to 3.836%.
ECB Governing Council member Villeroy de Galhau said, "The ECB has cut interest rates twice and should continue to cut them," as victory over inflation is "within sight."
Swaps are discounting the chances of a -25 bp rate cut by the ECB at 32% for the October 17 meeting.
US Stock Movers
Super Micro Computer is up more than +4% to lead gainers in the S&P 500 and Nasdaq 100 after Needham & Co. initiated coverage on the stock with a recommendation of buy with a price target of $600.
Cruise line operators are climbing today, with Carnival and Norwegian Cruise Line Holdings up more than +2% and Royal Caribbean Cruises Ltd up more than +1%.
VF Corp is up more than +5% after Barclays upgraded the stock to overweight from equal weight with a price target of $22.
Victoria’s Secret & Co is up more than +5% after Barclays upgraded the stock to equal weight from underweight.
United States Steel is up more than +1% after a US security panel granted Nippon Steel permission to refile its plans to purchase the company for $14.1 billion.
GE Healthcare is up more than +1% after BTIG upgraded the stock to buy from neutral with a price target of $100.
ResMed is down more than -5% to lead losers in the S&P 500 after Wolfe Research downgraded the stock to underperform from peer perform with a price target of $180.
Cencora is down more than -2% after Bank of America Global Research downgraded the stock to neutral from buy.
Incyte Corp is down more than -2% after Truist Securities downgraded the stock to hold from buy.
DaVita is down more than -2% on signs of insider selling after an SEC filing showed CEO Rodriguez sold $9.86 million of shares on Monday.
Edwards Lifesciences is down nearly -1% after Jeffries downgraded the stock to hold from buy.
Hilton Grand Vacations is down more than -1% after Goldman Sachs initiated coverage on the stock with a sell recommendation and a price target of $31.
Earnings Reports (9/18/2024)
Ennis Inc (EBF), General Mills Inc (GIS), Steelcase Inc (SCS).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.
For Immediate Release
Chicago, IL – September 18, 2024 – Today, Zacks Equity Research discusses Marriott International, Inc. MAR, Hilton Worldwide Holdings Inc. HLT and Hyatt Hotels Corp. H.
Industry: Hotels and Motels
Link: https://www.zacks.com/commentary/2336990/3-hotels-motels-stocks-to-watch-despite-industry-concerns
The Zacks Hotels and Motels industry in 2024 faces challenges from rising costs, geopolitical tensions and ongoing economic uncertainty. However, industry participants are concentrating on growth strategies, including expanding their portfolios, converting properties, forging strategic partnerships and enhancing loyalty programs.
The industry has shown resilience through cost-cutting measures and digital innovations. Hotel operators remain focused on balancing profitability while ensuring guest satisfaction continues to improve. Industry players, namely Marriott International, Inc., Hilton Worldwide Holdings Inc. and Hyatt Hotels Corp., are likely to benefit from the factors mentioned above.
Industry Description
The Zacks Hotels and Motels industry comprises companies that own, lease, manage, develop and franchise hotels. Some vacation ownership and exchange firms are also a part of the industry. Several participants own, construct and operate resorts. Some companies develop lodges, villages and mobile accommodations, including modular, skid-mounted ones and central amenities that provide long-term and temporary workforce accommodations. Some industry players develop, market, sell and manage vacation ownership and associated products. Few hoteliers also offer studios, one-bedroom suites and accommodations to mid-market business and personal travelers.
3 Trends Shaping the Future of the Hotels & Motels Industry
High Costs & Inflation Remain a Woe: Industry participants are concerned about higher costs. Rising salaries, wages and benefits have been adding to labor costs. The hospitality sector continues to struggle with labor shortages, driving up wages and reducing service quality. Hotels are finding it difficult to hire and retain staff, leading to reduced capacity and operational challenges. Heightened geopolitical risks and persistent macroeconomic uncertainty are a concern for the industry. Increases in food & beverage and non-operating costs, increased renovation costs and high interest rates are also hurting the industry.
RevPAR & ADR: Although RevPAR and ADR are expected to grow year over year in 2024, the projected growth rate declined compared with the forecast made in January. Per STR, the forecast for revenue per available room now is pegged at a 2% year-over-year increase, down from 4.1% projected in January. On the other hand, ADR is now expected to witness a growth of 2.1%, a decrease from the 3.1% projected in January. STR predicts RevPAR growth for 2025 to be 2.6% year over year in 2025, down from the earlier projection of 3.5%.
Digitalization to Drive Growth: Hotel owners are focused on maintaining the balance between maximizing hotel profitability and driving guest satisfaction. To this end, hoteliers have leveraged mobile and web check-in and mobile key technologies. These hoteliers also increased the use of digital tools to strengthen infrastructure, grow online package sales, enable self-service bookings, make real-time offerings and enhance the overall customer experience. This and the emphasis on pricing optimization and merchandising capabilities will likely help hoteliers capture additional market share.
Zacks Industry Rank Indicates Dismal Prospects
The Zacks Hotels and Motels industry is grouped within the broader sector.
The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. The Zacks Hotels and Motels industry currently carries a Zacks Industry Rank #145, which places it in the bottom 42% of the 251 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry's position in the bottom 50% of the Zacks-ranked industries results from a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, analysts are gradually losing confidence in this group's earnings growth potential. Since Aug. 31, 2024, the industry's earnings estimate for 2024 dropped 0.2%.
Before we present a few stocks you may want to keep an eye on, let's look at the industry's recent stock-market performance and valuation picture.
Industry Underperforms the S&P 500
In the past year, the Zacks Hotels and Motels industry has lagged the S&P 500 but has outperformed the sector. Over this period, the industry appreciated by 18.7% compared with the sector's increase of 8.5%. The Zacks S&P 500 composite has increased 25.7%.
Hotels & Motels Industry's Valuation
On the basis of the forward 12-month EV/EBITDA, which is a commonly used multiple for valuing Hotels and Motels stocks, the industry is currently trading at 19.87X compared with the S&P 500's 25.07X. It is also below the sector's trailing 12-month EV/EBITDA ratio of 11.92X.
Over the last five years, the industry has traded as high as 23.97X and as low as 10.02X, with the median being at 15.27X.
3 Hotels & Motels Stocks to Watch Out For
Marriott: The company has been benefiting from robust leisure demand and solid global booking trends. Also, substantial RevPAR growth in international markets added to the upside. During the second quarter, it registered nearly 5% growth in global RevPAR, with ADR increasing 3% year over year and occupancy reaching about 73%. The emphasis on expansion initiatives, digital innovation and the loyalty program bodes well. However, dismal performance in China and high debt levels are headwinds.
Marriott currently carries a Zacks Rank #3 (Hold). The company’s top line in 2024 is likely to witness a growth of 6.1% year over year. MAR's shares have gained 15.8% in the past year.
Hyatt Hotels: The company is benefiting from a gradual increase in demand, new hotel openings and acquisition initiatives. During the second quarter, system-wide comparable RevPAR increased 4.7% year over year, owing to increased business and group travel. Much optimism prevails on account of group bookings and confidence in the ongoing recovery of business transient demand and the steady levels of leisure transient demand.
H currently carries a Zacks Rank #3. In the past 30 days, the Zacks Consensus Estimate for 2024 earnings has been revised upward by 4.2%. The Zacks Consensus Estimate for Hyatt 2024 EPS suggests growth of 55.1% from the year-ago period’s figure. Hyatt's shares have gained 35.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here. .
Hilton: The company is benefiting from improvements in RevPAR, attributed to higher occupancy rates and ADR on the back of solid business and leisure transient demand. Its focus on unit expansion, hotel conversions, strategic partnerships and loyalty programs bode well. The company expects positive development trends to continue on the back of new development and conversion opportunities. For third-quarter 2024, management anticipates system-wide RevPAR to increase in the 2-3% band on a year-over-year basis.
Hilton currently carries a Zacks Rank #3. The Zacks Consensus Estimate for Hilton 2024 EPS suggests growth of 13.2% from the year-ago period’s levels. HLT's shares have jumped 42.2% in the past year.
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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.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
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.
Zacks Investment Research
As part of most compensation plans at big companies, insiders receive company stock. This means there is almost always going to be some insider selling. They may sell for many reasons, but the fact is that they buy stock for a single reason… they believe the stock is going to move higher.
Over the years I have learned that insider selling is often just noise and is often absorbed back by the company through buyback plans. This is not true of insider buying. Sometimes there is a planned purchase or series of purchases and sometimes it is a big statement buy. Knowing which is which takes a trained eye.
In this video we look at three stocks that have seen some insider buying over the last several months.
Royal Caribbean Cruises RCL is a Zacks Rank #2 (Buy) that has an A for Value and an A for Growth is highlighted first. This stock was left for dead at the start of the pandemic, but it has sailed on to better waters since then.
Next up is Crox CROX which also is a Zacks Rank #2 (Buy) and also has an A for Value and an A for Growth. This stock soared after we found out that the pandemic would not kill us all and we could wear our Crox at home without anyone judging us. Since then the stock is more or less telling us that people have been replacing their Crox shoes and maybe even accessorizing them.
Brian reviews the earnings history, estimate revisions and takes a look at the chart of both of these stocks.
Finally, we look at Aon AON which is a Zacks Rank #3 (Hold) and a stock that Brian would normally never really look at. Insurance just isn’t exciting, but when Brian saw the pop in the stock after a recent miss and post-earning drift higher, he just had to highlight this stock. Brian only takes a look at the Zacks Price, Consensus and EPS surprise chart for Aon (AON) and notes that they regularly miss earnings so the recent miss should not be a big shock.
Insider Trader is a service run by Tracey Ryniec and she does a great job separating the wheat from chaff in the world of insider buying. She can spot an insider statement buy from miles away and knows when it is a clear-cut sign that outperformance lies ahead. One tip from her service is to watch for the insider buying from Chief Legal Officers, as they are not the type, generally speaking of course, who would gamble with their own money.
Take a moment and check out the Zacks Insider Trader service today!
Zacks Investment Research
Ralph Lauren Corporation RL stock has been trending up the charts in the past year, recording growth of 64.1% against the broader Consumer Discretionary sector’s return of 10.1% and the Zacks Textile - Apparel industry‘s 2.8% decline. RL’s shares also surpassed the S&P 500 index’s appreciation of 27.9% in a year.
Currently priced at $181.44, Ralph Lauren stock is trading at 5.5% to its 52-week high of $192.03, reached on March 21, 2024. However, it is trading at a 67.1% premium to its 52-week low mark.
RL’s Strategies Drive Growth
Ralph Lauren’s stock performance is due to its progress on ‘Next Great Chapter: Accelerate Plan’ and digital efforts. As part of the plan, the company is focused on elevating its lifestyle brand, expanding core and other businesses and strengthening its presence in key cities. It is enhancing its global lifestyle brands by offering premium products that align with evolving consumer preferences. Its strategy, which includes product elevation, personalized promotions, disciplined inventory management and a favorable channel and geographic mix, is proving effective.
This approach supports Ralph Lauren’s financial goals. Management forecasted mid-to-high-single-digit compounded annual revenue growth in constant currency during the fiscal 2022-2025 period. Operating profit growth is expected to outpace revenue growth, with the operating margin projected to reach at least 15% by fiscal 2025 in constant currency. Modest gross margin improvements and controlled expenses will support operating margin expansion. Capital expenditures are expected to remain in the band of 4-5% of revenues annually and the company plans to return $2 billion to shareholders via dividends and share repurchases by fiscal 2025.
RL continues to invest in key priorities like marketing, digital growth and ecosystem expansion in major cities. Its direct-to-consumer (DTC) channels, including stores and digital commerce, are performing well, with significant progress in mobile, omnichannel and fulfillment investments. In the latest quarter, RL added 1.3 million new consumers through its DTC business, with digital sales increasing 14% in Europe and 21% in Asia.
RL's Price Performance
RL’s Earnings Estimate Revisions
Given the positive sentiments regarding the stock, the Zacks Consensus Estimate for fiscal 2025 and 2026 has been northbound. In the past 60 days, the consensus estimate for earnings per share (EPS) for the current fiscal year has been revised 1.5% to $11.24 for fiscal 2025 and 0.2% to $12.56 for fiscal 2026. This implies year-over-year earnings growth of 9% and 11.8%, respectively, for fiscal 2025 and 2026.
Hurdles in RL’s Growth Path
Ralph Lauren, like other lifestyle brands, faces macroeconomic challenges such as inflation, supply-chain issues and shifting consumer behavior. Management expressed caution about the global economic and consumer outlook. Also, unfavorable foreign currency impacts are expected to affect gross margins by 40 basis points and operating margins by 50 basis points in the upcoming quarter.
Softness in its wholesale channel in North America is another setback for the company. Higher promotions and an unfavorable wholesale timing shift have been affecting the segment. The North America wholesale business reported a 13% decline in revenues in first-quarter fiscal 2025, due to receipt timing shifts and lower product sales to the off-price wholesale division. This resulted in the North America segment reporting a 4% year-over-year decline in revenues, with 4% fall in digital revenues.
Management anticipates wholesale declines to moderate through the remainder of fiscal 2025, with the potential of a restock in well-performing core products.
RL Stock’s Valuation
Ralph Lauren stock is trading at a premium valuation relative to the industry. Going by the price/earnings ratio, RL stock is currently trading at 15.31 on a forward 12-month basis, higher than 12.38 of the industry. Also, it is trading higher than its median of 14.48.
How to Play the RL Stock?
Ralph Lauren’s robust strategies, including the Next Chapter Plan and digital endeavors, position it well for long-term growth. However, macroeconomic uncertainties and soft North America performance are likely to be headwinds in the near term.
The company's steady uptrend with a pricey valuation signals a cautious approach for investors willing to enter at these levels. For existing investors, retaining the stock seems to be a prudent choice, considering the company’s long-term growth potential. The company’s Zacks Rank #3 (Hold) supports our thesis.
Stocks to Consider
We have highlighted three better-ranked stocks, namely, G-III Apparel Group GIII, Crocs CROX and Royal Caribbean RCL.
G-III Apparel is a manufacturer, designer and distributor of apparel and accessories under licensed brands, owned brands and private label brands. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has a trailing four-quarter earnings surprise of 118.2%, on average. The Zacks Consensus Estimate for GIII Apparel’s current financial-year sales indicates growth of 3.3% from the year-ago figure.
Crocs develops and manufactures lifestyle footwear and accessories. It currently has a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 14.9%, on average.
The Zacks Consensus Estimate for Crocs’ current financial-year sales and EPS implies an improvement of 4% and 6.8%, respectively, from the prior-year actuals.
Royal Caribbean carries a Zacks Rank of 2 at present. RCL has a trailing four-quarter earnings surprise of 18.5%, on average.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates an increase of 18.1% and 71.1%, respectively, from the year-ago levels.
Zacks Investment Research
Following a thorough vendor evaluation, Flexsteel Industries, Inc. FLXS teams up with 3D Cloud for its 3D digital asset management and product configuration needs. This collaboration will provide more than 2,500 Flexsteel retailers with advanced 3D product visualization tools.
The integration of 3D Cloud is expected to enhance product visualization, streamline configuration processes and improve overall efficiency for Flexsteel’s retail partners. It will provide Flexsteel’s retailers with tools to create interactive brand experiences, including self-service product renders, WebAR and product configurators. This will enable FLXS to deliver more dynamic and engaging customer interactions.
Flexsteel plans to leverage its investment in 3D content across various applications. This strategy aims to ensure consistent branding, enhance marketing efforts and improve operational efficiency.
FLXS’ YTD Price Performance
Shares of the company have skyrocketed 120.7% year to date compared with the industry‘s 33.1% growth. FLXS effectively managed its operations. It capitalized on sustained productivity and cost-saving measures, maintained pricing discipline and actively managed its product portfolio to its advantage. The company is expected to benefit from its growth strategy and new product introductions.
Despite challenges in the industry, primarily stemming from changes in consumer spending preferences away from home furnishings, the company expects net sales growth of 5-10% year over year in first-quarter fiscal 2025. The same is expected to rise 2-6% in the fiscal 2025.
The company is committed to growth and gaining market share despite industry challenges. For fiscal 2025, it plans to advance through core markets and expand into new ones with robust strategies and investments.
FLXS focuses on investing in consumer insights, innovation and marketing to drive long-term growth. Flexsteel’s increased investment in consumer insights is expected to identify and address emerging needs. It also invests in innovation that differentiates the company and is protected by intellectual property, trademarks or exclusivity.
Additionally, the company enhances marketing and brand awareness by strengthening direct consumer engagement while continuing successful trade partner marketing. Alongside these efforts, Flexsteel remains committed to achieving profit growth through operational excellence and disciplined portfolio management in fiscal 2025 and
beyond.
Zacks Rank & Key Picks
Flexsteel currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Consumer Discretionary sector.
DoubleDown Interactive Co., Ltd. DDI currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DDI has a trailing four-quarter earnings surprise of 22.1%, on average. The stock has increased 43.4% in the past year. The Zacks Consensus Estimate for DDI’s 2024 sales and earnings per share (EPS) indicates an increase of 12.6% and 15.8%, respectively, from the year-ago levels.
Norwegian Cruise Line Holdings Ltd. NCLH currently sports a Zacks Rank of 1. NCLH has a trailing four-quarter earnings surprise of 5.7%, on average. The stock has moved up 15.9% in the past year.
The Zacks Consensus Estimate for NCLH’s 2024 sales and EPS indicates an increase of 9.8% and 125.7%, respectively, from the year-ago levels.
Royal Caribbean Cruises Ltd. RCL currently sports a Zacks Rank #2 (Buy). RCL has a trailing four-quarter earnings surprise of 18.5%, on average. The stock has gained 76.9% in the past year.
The Zacks Consensus Estimate for RCL’s 2024 sales and EPS indicates growth of 18.1% and 71.1%, respectively, from the year-ago levels.
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U.S. stock markets have witnessed renewed momentum in 2024 after an impressive 2023. The bull run continued for the past 18 months, barring some minor fluctuations. Meanwhile, market participants are expecting a 100% chance of the first rate cut to be initiated at the Fed FOMC meeting scheduled to start today.
Aside from the three major stock indexes, the mid-cap-centric S&P 400 index is up 10.2% year to date. Within the mid-cap space, a handful of stocks (market capital greater than $8 billion but currently less than $10 billion) have the potential to become large caps in the near future.
Five such stocks are Maplebear Inc. CART, Norwegian Cruise Line Holdings Ltd. NCLH, Sirius XM Holdings Inc. SIRI, Abercrombie & Fitch Co. ANF and Pilgrim's Pride Corp. PPC.
These stocks have seen positive earnings estimate revisions in the last 60 days and have strong price upside potential in the short-term. Each of our picks currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Why Mid-Cap Stocks?
Investment in mid-cap stocks is often recognized as a good portfolio diversification strategy. These stocks combine the attractive attributes of both small and large-cap stocks. Top-ranked, mid-cap stocks have a high potential to enhance their profitability, productivity and market share. These may also become large-cap over time.
If the economic growth slows down due to any unforeseen internal or external disturbance, mid-cap stocks will be less susceptible to losses than their large-cap counterparts owing to less international exposure.
On the other hand, if the economy continues to thrive, these stocks will gain more than small caps due to established management teams, a broad distribution network, brand recognition and ready access to the capital markets.
5 Mid-Caps Set to Turn to Large-Cap Stocks
These stocks could be poised to cross $10 billion in valuation, the yardstick for large-cap stocks status:
Maplebear Inc.
Maplebear is a grocery technology company operating principally in North America with grocers and retailers to transform how people shop. CART’s Instacart Platform offers retailers a suite of enterprise-grade technology products and services to power their e-commerce experiences, fulfill orders, digitize brick-and-mortar stores, provide advertising services, and glean insights. CART also operates virtual convenience stores; and provides software-as-a-service solutions to retailers.
Attractive Short-Term Price Upside Potential for CART Stock
The Zacks Consensus Estimate for the current-year earnings of CART has improved 10.9% in the last 60 days. The short-term average price target of brokerage firms for the stock represents an increase of 18.6% from the average target price of $43.85. The brokerage target price is currently in the range of $32-$52.
Norwegian Cruise Line Holdings Ltd.
Norwegian Cruise Line reported solid second-quarter 2024 results, with earnings and revenues surpassing the Zacks Consensus Estimate. NCLH is benefiting from strong demand, high pricing and increased booking volumes, leading to record advance ticket sales.
NCLH’s focus on fleet expansion efforts and digital initiatives bodes well. These factors showcase that the company’s strategy is well-aligned with its growth goals and 2026 financial and sustainability targets. Given the substantial progress made so far and current demand expectations, NCLH raised its 2024 full-year guidance.
NCLH Stock Has Impressive Price Appreciation Potential
The Zacks Consensus Estimate for the current-year earnings of NCLH has improved 12.1% in the last 60 days. The short-term average price target of brokerage firms for the stock represents an increase of 16.8% from the average target price of $22.58. The brokerage target price is currently in the range of $17.5-$32.
Sirius XM Holdings Inc.
Sirius XM has been benefiting from an improvement in ad revenues, offset by a decline in Sirius XM Standalone’s paid promotional subscribers. SIRI continues to bolster its content offerings by adding content from all spheres, including music, politics, news and sports, to its platform. SIRI’s expanded podcast efforts fit well with the existing advertising-led focus at Pandora and AdsWizz and are expected to improve monetization in the near term.
Huge Price Upside Potential for SIRI Shares
The Zacks Consensus Estimate for the current-year earnings of SIRI has improved 2.7% in the last seven days. The short-term average price target of brokerage firms for the stock represents a jump of 51.2% from the average target price of $37.05. The brokerage target price is currently in the range of $25-$65.
Abercrombie & Fitch Co.
Abercrombie & Fitch has benefited from continued momentum across its both brands, which bolstered sales in fiscal 2024. ANF witnessed strong sales growth for each of its brands during the last reported quarter.
ANF reported sturdy second-quarter fiscal 2024 results. Management anticipates net sales for fiscal 2024 to increase 12-13% year over year from $4.3 billion. For third-quarter fiscal 2024, net sales are projected to be up in low double digits year over year compared with our estimate of a 10.1% rise.
Robust Price Upside Potential for ANF Shares
The Zacks Consensus Estimate for the current-year earnings of ANF has improved 1.5% in the last seven days. The short-term average price target of brokerage firms for the stock represents a jump of 29.6% from the average target price of $184.33. The brokerage target price is currently in the range of $147-$220.
Pilgrim's Pride Corp.
Pilgrim's Pride’s portfolio diversification strategies, including its focus on branded offerings and strategic key customer partnerships, play a crucial role in driving growth. Focus on key customers is a pathway for refining PPC’s portfolio and creating competitive advantages over its peers.
PPC’s strategic investments in its U.S. and Mexican operations, including new facilities and expanded capacities, support growth. In addition to expansion, PPC is focused on cost-cutting measures, including optimizing operational processes and reducing grain input costs, which is driving profitability.
Solid Price Upside Potential for PPC Stock
The Zacks Consensus Estimate for the current-year earnings of PPC has improved 12.9% in the last 60 days. The short-term average price target of brokerage firms for the stock represents an increase of 13.5% from the average target price of $45.80. The brokerage target price is currently in the range of $36-$55.
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