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SOURCE Zacks Investment Research, Inc.
CHICAGO, July 7, 2014 /PRNewswire/ -- Zacks Equity Research highlights Intel Corporation (Nasdaq:INTC-Free Report) as the Bull of the Day and Vera Bradley (Nasdaq:VRA-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Fox Factory Holding Corp (Nasdaq:FOXF-Free Report), Cooper Tire & Rubber Co. (NYSE:CTB-Free Report) and Magna International Inc. (NYSE:MGA-Free Report).
Here is a synopsis of all five stocks:
Intel's stock has been surging this year thanks to the recovering PC market and analysts still remain optimistic. Rising estimates sent the stock to Zacks Rank # 1 (Strong Buy) on July 1.
About the Company
Based in Santa Clara, California, Intel Corporation (Nasdaq:INTC-Free Report) is one of the leading producers of microprocessors in the world. The company supplies microprocessors, motherboards, and system building blocks that are integral to computers, servers, and networking and communications products.
The company has been through hard times of late as consumer preference shifted from personal computers to tablets and smartphones.
Intel reported first-quarter earnings of $0.38 per share, a penny above the Zacks Consensus Estimate of $0.37 per share. Slightly better-than-expected gross profit margin drove the surprise.
PC client platform unit volume as well as Mobile unit volume were up year-over-year, while desktop units were flat.
Data Center revenue increased 11% year-over-year while cloud, networking and storage were all up more than 20%. The new "Internet of Things" Group, surged 32% year-over-year, thanks to strong demand in in-vehicle infotainment and retail.
On June 12, INTC raised its guidance for the second quarter and full-year driven mostly by stronger than expected demand for business PCs. The company now expects Q2 revenue to be $13.7 billion, plus or minus $300 million, better than the previous guidance range of $13.0 billion, plus or minus $500 million and gross margin range to 64%, plus or minus a couple percentage points.
Vera Bradley (Nasdaq:VRA-Free Report) is a designer, producer, marketer and retailer of stylish and functional accessories, including handbags,travel and leisure items for women. It is well known for its stylish designs with distinctive and colorful fabrics and trims.
Founded over 30 years ago by Patricia R. Miller and Barbara Bradley, the company is now headquartered in Fort Wayne, Indiana. It started trading publicly on October 21, 2010. The company sells its products directly as well as through independent retailers and third party e-commerce sites.
On June 5, Vera Bradley announced its financial results for its fiscal first quarter ended May 3, 2014. Net revenues for the quarter were $113.5 million down from $123.0 million in the prior year quarter. Net income came in at $6.6 million, or $0.16 per share, compared to net income of $9.2 million, or $0.23 per share, year ago quarter.
According to the management "we continue to face a difficult environment, one that is proving much more challenging than we anticipated just two short months ago".
"Direct segment revenues are weaker than we expected," and "sales from existing customers have been relatively stable, but our traditional patterns and products simply are not attracting enough new customers to our brand, and overall traffic is down substantially".
"Until we can make meaningful changes to our product offering and marketing initiatives, we don't expect these sales trends to substantially improve".
The company also lowered the guidance for the current quarter and the year. For the second quarter of fiscal 2015, they expect net revenues to be in the range of $113 million to $120 million compared to prior year second quarter revenues of $125.4 million. They expect gross margin rate to range from 53.5% to 54.0% down from 57.2%.
3 Auto Stocks Riding High
U.S. auto sales remained on the growth trajectory in Jun 2014, despite the anticipation of a decline. The increased sales in the month contributed to a 4% year-over-year uptick in U.S. light vehicle sales in the first half of 2014.
Sales on a seasonally adjusted annualized rate (SAAR) basis also rose to 17 million in Jun 2014 from the year-ago level of 15.9 million units. This is the first time that SAAR reached 17 million after Jul 2006. Moreover, SAAR has remained above the 16 million mark in the last 4 months.
Both retail and fleet sales remained strong in the last four months, thus offsetting the weak auto sales in the first two months of 2014. Light truck sales were particularly strong and outpaced the car sales.
High incentives by automakers, low interest rates, the rising employment rate, increasing consumer confidence and recovery of the housing market were some of the factors that drove sales. Incentives in the form of discounts led to a 2.2% sequential decline in the average transaction price for light vehicles to $30,575 in June, per TrueCar.
Apart from these factors, the high average age of cars on the U.S. roads is resulting in replacement demand. Moreover, with the improvement in the general economic situation, banks are offering more car loans with lower interest rates and longer repayment periods. This is an important reason behind the increase in auto sales.
The most obvious beneficiaries of increasing automobile sales are major auto manufacturers and auto retailers. Additionally, manufacturers and suppliers of car parts are gaining from the rising sales as well.
The benefits also trickle down to the suppliers of the basic materials for these cars, such as steel, rubber, paint and so on. Moreover, with the growing demand for in-car connectivity, the Internet service providers for the major automakers also stand to gain. Further, high auto sales increase the demand for fuel, thus proving to be profitable for oil and gas companies.
3 Auto Stocks to Buy Now
Considering the robust sales figures and future expectations, it would be a good idea to invest in some stocks in the automobile sector. Here are three auto stocks that are expected to perform well, each of which also has a favorable Zacks Rank:
Headquartered in Scotts Valley, CA, Fox Factory Holding Corp (Nasdaq:FOXF-Free Report) designs and manufactures suspension products for mountain bikes, side-by-side vehicles, on-road vehicles with off-road capabilities, off-road vehicles, trucks, all-terrain vehicles, snowmobiles, specialty vehicles and applications, and motorcycles.
This Zacks Rank #1 (Strong Buy) stock offers a strong return on equity (ROE) of 36.7%. Moreover, its long-term growth rate is projected to be about 20%. Fox Factory has a forward price-to-earnings (P/E) ratio of 19.6x and price-to-book (P/B) ratio of 6.6x.
Ohio-based Cooper Tire & Rubber Co. (NYSE:CTB-Free Report) manufactures and markets tires and related products. This Zacks Rank #1 stock is the 11th largest tire company globally on the basis of sales and the 4th largest tire manufacturer in North America.
Cooper Tire is currently trading at a forward P/E ratio of 11.2x and P/B ratio of 1.8x. Its ROE is 9.4%.
Magna International Inc. (NYSE:MGA-Free Report), based in Aurora, Canada, is a leading manufacturer and supplier of automotive components. The company designs, develops and manufactures automotive systems, assemblies, modules and components, besides engineering and assembling complete vehicles, primarily for sale to original equipment manufacturers of cars and light trucks.
Magna International currently carries a Zacks Rank #2 (Buy). The company has a P/E ratio of 13.1x and P/B ratio of 2.5x. Moreover, it offers a good ROE of 17.6%. Its long-term growth rate is expected to be 11.63%.
About the Bull and Bear of the Day
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
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