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Top Stock Reports for Berkshire Hathaway, Colgate & CME Group

Mark Vickery
Top Stock Reports for Berkshire Hathaway, Colgate & CME Group

Tuesday, June 5, 2018

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Berkshire Hathaway (BRK.B), Colgate (CL) and CME Group (CME). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Buy-ranked Berkshire Hathaway’s shares have gained +14.9% in the last year, outperforming the Zacks Property and Casualty Insurance industry which increased +11.3% during the same period. The Zacks analyst thinks Berkshire’s inorganic growth story remains impressive with strategic acquisitions. A strong cash position allows it to make earnings-accretive bolt-on acquisitions.

Demand for utilities is expected to rise in the future and drive earnings growth. Continued insurance business growth also fuels increase in float. A sturdy capital level further adds an impetus to the company. The insurance business generates maximum return on equity but its exposure to catastrophe loss remains a concern.

Huge capital expenses due to railroad operations have also emerged as headwinds. Capital expenditures are estimated at $10 billion in 2018. Nonetheless, the stock has witnessed its 2018 and 2019 estimates move up in the last 30 days.

(You can read the full research report on Berkshire Hathaway here >>>).

Shares of Colgate have lost -10% over the last three months, underperforming the Zacks Consumer Staples sector, which has declined -8.1% over the same period. Colgate has been popular with investors for its meet or beat earnings track record.

Continuing with this trend, the company delivered an earnings beat in first-quarter 2018, after three consecutive quarters of in line earnings. Results continue to be driven by sales growth and significant market share gains. Going forward, the company remains on track with brand building and productivity maximization initiatives. Consequently, it provided a robust outlook for 2018.

Further, the company is encouraged by the progress on Global Growth and Efficiency Program along with additional savings anticipated from the recent expansion of the program. However, the company’s margins continue to be strained by higher raw material and packaging costs. Moreover, Colgate expects the backdrop to remain challenging in 2018 due to uncertain global markets and slowing category growth worldwide.

(You can read the full research report on Colgate here >>>).

CME Group’s shares have outperformed the Zacks Securities and Exchanges industry in the last six months, gaining +11.5% vs. +6%. The Zacks analyst thinks the company remains well-positioned for growth on a strong market position with diverse derivative product lines.

Efforts to expand and cross sell its core exchange-traded business via new product initiatives and global reach also support growth. It intends to exit its credit default swap clearing business by mid-2018 and focus on over-the-counter clearing services on interest rate swaps as well as foreign exchange. This will free up $650 million as clearing member capital.

Also, the buyout of Nex Group will help CME generate $200 million in run-rate cost synergies annually by the end of 2021. However, exposure to interest rate volatility and limited credit availability might hamper liquidity.

(You can read the full research report on CME Group here >>>).

Other noteworthy reports we are featuring today include Tesla (TSLA), PPL Corporation (PPL) and lululemon (LULU).

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Mark Vickery

Senior Editor

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>

Today's Must Read

Berkshire (BRK.B) Set to Gain from Solid Insurance Business

Colgate's (CL) Restructuring Plan Likely to Boost Margins

Derivative Product Lines Aid CME Group (CME), High Costs Ail

Featured Reports

Emergent's (EBS) BioThrax To Drive Growth Amid Competition

Per the Zacks analyst, while Emergent's follow-on contract with the CDC and deals with the BARDA for BioThrax and NuThrax look good, the company is highly dependent on BioThrax for growth.

Puma Biotech's (PBYI) Breast Cancer Drug Sales Rise Steadily

Sales of Puma's marketed drug, Nerlynx for breast cancer in the United States have improved steadily since launch in July 2017.

Investments Aids Spirit AeroSystems (SPR), Competition Hurts

Per the Zacks analyst, the company invests in technology and automation to reduce costs and meet rising production rates on many programs.

Altice (ATUS) Fiber Network Plans Marred by Programing Costs

Per the Zacks analyst, Altice remains on track to build a FTTH network to capitalize on associated revenue-growth opportunities, although continued high programming costs remain perennial concerns.

Increasing Commodity Costs Continue to Hurt EnerSys (ENS)

Per the Zacks analyst, EnerSys' steady revenue growth and operational efficiencies are being dampened by a steep rise in commodity costs which is hurting the bottom line.

New Programs to Drive American Public's (APEI) Enrollment

Per the Zacks analyst, American Public Education will continue to improve enrollment trends by strengthening its brand and adding new programs.

Strategy for 2020 to Augment Lululemon's (LULU) Top-Line

Per the Zacks analyst, Lululemon's top-line is gaining from its 2020 strategy.

New Upgrades

Ciena (CIEN) Benefits From Solid Order Flows and Bookings

Per the Zacks analyst, rise in order flow and total bookings with continued growth in Asia Pacific service providers as well as global webscale customers will continue to boost Ciena's top-line.

Growth in Energy Storage Deployments to Aid Tesla (TSLA)

Per the Zacks analyst, rise in deliveries of powerpacks will help Tesla's Energy & Storage unit to drive sales and also attain its aim to triple energy storage deployments in 2018.

ResMed (RMD) Gains Ground on Recent Reimbursement Approvals

The Zacks analyst is bullish on ResMed's receipt of French reimbursement nod for mandibular repositioning devices. ResMed expects South Korea to start reimbursing treatment for sleep apnea soon.

New Downgrades

High Power Prices, Input Costs Ail Century Aluminum (CENX)

Per the Zacks analyst, elevated costs of certain key raw materials including alumina will weigh on Century Aluminum's margins. High prices for power at its Mt. Holly smelter is another concern.

High Debt Burden & Pricing Pressure to Hurt Broadcom (AVGO)

Per the Zacks analyst, Broadcom's leveraged balance sheet and customer concentration continue to be headwinds. Also, stiff competition, integration risks and pricing pressure adds to its woes.

Rising Debt Levels, Regulation Ail PPL Corporation (PPL)

The Zacks analyst believes PPL Corporation's prospects could be adversely impacted by its high debt levels amid rising interest rates and stringent regulation of emissions.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
PPL Corporation (PPL) : Free Stock Analysis Report
lululemon athletica inc. (LULU) : Free Stock Analysis Report
CME Group Inc. (CME) : Free Stock Analysis Report
Colgate-Palmolive Company (CL) : Free Stock Analysis Report
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
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