The Zacks Analyst Blog Highlights: Amazon.com, Whole Foods Market, Aramark, Unilever and Service

For Immediate Release

Chicago, IL – June 28, 2017 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Amazon.com, Inc. AMZN, Whole Foods Market Inc. WFM, Aramark ARMK, Unilever, Plc UL and Service Corp. SCI.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free .

Here are highlights from Tuesday's Analyst Blog:

Consumer Staple Stocks to Buy Amid Food Industry Concerns

The food industry business has been grappling with headwinds like food deflation, stiff competition, and aggressive promotional environment of late. Traditional grocery rivals are strengthening their franchises and outside players are offering alternative outlets for food and other staples. Customers are becoming more inclined toward private label products as they are low-cost alternatives to national brands. Food deflation across major parts of the market from the last two quarters have added to the woes. Oversupply in some types of food – particularly meat, poultry and dairy – has dragged prices lower and forced grocery stores into more aggressive promotions.

Amid such a scenario, e-Commerce biggie Amazon.com, Inc. AMZN announced an all-cash $13.7 billion deal on Jun 16, to acquire the natural and organic foods supermarket chainWhole Foods Market Inc. WFM, raising pricing and competition concerns among competitors, thus washing out about $35 billion market value of the majority of the supermarkets, food producers, shopping malls and payment processors in the U.S. market.

Amazon's Move and its Impact on the Food Industry

Amazon has been making efforts to enter the grocery industry for the past few years to strengthen its foothold in offline as well as online retail space. Amazon has also been testing waters with innovations such as drive-in-grocery delivery service (AmazonFresh Pickup – order groceries online and collect them from a store nearby) and cashier-less stores (Amazon Go – the company's first brick-and mortar grocery store). It has also added online and offline features to its bookstores.

The Whole Foods deal, which is expected to conclude in the second half of this year, will give Amazon an opportunity to leverage Whole Foods' 460 stores across the U.S., U.K. and Canada along with 87,000 employees and its solid reputation. The acquisition could cater to the niche market that prefers to buy quality products at a premium price, thus adding more value to Amazon's sales volume.

Post the acquisition, Amazon might lower prices at the premium grocer by automation, headcount reduction and inventory changes. With Amazon's huge cash balance and expansion capabilities, we believe such acquisitions can change the retail landscape and ward off competitors.

The possibility of lower grocery prices with this Amazon-Whole Foods deal has given a great blow to grocery stores and supermarkets as they may experience pricing pressure and lose customers. Some investors also worry that Amazon's entry would squeeze profit margins in an industry already known for stiff competition and tight margins. These concerns have significantly hurt share prices of big grocery and supermarket chains including Kroger Co., Supervalu Inc., Costco Wholesale Corporation, Sprouts Farmers Market Inc., United Natural Foods Inc., The Wal-Mart Stores, Inc. and Target Corp. on Jun 16.

The Amazon-Whole Foods deal has also brought shares of Sysco Corp. and US Foods – two largest players in the food service distribution industry – under pressure. Since the announcement of the deal, Sysco's shares have declined 10.1%, underperforming the Zacks categorized Food-Miscellaneous/Diversified industry's 3.9% fall. It is estimated that both Sysco and US Foods will each derive at least 30% of revenues serving the independent restaurant category.

The entry of Amazon has made investors skeptical and has caused a disruption in the grocery segment, which is already grappling with headwinds like food deflation, stiff competition and aggressive promotional environment.

Consumer Staple Stocks – A Safe Haven

Amid such a scenario, you need to position yourself in stocks with the strongest chances of long-term success. The consumer staples sector is considered as the most attractive bet in times of economic turbulence. Stocks of consumer staple companies are poised to grow, as evident from the renewed consumer spending strength. Per the Zacks Earnings Trend , earnings of the consumer staple companies enlisted on the S&P 500 are expected to increase 2.7% on 1.6% revenues for second-quarter 2017 as of Jun 23.

How to Pick the Best Stocks?

Fetching higher returns amid such an investment climate is a herculean task. Just picking stocks on the basis of their price performance is not a good investment decision. One should check out the other factors before zeroing in on the profitable stocks.

With the help of our new style score system, we have identified three consumer staples stocks that have excellent prospects and are good bets in this uncertain market. Such stocks also boast a VGM score of ‘A' or ‘B'. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Our research shows that stocks with VGM Scores of ‘A' or ‘B' when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best upside potential. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today's Zacks #1 Rank stocks here .

Prominent Choices

Headquartered in Philadelphia, PA, Aramark ARMK carries a Zacks Rank #2 along with a VGM Score ‘A'. The company offers food services, facilities management, uniform and career apparel to health care institutions, universities, school districts, stadiums and businesses. The company has a long-term earnings growth rate of 12.00%, which also makes it a viable investors' choice.

Coming to the share price movement, the stock rallied 15.4% over the past six months, as against the Zacks categorized Food-Miscellaneous/Diversified industry's decline of 3.8%.

Investors can also count on London-based Unilever, Plc UL, which operates in the fast-moving consumer goods industry worldwide. It carries a Zacks Rank #2 along with a VGM Score ‘A'. It has a long-term earnings growth rate of 11.98%.

Its share price movement shows that the stock rallied 36.28% in the past six months, outperforming the Zacks categorized Soap & Cleaning Preparations industry's gain of 16.27%.

We also suggest investing in Service Corp. SCI, the largest provider of funeral and cemetery services in the world. The company carries a Zacks Rank #2 and has a VGM Score of ‘B'. The stock has a long-term earnings growth rate of 10.50%. If we look into its share price movement, we note that the stock rallied 14.84% in the past six months, outperforming the Zacks categorized Funeral Services industry, which gained only 2.52%.

Bottom Line

We believe that investing in these companies should safeguard your portfolio in the short term and yield higher returns amid food industry concerns.

Sell These Stocks. Now.

Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.

See today's Zacks ""Strong Sells"" absolutely free >>

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.

Get the full Report on AMZN - FREE

Get the full Report on WFM - FREE

Get the full Report on ARMK - FREE

Get the full Report on UL - FREE

Get the full Report on SCI - FREE

Follow us on Twitter: https://twitter.com/zacksresearch

Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

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.


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
 
Amazon.com, Inc. AMZN: Free Stock Analysis Report
 
Whole Foods Market, Inc. WFM: Free Stock Analysis Report
 
Aramark ARMK: Free Stock Analysis Report
 
Unilever PLC UL: Free Stock Analysis Report
 
Service Corporation International SCI: Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!