The Zacks Analyst Blog Highlights: JinkoSolar Holding, CBRE Group, Francesca's Holdings, Aspen Insurance Holdings and General Finance

For Immediate Release

Chicago, IL – January 05, 2015 – 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 JinkoSolar Holding Co., Ltd. (JKS), CBRE Group, Inc. (CBG), Francesca's Holdings Corp. (FRAN), Aspen Insurance Holdings Ltd. (AHL) and General Finance Corp. (GFN).

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Here are highlights from Monday's Analyst Blog:

5 Stock-Picking Lessons from 2015

If past mistakes are meant for future growth and progress, then the action-packed 2015 can be treated as a handbook of smart tips on how to tackle market or economic threats and forge ahead in a volatile stock market.

Any Silver Bullet for 2016?

As Jim Cramer says, "On any given day the market can be totally wacky for reasons that do not make sense. Sometimes stocks go up when they should have gone down, and sometimes entire sectors move for ridiculous reasons."

Undoubtedly, volatility is inevitable and there is no instant solution to avoid market risk.

In 2015, a tsunami of events one after another -- falling oil prices, currency devaluation in the world's second-largest economy, domestic currency appreciation, worldwide socio-political issues and Fed rate hike-related apprehension led to a doubling of the volatility index.

In consequence, some fundamental hypotheses like investment in the so-called safe haven oil and aviation industries were nullified. BRIC-related myths have dissipated, leaving investors wondering what exactly went wrong with their standard beliefs and assumptions in the investment game.

While assessment of the string of events in the past year is ongoing, there is no reason to believe that this year will be any different. Though it's difficult to hazard a guess of what's coming up next, we can at our best learn from the mistakes made in the past and sharpen our investment skills.

Key Takeaways from 2015

The sectors could be riskier than you think: While the price of Brent crude hit an 11-year low of $36.05 in December, according to The Guardian, "The global glut of oil will deepen in 2016." While the oil ministers of Qatar and Iraq are occupied in discussing the strategy of recovering oil prices, we should get out of the habit of discriminating between risky and riskless sectors.

Hence, if you are still planning for a portfolio with stocks culled from sectors traditionally known for their stability, you are headed the wrong way. What's important is to rebalance the portfolio by choosing from varied sectors.

It, of course, doesn't mean that portfolio diversification will fully hedge you from losses. Nevertheless, diversification can limit the magnitude. For example, a mixed portfolio with stocks from energy, REIT, finance and technology definitely had demonstrated more risk tolerance competence than an off-balance portfolio if we calculate its win-loss account for the year gone by.

Greenback gain is no gain; invest in ADRs: The relentless rally in the U.S. dollar, the fastest rise in the last 40 years (per a report by Citibank) and a parallel slowing down of emerging market economies in 2015, have hit U.S. manufacturers hard. With reduced overseas demand, these manufacturers have been subject to falling revenues and profitability.

In this scenario, with the U.S. dollar expected to gain in strength down the line, we expect foreign investors to be attracted further toward dollar-denominated assets that promise higher returns. In light of this, the key rationale is to choose a handful of ADRs that are presently floating handsomely in the market. These foreign companies with their domestic-based manufacturing units should reap benefits both ways – one, by giving tougher price competition to their U.S. counterparts and, two, by floating money in the appreciated U.S. market.

At present, solar power ADRs like China's JinkoSolar Holding Co., Ltd. (JKS) are doing very well. JKS sports a Zacks Rank #1 (Strong Buy).

Rate hike to continue in 2016; be careful with sector selection: Throughout 2015, investors wasted much of their energy in speculating the time and consequences of the anticipated Fed rate hike. The series of heated arguments, muddles, ifs and buts, and uncertainties surrounding Fed's indecision made them all the more bearish in terms of future investment. They feared that the U.S. economy might once again slip into another recession post rate hike.

Moreover, the Fed's clear indication of the hike being certainly not the ‘one and done' case and presuming more such hikes in 2016, investors should not fall into the same trap -- stop putting money into equity markets.

Logic says not all sectors across the economy will face the same amount of heat of this interest hike. Rather, there are sectors expected to grow further with rising rates. In fact, sectors like finance, technology and consumer discretionary have historically shown strong positive correlation to interest rates.

One such potential stock in the finance sector is CBRE Group, Inc. (CBG) holding a Zacks Rank #2. In consumer discretionary, we have Francesca's Holdings Corp. ( FRAN), a popular chain retail boutique, boasting a Zacks Rank #1.

Devaluation of yuan; value investing is ideal: The year 2015 can find a place in history solely because of China's yuan devaluation leading to a massive slump in the investment world. With the long awaited Fed rate hike in December, investors are currently worrying about further currency devaluation down the line in the emerging nations.

As a result, foreign currency-based investments should be closely watched before thronging the space in search of alternative currency exposure. At this point of time, the Warren Buffett mantra of Value Investing -- i.e. buying a stock based on its intrinsic value, which can be calculated by analyzing the company's fundamental strength -- seems to be a good idea.

Finding value stocks is definitely a challenge for investors, as valuations look stretched in almost all corners of the market after five years of bullishness. Traditional value metrics, such as, price-to-earnings (P/E) ratio are not quite adequate to unearth true value.

Here we make use of our efficient style score system. Back-tested results show that stocks with a Style Score of ‘A' or ‘B' when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) handily beat other stocks.

Aspen Insurance Holdings Ltd. (AHL) has every potential to outperform in 2016, based on its Zacks Rank #1 and value style score A.

Time is fleeting; act for the moment: For equity investors, betting on growth has always been a favorite style of investing. To a great extent, growth investors bet on the earnings potential of the companies apart from their strong fundamentals, bright management team and a resilient position in the market, to ensure that they get good returns over the longer term.

Ardent followers of this rule believe that stocks with greater earnings potential have more possibility of earning higher returns with reduction in inherent risk over an extended period. However, in the last couple of years, if one closely looks at the corporate earnings picture, the scenario has not been as rosy as it seems. The quality of earnings has steadily deteriorated. And if companies are seen to be beating on estimates it is only because analysts are getting more conservative with their predictions.

However, among the lessons learned in 2015, an important one is, nothing works forever and mastery in one single trick may falter easily. More specifically, while paying attention to growth investment, investors often tend to overlook the opportunity to earn more through momentum trading or grabbing the opportunity to win a big bet when a stock is about to move significantly in one direction on high volume based on certain catalyst.

According to a Bloomberg report, virtually nothing has worked better in 2015's thinning equity market than momentum. "One of the largest exchange-traded funds employing the tactic, the iShares MSCI USA Momentum Index Fund, lured a record $125 million in July, boosting its total by about a fifth," they said.

The Zacks Momentum new style score system indicates when the timing is best to grab a stock and take advantage of its momentum with the highest probability of success. Back-tested results show that stocks with a Style Score of ‘A' or ‘B,' when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), easily outperform other stocks. Consider General Finance Corp. (GFN), with a Zacks Rank #1 and a Momentum style score A.

Bottom Line

The structure of the U.S. equity market has evolved substantially, and it is important for market participants to adapt to this change. Among recent years, 2015 can be considered as a case study considering the medley of factors, both domestic and international, that were at play.

Volatility is almost certain and is ever changing with the altering landscape of efficient market mechanism. But when it comes to trading, what is certain is that any price reversal will come with its own correction. It's also sensible in accepting that each cataclysm that the market is going to face is bound to be followed by the collective will to fight against it. We just need to discover the appropriate trick on time.

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