For Immediate Release
Chicago, IL – June 21, 2021 – Zacks Equity Research Shares of Teledyne Technologies Incorporated TDY as the Bull of the Day, Planet Fitness, Inc. PLNT as the Bear of the Day. In addition, Zacks Equity Research provides analysis on General Motors Company GM, Ford Motor Company F and Tesla, Inc. TSLA.
Here is a synopsis of all five stocks:
Bull of the Day:
Teledyne Technologies is an excellent inflation play following the sizable increase in inflationary expectations from the FOMC’s post-meeting projections. TDY’s relative buoyancy amid last week’s selloff reaffirms my confidence in this stock as a robust cyclical name to hold for the remainder of 2021. Analysts are increasingly optimistic about this stock, raising their near and long-term EPS estimates and driving TDY into a Zacks Rank #1 (Strong Buy).
Teledyne’s vast array of cutting-edge tech-driven products are utilized in critical industrial growth markets that heavily rely on its products. This allows the company to easily pass on their price increases to their end markets with little to no margin deterioration.
TDY is an under-the-radar inflation play that hasn’t gained the market traction that I believe it deserves. You can see this from both its lack of analyst coverage and relatively low daily market volume. Nevertheless, TDY is trading around its 50-day moving average (utilizing it as both a support and resistance), riding higher for the past month, heading towards my Fibonacci-derived price target of $495 (over 16% upside).
FLIR Deal Closed
Teledyne just closed an enormous synergy driving acquisition of FLIR Systems last month. These businesses have complementary product offerings in proprietary sensor technology that will provide immediate value to the combined enterprise.
TDY investors were initially wary of this acquisition when announced on the first trading day of 2021 trading because of the 40% premium they offered for FLIR shares, catalyzing an immediate 7.5% pullback. However, it only took just over a week of trading for the stock to recover as investors saw the robust value proposition in this acquisition.
FLIR continues to get awarded lucrative government contracts that drive revenue growth and visibility. The business keeps adding to its backlog of government contracts that range from the Pentagon to the French Defense Procurement Agency. Last month the company announced in a press release that it had “received more than $70 million in new orders for its advanced ground robots from the U.S. Armed Services.”
Teledyne is a high-growth industrial business categorized under aerospace & defense equipment in the Zacks database, but the company is so much more than that. According to the company website, Teledyne’s end markets include “aerospace and defense, factory automation, air & water quality environmental monitoring, electronics design and development, oceanographic research, deepwater oil and gas exploration and production, medical imaging, and pharmaceutical research.” Industries that are all at the forefront of this 4th Industrial Revolution, which is just commencing.
The company has demonstrated excellent operational management with robust growth that is just beginning to accelerate. Teledyne is expected to illustrate top and bottom-line growth of 44.2% & 21.4% this year followed by 23.6% & 18.6% in 2022, respectively. The margin expansion that this enterprise has been able to illustrate continues to impress analysts, with this past quarter demonstrating record operational margin.
All 4 of the covering sell-side analysts on the ZRS platform call it a buy today, and I couldn’t agree more. In addition, TDY’s most recent sell-side company report illustrated an extremely bullish call from a very reputable firm of $520 a share (over 22% upside).
Every quarter it seems analysts are raising their price targets on persistent earnings beats. Now that military powerhouse FLIR Systems is in the business mix, I expect the company will continue to impress.
Bear of the Day:
Summer is finally here, and the world is ready to show off that beach bod that they have been working so hard for, but unfortunately, that hard work isn’t being reaped by the discount gym chain Planet Fitness. After a series of 5 consecutive quarterly misses, sell-side analysts are beginning to lose faith in PLNT, and at its excessively rich valuation multiple, I wouldn’t touch the stock.
Analysts are getting increasingly uninspired by this “Judgement Free Zone” gym’s narrative and have been dropping their EPS estimates for the next couple of years, pulling this stock down to a Zacks Rank #5 (Strong Sell).
Planet Fitness had been one of the fastest-growing gyms in the pre-pandemic US economy, but like most gyms, it couldn’t retain its peak pre-COVID customer base of 15.5 million, which it had reach by the end of Q1 2020. As a result, in only one year of operation, this budget gym has lost 1.4 million members (having 14.1 million members as of March 31, 2021) and has been struggling to get consumers back in its gyms, despite opening up over 100 new locations (5% increase in gym locations, and 9% decline in memberships). This business may be over-extending itself.
We all know Planet Fitness as the inexpensive purple gym meant for individuals who don’t take working out too seriously. One of its unique gimmicks is its “Lunk Alarm” that goes off and draws attention to anyone that is lifting “too hard,” aka grunting or dropping weights. But, unfortunately, the pandemic has changed consumers’ perspectives on the $10 a month health club membership.
It would appear that this pandemic and the global lockdowns have changed society’s perception of living a “healthy lifestyle,” and being a member of a gym doesn’t seem to be at the top of that list. Being in an enclosed, humid, sweaty gym where everyone is touching everything is not the most attractive service offering for the new normal, especially when your target consumer is a ‘casual exerciser’ to begin with.
Individuals have found ways to stay healthy and active that don’t involve a gym membership, whether it be walking/jogging outdoors, home workouts, or other activities. Whatever it is, it’s evident from Planet Fitness’s latest quarterly report that these casual exercisers aren’t rushing to sign up.
Planet Fitness has been experiencing significant topline depreciation over the past 5 quarters, which was to be expected from any health club amid the economic lockdowns. Still, the company doesn’t seem to be making the material strides back to robust profitability despite its shares hitting fresh all-time highs at the end of February.
Its balance sheet has been experiencing a slightly concerning trend of growing liabilities and a negative shareholders deficit which continues to swell. Planet Fitness has over $580 in debt due by the end of next year, which it will likely have to roll over due to its lack of free cash flows. The company has $504 million in cash & equivalents. However, this is still insufficient to cover its debt maturities for the next year and a half, especially if cash-flows don’t regain their pre-pandemic growth trend soon.
The Charts & Valuations
PLNT is experiencing some recent downward momentum, dipping below its 200-day moving average last, which appears to be a new resistance level for the stock, a bearish indicator.
PLNT shares have been pushed way too far amid this recovery rotation as reopening euphoria has investors and traders buying up every perceived beneficiary as the markets bet on the world going back to normal. As a result, the stock is currently trading at a forward P/E of more than 55x and a double-digit forward price to sales, far above its pre-pandemic levels. These seem like almost indisputably stretched valuation multiples for a business the persistently fails to meet analyst expectations. PLNT has further to fall before they reach an equitable level.
3 Electric Vehicle Stocks Poised to Gain Over the Long Term
The electric vehicle (EV) boom is widely expected to continue in 2021 and beyond, especially after President Biden committed to spend a staggering $174 billion to lift the EV market. Several state governments have also provided subsidies for EVs. This is because EVs are environment-friendly, responsible for lesser noise and have a low maintenance cost.
Several countries this year have pledged to reduce carbon emissions. Companies like Amazon and salesforce.com are also aiming to be carbon-neutral soon. Needless to say, companies can easily lower emissions by electrifying their fleet. FedEx, in particular, mentioned that electrifying its fleet will largely help the company reach carbon neutrality by 2040.
Thus, with several companies aiming to reach carbon neutrality in the near term, the demand for EVs is soaring at the moment. In fact, notable traditional carmakers have now joined the EV bandwagon. For instance, players like General Motors, Ford Motor and Volkswagen have now started to venture into the EV market.
Ford’s F-150 EV is the latest to have an impact on the auto industry. Similarly, General Motors and Volkswagen are set to launch new battery-electric vehicles in the near future. By the way, EV battery sales increased handsomely in the first four months of the year, buoying companies like Tesla and Nikola. Apart from this, wireless charging mechanisms coupled with turbo-charges for EVs are having an overall positive impact on the EV market.
In fact, the EV market is now well-poised to expand, and as per Facts and Factors, citing a globenewswire article, the global EV market is projected to touch $700 billion by 2026, at a CAGR of 22% from 2021 to 2026. Additionally, another globenewswire article stated that Market Research Future expects the global EV market to see a CAGR of 21.6% from 2021 to touch $893.5 billion by 2027.
What’s more, the Boston Consulting Group already projected that EVs will more or less account for a third of the global auto industry by 2025, and more than 50% by 2030, easily surpassing sales of internal combustion engine (ICE) companies.
3 Electric Vehicle Stocks That Could Keep Gaining
From rising concerns about CO2 emission, encouraging government policies to considerable investments by EV manufacturers, the global EV market is well-positioned to expand in the near future. An increase in initiatives to provide charging facilities in many areas and active involvement by original equipment manufacturers (OEM) in the EV space should contribute toward its growth trends. We have, thus, highlighted three solid EV stocks that are well-positioned to gain from this growing industry.
Tesla has played a pivotal role in transforming the EV market, the same way Amazon did to the retail landscape. By selling EV cars, Tesla is actually compelling the world to rely more on sustainable energy. In the United States, Tesla is one of the dominant players in the EV space and has made sure that EVs are now available for all and not just the affluent.
Tesla currently has a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its current-year earnings has moved up 0.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 92.9%. For the next five-year period, shares of Tesla are expected to gain 37.5%.
General Motors is now spending billions of dollars on EV vehicles to establish itself as a dominant player in the EV market. Citing a Barron’s article, General Motors is aiming to spend $35 billion on EVs during the period 2021 to 2025. The article further noted that General Motors aims to sell 1 million EVs each year by 2025. In fact, General Motors aspires to be an all-EV seller by 2035.
General Motors currently has a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its current-year earnings has moved up 7.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 11.6%. For the next five-year period, shares of General Motors are expected to gain 9.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ford, in the meantime, has also raised its spending on EVs. Citing one of the abcnews articles, Ford declared that its Lincoln luxury brand would be electric by 2030.
Ford currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings has moved up 6.3% over the past 30 days. The company’s expected earnings growth rate for the current year is 146.3%. For the next five-year period, shares of Ford are expected to gain 21.8%.
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