Chicago, IL – January 23, 2024 – Zacks Equity Research shares Pinterest PINS as the Bull of the Day and First Majestic Silver AG as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ford F, Volvo VLVLY and Bridgestone Corp. BRDCY.
Here is a synopsis of all five stocks:
Bull of the Day:
Zacks Rank #1 (Strong Buy) stock Pinterest is a social media platform that allows users to discover and save ideas for various interests and projects.The Pinterest platform revolves around visual discovery and bookmarking, and users can create personalized collections of images and videos known as "pins" on themed boards. Pins range from recipes and fashion ideas to travel destinations and DIY projects.
Users often market their items on Pinterest and sell them through DIY-focused e-commerce website Etsy.Pinterest is designed to inspire users by allowing them to discover and save content that aligns with their interests. It serves as a visual search engine, helping people find ideas and inspiration for various aspects of their lives, making it a unique platform for creative exploration and idea sharing.
US equities are in the middle of a robust bull market. In my experience, bull markets favor growth stocks as momentum investors climb aboard, speculators are willing to take on more risk, higher multiples are favored, and investors become hyper-focused on innovation and growth opportunities rather than value and stability. With Zacks Consensus Estimates anticipating year-over-year earnings growth of more than 60% over the next three quarters, PINS fits the bill of a classic quality growth stock.
Few investors probably realize that Pinterest is one of the most popular social media platforms in the world. As of last year, Pinterest ranks as the 14th largest social media platform in the world and beats out other powerhouses such as Redditt in terms of global active users.
Furthermore, data from Black Swan shows that trends on Pinterest take off 20% faster in the first six months versus trends on other platforms, and those trends tend to sustain themselves 21% longer than other online trends. This begs the question, "If Pinterest is so popular, why has the stock been flat since its IPO in 2019?"
The answer to that question is lack of monetization. Though Pinterest garners a lot of traffic, the company has had difficulty monetizing the traffic – failing to meet the most critical demand of investors. However, on April 27th, 2023, Pinterest posted, "Today we're announcing that we're opening up third-party ad demand on Pinterest. As user engagement with shoppable content on Pinterest continues to grow, we're pleased to have selected Amazon as our first partner for third-party ads."
Since the announcement, PINS is up more than 30% - proof that the partnership is a game-changer for the stock.
We are in the infancy of what I call "The AI Revolution." Social media firms like Pinterest will benefit dramatically from the rollout of AI. By incorporating sophisticated AI models to enhance relevancy and personalization, AI will likely bring long-term benefits to the company.
With its unique focus on visual discovery and bookmarking, Zacks Rank #1 (Strong Buy) stock Pinterest stands out. The recent partnership with Amazon to open up third-party ad demand has been a game changer, and the addition of AI will further drive growth.
Bear of the Day:
Zacks Rank #5 (Strong Sell) stock First Majestic Silver is a Canadian-based mining company focused on exploring, developing, and producing silver and other precious metals. The company operates predominately in Mexico and owns several silver mines, including the San Dimas, Santa Elena, and La Encantada silver mines. First Majestic Silver is known for its focus on silver production, and the company plays an important role in the global silver mining industry. The company's operations involve extracting and processing silver ore to produce silver bullion, which contributes to meeting the demand for silver in various industrial and investment applications.
In 2022, inflation hit 40-year highs. However, since the headline-grabbing number was released in 2022, the U.S. Federal Reserve has gone on an interest rate hiking crusade and has broken the back of inflation. According to the Consumer Price Index (CPI), the inflation rate has slowed from near-double-digits to a little more than 3% annually. In addition, rent prices (an important proxy of inflation) dropped by a robust 8.8% in the most recent quarter – another sign inflation is moving in the right direction.
Where does silver come in? Silver miner stocks may underperform in a deflationary environment because investors often see the commodity as a hedge against inflation. Furthermore, deflationary pressures may lower commodity prices overall, affecting the profitability of silver mining operations.
The old Wall Street adage says,"The trend is your friend." Unfortunately for AG investors,the stock has been trendless for years and has exhibited relative weakness over the past three years. AG is down a painful 65% over the past three years, while the S&P 500 Index is up 24.7%. In other words, recent history tells us that investors are achieving higher returns with less risk by simply investing in a basket of diverse industries.
Years of proprietary research at Zacks tells us that earnings estimates are one of the best ways to predict future stock prices. In the past 90 days, Wall Street has revised AG consensus estimates lower. To make matters worse, AG has a poor EPS surprise track record – the company has missed Zacks Consensus Estimates in 10 of the past 11 quarters (the opposite of what investors want to see.)
A deflationary environment poses a headwind for silver miner stocks such as Zacks #5 (Strong Sell) stock First Majestic Silver. With a recent history of relative weakness, choppy price action, and a bearish sentiment on Wall Street, AG investors may need to carefully assess the risks and consider the impact of deflationary pressures on the profitability of silver mining operations.
Ford will cut one of the two production shifts at its Rouge Electric Vehicle Center in Michigan that builds the all-electric F-150 Lightning. The company intends to match customer demand by lowering production. The announcement came amid slower-than-expected customer demand for electric vehicles ("EVs").
The U.S. legacy automaker has been manufacturing the F-150 Lightning since April 2022. In 2023, the company sold 24,000 F-150 Lightning units. This represented a small fraction of Ford's overall F-series pickup sales, which exceeded 750,000 units.
Sales of F-150 Lightning increased 55% year over year in 2023. While the company expects further growth in the model's sales this year, reportedly, it is not likely to reach the 150,000-production rate targeted during the plant's upgrade last year.
Although the F-150 Lightning is eligible for $7,500 in federal EV tax credits, the price of the vehicle is still higher than the $34,000 base price of the gas-powered truck. Ford has changed the price of Lightning several times since 2022.
The decrease in production of the F-150 Lightning will impact 1,400 workers. Half of these workers will be transferred to the Michigan Assembly Plant, where Ford will increase the production of gasoline-powered Ford Bronco and Ranger models. Other workers will be shifted to nearby plants or are expected to avail of the "Special Retirement Incentive Program" as per the 2023 Ford-United Auto Workers agreement.
Last year, Bronco and Ranger sales went down 9.7% and 43.3%, respectively. The factory that manufactures both vehicles was affected by a six-week United Automobile Workers strike. The company will add a third shift to its Michigan Assembly Plant this summer to increase the production of Bronco and Ranger. It will add 900 jobs to this plant.
F currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the auto space are Volvo and Bridgestone Corp., which both sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for VLVLY's 2023 sales and earnings suggests year-over-year growth of 4.2% and 73.1%, respectively. The EPS estimates for 2023 and 2024 have improved by 4 cents and 3 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for BRDCY's 2023 earnings implies year-over-year growth of 5.3%. The EPS estimate for 2024 has moved up by 8 cents in the past 60 days.
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Bridgestone Corp. (BRDCY) : Free Stock Analysis Report
First Majestic Silver Corp. (AG) : Free Stock Analysis Report
AB Volvo (VLVLY) : Free Stock Analysis Report
Pinterest, Inc. (PINS) : Free Stock Analysis Report
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