3 Model Zacks Buys

This story originally appeared on Zacks

Regardless of what goal you want to achieve in life, it is always helpful to look for a model of success to emulate. It could be a person who achieved the same results or a method that has proven successful in the past.
When it comes to building a better portfolio, we have a great tool for you that can serve as a blueprint for higher returns in the future. In fact, that’s what we call a screen.
the Zacks Strong Buys & Buy display. You will find Zacks Rank # 1 (Strong Buys) and Zacks Rank # 2 (Buys) that are in the top 50% of the Zacks Industry Rankings and have solid Zacks Style Scores. All the building blocks for higher yields.
It’s a great place to start on your journey to greater profitability. Here are three names that recently appeared on the screen that are worth checking out:
Go ahead and try connecting a smartphone to the handlebar of your dirt bike. The average iPhone or Android is too responsive for active and a bit insane effort like motocross. And let’s not start with diving!
These are activities that require some specialized equipment, such as the GoPro HERO 10 Black (GPRO). It’s the company’s new flagship camera using the GP2 processor, which captures 5.3K video at 60 frames per second, 4K video at 120 frames per second, and 2.7K video at 240 frames per second. Eat your heart Apple!
The HERO 10 Black is one of several reasons why GPRO reported strong third quarter performance in early November. In addition to the launch of the new product, the company also attributed its impressive results to strong demand and good management of its supply chain and channel inventory.
The company earned 34 cents a share in its third quarter, beating the Zacks consensus estimate by a powerful 70%. Revenue of $ 316.7 million was up nearly 13% year-over-year and easily dwarfed the Zacks consensus estimate by roughly 8.2%.
Other highlights include subscription revenue that soared 143% and subscriber count increased 168%.
The GoPro lifestyle is about packing something and going on an adventure. This wanderlust was popular during the worst of the pandemic and will continue to be so as things return to normal. So analysts expect more success in the future.
The Zacks Consensus Estimate for this year is now 84 cents, representing a 12% increase over the past 30 days. The next year it rose to 95 cents, marking an 8% gain in one month and suggesting a 13% year-on-year improvement.
GPRO shares were up nearly 30% in 2021. As part of the audio and video production space, it is in the top 40% of Zacks’ industry range.
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Guess ?, Inc. GES
After six positive surprises in a row (during the worst of the pandemic) and with earnings estimates on the rise; You can see why the Guess?, Inc. (GES) Basic Garment believes it has reached a “tipping point”. And we’re talking about a positive tipping point that suggests more gains are on the horizon as life returns to normal and people start to worry about their appearance again.
As part of the textile-apparel space, GES is in the top 16% of Zacks’ industry rankings. Its five reportable segments are Europe, America Retail, Asia, America Wholesale, and Licensing. As of October 30, 2021, it operated approximately 1,052 retail stores.
GES has seen strong momentum for its brand around the world, which was shown in its fiscal third quarter report late last month. Earnings per share of 62 cents beat the Zacks Consensus Estimate by nearly 35%, bringing the average surprise over the past four quarters to 97%!
Revenue of $ 643.1 million increased 13% year-over-year and 4% more than in the days leading up to the pandemic in fiscal third quarter 2020. Strong results from wholesale sales in Europe, retail in America and licensing drove this performance.
In addition, the operating margin was 10% thanks to the strong expansion of the gross margin.
GES announced a five-year strategic plan in December 2019 with priorities including brand relevance; customer-centric; Global footprint; product excellence; and functional capabilities. In the meantime, their branding strategy involves improving product quality, visual merchandising, and enhancing the customer’s shopping experience in stores and online.
GES is still not comfortable offering detailed guidance for the full year, except that revenue is expected to fall in the low single digits compared to fiscal 2020. Additionally, the operating margin is expected to double to 11% by the current year from fiscal year 2020.
Analysts liked what they saw in the quarter and raised earnings estimates for this year (ending January 2022) by 8.8% for the past 30 days to $ 2.97. Expectations for next year (ending January 2023) rose 5.8% at the time to $ 3.28, suggesting a very encouraging year-over-year profit improvement of 10.4%.
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Williams-Sonoma WSM
Hopefully life will be near normal sometime in the next year, but that doesn’t mean our homes will start to look like a bedroom during finals week. Once you spend $ 500 on some silverware, it’s not like you’re getting plastic knives and forks ever again.
So while Williams-Sonoma (WSM) has put together 16 consecutive quarters of positive surprises (spanning the entire pandemic); the company continues to see momentum strong enough to raise its full annual outlook … and analysts followed suit.
WSM is a multi-channel specialty retailer of premium home products. The company’s five operating segments include Pottery Barn (34.8% of fiscal 2020 total revenue); Williams-Sonoma (23.5%); West Elm (22.3%); Pottery Barn Kids and Teen (14.8%) and Others (4.5%). As part of the retail space: home furnishings, WSM is in the top 13% of Zacks’ industrial range, while stocks have soared 82% in 2021.
The third fiscal quarter posted earnings per share of $ 3.32, which beat the Zacks consensus estimate by nearly 7% and brought the four-quarter average surprise to more than 27%. Revenues of $ 2.05 billion were up 16% year-over-year and exceeded our expectations by nearly 3%. E-commerce accounted for 67% of the company’s total revenue, as it enjoyed strong growth across all brands.
The brand’s comparable revenue growth reached 16.9%, driven by its distinctive market positioning and successful execution of long-term growth strategies. These positive attributes convinced WSM to raise its outlook for the full year.
Income growth of 22% to 23% is now expected, compared to the previous outlook in the upper teens to lower twenties. Additionally, a non-GAAP operating margin is now expected between 16.9% and 17.1%, instead of just 16% and 17%.
The Zacks Consensus Estimate for this year (ending January 2022) is up to $ 14.21, which is up 4.7% in the past 30 days. The year ending January 2023 is just $ 13.89 so far, but has advanced 7% in the last month with plenty of time to keep improving.
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