Chicago, IL – April 15, 2024 – Zacks Equity Research shares Coinbase Global COIN as the Bull of the Day and Yeti Holdings YETI as the Bear of the Day. In addition, Zacks Equity Research provides analysis on SM Energy Co. SM, Global Partners LP GLP and Murphy USA MUSA.
Here is a synopsis of all five stocks.
Bull of the Day:
Company Overview
Zacks Rank #1 (Strong Buy) stock Coinbase Global is the third-largest crypto exchange globally and the leading crypto exchange in the United States in terms of trading volume. Coinbase, which was founded in 2012, has one of the broadest selections of cryptocurrency listings to trade. Clients can choose to trade some ~250 cryptocurrencies, three fiat currencies, and nearly 600 crypto trading pairs.
Institutional Business is Exploding
Luckily for Coinbase, two of its biggest competitors, FTX (now defunct with former CEO Sam Bankman Fried in prison) and Binance, found themselves in major legal trouble. Meanwhile, Coinbase CEO Brian Armstrong has laser-focused his company on being compliant since inception – a rare trait for a crypto exchange in the wild west of the crypto industry.
Earlier this year, Armstrong and Coinbase’s reputation paid off when several long-awaited Bitcoin ETFs launched following years of standoff with the U.S. Securities and Exchange Commission (SEC). It wasn’t long before it became clear that the Bitcoin ETF launch was the most successful in history, far surpassing the debut in the SPDR Gold Shares ETFback in 2004. ETFshave attracted billions in inflows, gained more than 70% since their debut, and were already among the top 15 ETFs within weeks of launching.
Why is the historic Bitcoin ETF launch a bullish catalyst for COIN? Coinbase is the custodian exchange for nearly every active Bitcoin ETF. In other words, they get a piece of the casual crypto investor who prefers the ETF over Bitcoin itself, and institutional investors aiming to add exposure for clients via ETFs.
Correlation to Bitcoin
Coinbase is highly correlated to the world’s largest and most followed cryptocurrency, Bitcoin. Bitcoin has been the most consistent and best-performing asset over the past decade, and the rampant bull market is unlikely to subside for the following reasons,
Bitcoin is breaking out to fresh all-time highs for the first time in years. Each time these multi-year breakouts have occurred, Bitcoin has produced meteoric returns.
Election year seasonality: Like with equities, studying Bitcoin’s historical seasonality can pay dividends. In the past three election years, Bitcoin returns were as follows: 2012 +272.4%, 2016 +161.1%, and 2020 +302.8%.
The Upcoming Bitcoin Halving: The Bitcoin halving is an event that occurs approximately every four years, reducing the reward miners receive for validating and adding new blocks to the Bitcoin blockchain by half. Though the number of halvings in Bitcoin’s history is only three, and history is no guarantor, the stats suggest that bulls should stay the course for at least the next year. Bitcoin has delivered at least triple-digit one year after the halving, including +7,715% in 2012/13, +283% in 2016/17, and +423% in 2020/21!
Cash Cow
Coinbase has a clean balance sheet, unlike many industry peers. The company has $5.7 billion on hand, which is impressive when you consider COIN has been growing revenue at a juicy double-digit clip in recent quarters.
Coinbase also has a positive Zacks ESP (Earnings Surprise Prediction) score. Our in-house studies show that when a company has a positive ESP score and a Zacks Rank of #1 (like COIN), earnings are likely to surprise to the upside (COIN reports 5/8).
Bull Flag Reset
COIN shares are up nearly 300% over the past year, affording investors very few “clean” entry points. However, the stock is finally taking a breather and setting up in a picture-perfect bull flag pattern, offering investors who missed the first move another shot.
Bottom Line
Coinbase is the crypto exchange leader from both a retail and institutional perspective. As the stock retreats in the short term, several bullish catalysts remain, offering investors a juicy reward-to-risk zone to exploit.
Bear of the Day:
Zacks Rank #5 (Strong Sell) stock Yeti Holdings is a producer focused on high-end products temperature regulation products such as stainless-steel drinkware, ice chests, coolers, and similar accessories. The company’s products are built to endure rugged outdoor conditions and are prevalent in the fishing, hunting, and camping communities. Yeti products rose to prominence when the marketplace began to understand and appreciate how long the company’s products have been able to keep contents cold or warm.
Competition is Heating Up
From 2018 to 2021, Yeti products caught fire and led to an earnings growth spurt. Annual earnings per share (EPS) grew 221% in 2018, 18% in 2019, 76% in 2020, and 39% in 2021. However, though Yeti products are very popular with enjoy a loyal following, they can be replicated by the competition and are not 100% unique in the marketplace.
For example, Stanley is a company that sells a similar product to Yeti’s temperature-regulating drinkware. Though the company is more than a century old, Stanley’s water tumbler is trending on the social media platform TikTok. The Stanley cup (not the hockey one) was introduced nearly a decade ago but has garnered a cult-like following by ditching old marketing concepts and utilizing TikTok influencers to spread the word. Like Yeti’s product line, Stanley cups can keep drinks hot or cold for several hours.
Relative Weakness
Yeti’s souring fundamental picture is leading to weakness in the shares. Not only are YETI shares negative year-to-date, but they are also underperforming industry peers over the past six months. Clearly, YETI is a laggard, and if there is one lesson I have learned over the years, it’s that weakness tends to beget weakness on Wall Street.
Wall Street is Souring on the Stock
Recent analyst revisions are one of the best ways to predict a stock’s next move and are an integral part of our Zacks Ranking system. A whopping 10 analysts tracked by Zacks revised YETI EPS estimates lower over the past 60 days.
Bear Flag Pattern
YETI shares were slammed lower in February and have now rebounded in a slow, weak rally to the descending 50-day moving average, setting up a classic bear flag pattern.
Bottom Line
Souring fundamentals, increased competition, and relative weakness are valid reasons to avoid YETI shares.
Additional content:
3 Top-Ranked Value Stocks to Buy from the Energy Space
Despite the remarkable performance of the Oil/Energy market so far this year — up 16.6% compared with the S&P 500’s 8.2% increase — not all stocks have become overpriced. There are still plenty of opportunities available. Investors who focus on value aim to identify stocks that are currently undervalued, anticipating that others will eventually recognize their true worth, potentially leading to significant returns. After all, everyone appreciates a good bargain.
For those investors seeking stocks with reasonable valuations, SM Energy Co., Global Partners LP and Murphy USA stand out as compelling options.
In addition to their attractive valuation levels, these companies sport a Zacks Rank #1 (Strong Buy) each and demonstrate robust growth prospects, inspiring optimism among analysts.
You can seethe complete list of today’s Zacks #1 Rank stocks here.
Let’s take a closer look at each.
SM Energy Company: Denver, CO-based SM Energy Company, previously known as St. Mary Land & Exploration Company, is an independent oil and gas explorer in North America. The company’s operations are focused on the Permian Basin region and the South Texas & Gulf Coast region.
Notably, SM Energy's stock has a Value Score of B with its P/E discount being very tempting at the moment. Trading at $51.70, SM Energy’s stock has an 8.76X forward earnings multiple compared to its Zacks Oil and Gas - Exploration and Production - United States industry average of 12.32X.
Furthermore, SM Energy’s annual earnings are expected to rise 1.7% in 2024 and are forecast to jump another 7.6% in 2025 to $6.44 per share. SM Energy’s stock also trades at 2.42X forward sales, which is well below the industry average of 3.24X, with the company’s top line projected to expand 5.5% this year and slated to rise another 2.2% in 2025 to $2.6 billion.
Global Partners LP: It is a vertically integrated energy partnership focused on the distribution of gasoline, distillates, residual oil and renewable fuels, apart from owning several refined-petroleum-product terminals. Unlike most energy operators, which maintained their payout through the coronavirus-induced downturn, Global Partners continued to increase distributions.
GLP is trading at a very reasonable 11.59X forward earnings multiple. This is still an advantageous discount to the Zacks Oil and Gas - Refining & Marketing MLP industry average of 13.38X and the S&P 500’s 21.82X. Global Partners has a Value Score of A.
Global Partners is forecast to see decent growth in its current year and next, with the respective Zacks Consensus Estimate of $3.90 and $4.47 suggesting a 3.7% and 14.6% improvement in year-over-year earnings. Finally, GLP’s stock also trades at a mere 0.06X forward sales, which is well below the industry average of 0.89X
Murphy USA: It is a leading independent retailer of motor fuel and convenience merchandise in the United States. The proximity of Murphy USA’s fuel stations to Walmart supercenters helps the company leverage the strong and consistent traffic that these stores attract. MUSA’s acquisition of QuickChek Corporation — a family-owned food and beverage chain — is expected to help improve its offerings.
With a Value Score of B, Murphy USA stock trades at $412.93, 15.67X forward earnings, which is nicely beneath the S&P 500’s 21.99X despite being above its Zacks Oil and Gas - Refining & Marketing industry average of 9.58X.
Plus, Murphy USA’s EPS is forecasted to climb 3.4% this year and is expected to grow another 16.5% in 2025 to $28.07 per share. Murphy USA stock also trades at 0.4X sales with its top line expected to expand 2.2% in 2024 and 3.2% in 2025.
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