Monday, September 16, 2024

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Bank of America Corp. (BAC), Advanced Micro Devices, Inc. (AMD) and Linde plc (LIN), as well as two micro-cap stocks Comstock Holding Companies, Inc. (CHCI) and Kingsway Financial Services Inc. (KFS). The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.

These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Bank of America’s shares have outperformed the Zacks Banks - Major Regional industry over the past six months (+8.7% vs. +7.5%). The company’s net interest income (NII) will be positively impacted by the current high-rate regime and also rate cuts, however high funding costs are a concern.

The Zacks analyst projects NII to witness a CAGR of 1.9% by 2026. Its plans to open financial centers in new and existing markets and improve digital capabilities. These will support the top line. We project total revenues to grow 2.9% in 2024.

While the capital markets activity is showing signs of revival, the challenging macroeconomic environment might weigh on the investment banking (IB) business. Thus, fee income growth will likely be muted. We project fee income to rise in 2024 and decline in 2025. Due to continued investments in franchise, operating costs will remain high. We expect expenses to rise 1% in 2024.

(You can read the full research report on Bank of America here >>>)

Shares of AMD have gained +3.3% over the year-to-date period against the Zacks Electronics - Semiconductors industry’s gain of +26.4%. The company is benefiting from portfolio strength and an expanding partner base. It expects third-quarter 2024 revenues to grow 15% sequentially and 16% year over year driven by strong growth in the data center and the client segment.

Exiting second-quarter 2024, AMD had more than 900 public cloud instances available, with Netflix and Uber selecting fourth-gen EPYC public cloud instances. In the data center AI business, MI300 quarterly revenues exceeded $1 billion for the first time.

The momentum is expected to continue in the rest of 2024. Enterprise and Cloud AI customer pipeline remains robust. AMD and its partners, including Microsoft, Oracle, DELL, HPE, Lenovo, and Supermicro, have instinct platforms in production. However, weakness in the embedded and gaming business is a headwind.

(You can read the full research report on AMD here >>>)

Linde’s shares have outperformed the Zacks Chemical - Specialty industry over the year-to-date period (+15.2% vs. -16.4%). The company is a global leader in industrial gas manufacturing, supplying a wide range of essential gases to industries such as energy, steel, healthcare, manufacturing and electronics.

The firm secures long-term contracts with key on-site clients featuring minimum purchase agreements, helping to stabilize earnings during economic downturns. With a track record of raising dividends for 31 consecutive years, Linde remains committed to rewarding shareholders, supported by its robust business model.

However, increasing competition for new projects poses challenges to the company's return on investment. Additionally, the volatility of energy prices, particularly for natural gas and diesel fuel, presents a significant concern for profitability. Increasing regulatory burden may negatively impact the industrial gas producer’s overall financial health.

(You can read the full research report on Linde here >>>)

Shares of Comstock have outperformed the Zacks Building Products - Home Builders industry over the year-to-date period (+87.5% vs. +28.7%). This microcap company with market capitalization of $81.95 million recorded strong revenue growth of 11% year over year, reaching $21.4 million in the first half of 2024. This growth is driven by high demand for its premium, transit-oriented properties like The Hartford and Reston Metro Plaza, with fully leased spaces attracting high-profile tenants such as Google, Rolls-Royce, and GuidePoint Security.

The company’s focus on urban, commuter-friendly developments positions it well to capture long-term growth in the Washington D.C. market. Comstock's asset-light, debt-free model, combined with access to a $10 million credit facility, provides ample financial flexibility for future developments. Its diversified tenant base and strong occupancy rates reduce vacancy risk.

However, the company faces concentration risk with heavy reliance on key developments. A structural shift toward remote work also poses challenges to its office leasing performance.

(You can read the full research report on Comstock here >>>)

Kingsway Financial Services’ shares have underperformed the Zacks Insurance - Property and Casualty industry over the year-to-date period (-7.4% vs. +26.3%). This microcap company with market capitalization of $216.37 million recently bought Systems Products International, Inc. ("SPI") and Digital Diagnostics Imaging, Inc. ("DDI") which boosted adjusted EBITDA to a run-rate of $16 million-$17 million.

Kingsway Financial Services targets two to three acquisitions annually, each expected to add $1 million-$3 million in EBITDA. The Extended Warranty segment (66% of revenue) provides high-margin, recurring income and has expanded beyond auto warranties to include heating, ventilation, air conditioning (HVAC) and plumbing. Its $626 million in net operating loss carryforwards (NOLs) provide tax advantages and enhance cash flow for reinvestment.

However, debt levels rose to $37.7 million, posing risks. Limited cash flow, sluggish revenue growth and execution challenges in acquisitions add pressure.

(You can read the full research report on Kingsway Financial Services here >>>)

Other noteworthy reports we are featuring today include IBM Corp. (IBM), Eaton Corp. plc (ETN) and Deere & Co. (DE).

Mark Vickery
Senior Editor

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>