The Zacks Analyst Blog Highlights Southern Copper, Allstate and Datadog
For Immediate Release
Chicago, IL – May 29, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Southern Copper SCCO, Allstate ALL and Datadog DDOG.
Here are highlights from Tuesday’s Analyst Blog:
A Big Inflation Data Dump: Global Week Ahead
Out across Thursday and Friday, in the Global Week Ahead, consumer spending & inflation data from the U.S., the Eurozone and Japan could reshape traders' views.
This fresh inflation data dump will guide both trader and investors' expectations — over the scale and pace of interest rate changes to come — in these major economies.
Securities markets brace for the T+1 shortening of trade settlements for U.S. securities.
Finally, South Africans head to the polls, in that country's most uncertain election in decades.
Next are Reuters' five world market themes, reordered for equity traders—
(1) On Friday, fresh U.S. Personal Consumption Expenditure (PCE) data lands.
Key U.S. inflation data — the personal consumption expenditures (PCE) price index — due on May 31st, will give the next hints about whether the Federal Reserve is in position to start lowering interest rates later this year.
It follows separate data earlier this month that showed monthly consumer prices increasing less than expected, which kept alive investors' hopes for rate cuts at some point this year, after hotter-than-expected inflation reports in the first quarter.
Minutes of the last meeting showed Fed officials indicated they still had faith price pressures would ease, if only slowly.
But they also said the Fed should wait several more months to ensure inflation is back on track to its 2% target before any moves.
(2) On Friday, Eurozone consumer price inflation also comes out.
The European Central Bank (ECB) has all but promised to cut its deposit rate from a record high of 4% in June.
But it's expected to keep markets guessing about how far and fast it will lower borrowing costs after that, particularly if monthly inflation data out on May 31st shows price pressures remain volatile.
Economists polled by Reuters expect Eurozone inflation to have risen to +2.5% in May year-on-year, from +2.4% in April.
Societe Generale economists predicted the ECB will cut rates in June and September but then pause to wait for the Fed to implement its first rate cut and assess inflationary risks from rising wages.
Market pricing is less clear on when that second rate cut might come.
"With wage growth running high and the Fed forced to hold off rate cuts for now, we expect the language from the ECB to remain hawkish," the SocGen team said.
(3) On Friday, Japan's Ministry of Finance (MoF) releases its FX intervention data.
Consumer prices across Japan are in the spotlight as markets try to gauge when the Bank of Japan (BOJ) could next raise rates, with Tokyo inflation data scheduled for May 31st taking center stage.
The figures come two weeks before the BOJ's next monetary policy meeting, where some are betting the central bank could deliver its second rate rise after March's historic move.
Policymakers have thus far remained reticent on how soon further hikes could come, but they face increasing pressure to do so as a fragile yen continues to cripple weak consumption.
May 31st will also see the periodic release of the Ministry of Finance's intervention data, which covers the recent rounds of suspected intervention and the BOJ's bond buying schedule, where traders will look out for cuts in the amount of central bank purchasing.
(4) Securities move to T+1 trade settlement.
A Wall Street boom confounding the old 'sell in May and go away' investment adage is adding to worries among those tasked with ensuring a smooth transition from two-day to one-day trade settlement in the United States, Canada and Mexico on May 28th for U.S. stocks, corporate and municipal bonds, and other securities.
As trading activity climbs, so too do the risks of so-called trade "fails" — when intermediaries don't have necessary instructions to settle on behalf of clients within the tighter time frame.
This might trigger a rush for dollars among non-U.S. investors who need to borrow at short notice to cover any temporary mismatch in inflows and outgoings.
Any disruption is expected to be temporary, and the move to T+1 is broadly considered a crucial step towards more liquid and efficient financial markets.
But given time zones, the move to T+1 trade settlement is effectively T+0 for many in Asia, where preparations are seen lagging other regions.
(5) On Wednesday, South Africa holds a national election.
South Africans vote in a national election on Wednesday and, for the first time since the end of apartheid 30 years ago, polls suggest the ruling African National Congress party (ANC) is at risk of losing its parliamentary majority.
If the ANC gets less than 50%, or even 45%, support it would have to seek one or more coalition partners to govern.
Get the more business friendly Democratic Alliance (DA) on board and the rand and other South African assets are likely to take it in their stride.
But any hint that it might be the far-left Marxist Economic Freedom Fighters (EFF) or recently-formed MK, led by ex-President Jacob Zuma, then that stride might suddenly become a stumble.
The drama might not end there, either.
President Cyril Ramaphosa could face an internal leadership challenge if the ANC is perceived to have performed poorly.
Zacks #1 Rank (STRONG BUY) Stocks
(1) Southern Copper : This is a $117 a share stock, found in the Mining - Non-Ferrous industry. This is a $91B market cap stock. The Zacks Value score is F. The Zacks Growth score is C. The Zacks Momentum score is B.
Phoenix, AZ-based Southern Copper Corporation engages in mining, exploring, smelting and refining copper and other minerals. The company conducts exploration activities in Argentina, Chile, Ecuador, Mexico and Peru.
Southern Copper has the largest copper reserves in the industry and operates high-quality, world-class assets in investment grade countries, such as Mexico and Peru.
Southern Copper reports results under three reportable segments.
Each consist of a group of mines with similar economic characteristics, type of products, processes and support facilities, regulatory environments as well as employee bargaining contracts.
Peruvian operations (around 36% of the company's revenues) includes the Toquepala and Cuajone mine complexes and the smelting and refining plants, industrial railroad and port facilities that service both mines. The Peruvian operations produce copper, with significant by-product production of molybdenum, silver and other materials.
Mexican Open-Pit (58% of revenues) includes La Caridad and Buenavista mine complexes, the smelting and refining plants and support facilities, which service both mines. The Mexican open pit operations produce copper, with significant by-product production of molybdenum, silver and other materials.
Mexican underground operations (6% of revenues) (IMMSA unit) includes five underground mines that produce zinc, lead, copper, silver and gold, a coal mine which produces coal and coke, and several industrial processing facilities for zinc, copper and silver.
The geographic breakdown of the company's sales is as follows – Americas (50% of revenues), Europe (32%) and Asia (18%).
Approximately 80% of the company's revenue comes from the sale of copper, 6% from molybdenum and 10% from silver and zinc.
(2) Allstate : This is a $164 a share stock, found in the Insurance – Property & Casualty industry. This is a $43B market cap stock. The Zacks Value score is B. The Zacks Growth score is B. The Zacks Momentum score is A.
Founded in 1931 and headquartered in Northbrook, IL, The Allstate Corp. is the third-largest property-casualty (P&C) insurer and the largest publicly-held personal lines carrier in the U.S.
The company also provides a range of life insurance and investment products to its diverse customer base. It provides insurance products to approximately 16 million households through more than 12,000 exclusive agencies and financial specialists in the U.S. and Canada.
As of Mar 31, 2024, total policies in force amounted to 197.3 million. The company generated $57.1 billion in revenues in 2023, in which Property and Casualty insurance premiums, and Accident and Health insurance premiums/contract charges contributed 88.7% and 3.2%, respectively. The rest was generated through other sources and investment income.
Following the closing of the National General acquisition, the company reports through the following segments: Property-Liability, Protection Services and Allstate Health and Benefits.
Property-Liability (90.9% of total revenues in 2023): It was previously Discontinued Lines and Coverages. This segment incorporates Allstate Protection and Run-off Property-Liability.
Protection Services (4.9%): It includes consumer product protection plans. Brands like Allstate Protection Plans, Allstate Dealer Services, Allstate Roadside Services, Arity and Allstate Identity Protection are included in this segment. The company provides identity protection services and data and analytic solutions utilizing automotive telematics information.
Allstate Health and Benefits (4.2%): It was previously Allstate Benefits. Accident and health results of National General are incorporated in this segment. It provides life, accident, short-term disability, critical illness, and multiple other health insurance products. The company expects the sale of Health and Benefits business to be completed by 2024.
The remaining revenues were generated from other sources.
(3) Datadog : This is a $122 a share stock, found in the Internet - Software industry. This is a $41B market-cap stock. The Zacks Value score is F. The Zacks Growth score is A. The Zacks Momentum score is B.
Datadog is a monitoring and analytics platform for developers, IT operations teams, and business users, in the cloud age.
The company's business runs around its portfolio of over 400 out-of-the-box integrations including public cloud, private cloud, on-premise hardware, databases and third-party software.
Delaware, NY-based Datadog became a public company in September 2019.
The company's Software as a Service (SaaS) platform integrates and automates Infrastructure Monitoring, Application Performance Monitoring (APM), Log Management, User Experience Monitoring, Network Performance Monitoring (NPM), Security Monitoring, Incident Management and Continuous Profiler that can be used individually or as a unified solution by customers.
The company has a single operating and reportable segment. Solid uptake of its cloud-based monitoring and analytics platform also helped Datadog strengthen its customer base.
Datadog generates revenues from the sale of subscriptions to customers using its cloud-based platform. The terms of the subscription agreements are primarily monthly or annual, with the majority of revenues coming from annual subscriptions.
Datadog reported revenues of $2.13 billion in 2023. As of Dec 31, 2023 the company has over 27,300 customers in more than 100 countries, up from about 23,200 last year.
As of Dec 31st, 2023, 42% of the Fortune 500 are Datadog customers, up from 37% last year.
As of Dec 31, 2023, the company had 5,200 employees operating across 33 countries with 40% of full-time employees located outside the United States.
The company faces significant competition from the likes of IBM, Microsoft Corporation, Cisco Systems, Dynatrace Software Inc. and Splunk, among others.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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