The Zacks Analyst Blog Highlights C.H. Robinson Worldwide, Packaging Corporation of America, Ameren, Watsco, and Vistra

For Immediate Release

Chicago, IL – May 16, 2022 – 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: C.H. Robinson Worldwide Inc. CHRW, Packaging Corporation of America PKG, Ameren Corp. AEE, Watsco Inc. WSO and Vistra Corp. VST.

Here are highlights from Friday’s Analyst Blog:

Does Wall Street Lack a Trigger to Rebound? Top 5 Safe Picks

Since the beginning of this year, Wall Street has been reeling under severe volatility, which has intensified in the past one and half months. Year to date, major indexes have corrected significantly and a long list of bellwether stocks are deep in red. Yet, U.S. stock markets are showing no signs of a recovery.

At this stage, it should be fruitful to invest in low-beta high-yielding stocks to safeguard your portfolio. A handful of these stocks are available with a favorable Zacks Rank. Five such stocks are — C.H. Robinson Worldwide Inc., Packaging Corporation of America, Ameren Corp., Watsco Inc. and Vistra Corp..

Market's Sentiment Turns Bearish

Market participants have started feeling the economic-pain of coronavirus since the beginning of 2022. U.S. stock markets had a fabulous bull run in the pandemic-ridden last two years supported by unprecedented fiscal and monetary stimulus and a near-zero interest rate regime. Once these stimuli were taken off and the Fed took a U-turn from an ultra-dovish to an ultra-hawkish stance, Wall Street started witnessing a rapid meltdown.

The biggest devastating effect of the pandemic is the complete destruction of the global supply-chain system. Excessive dependence of U.S. corporate on China for low-cost inputs has made the situation worst as China is currently under lockdown due to the resurgence of COVID-19. The lingering war between Russia and Ukraine has elevated the prices of several major commodities used as inputs for manufacturing, auto and high-tech sectors.

This supply-chain bottleneck coupled with shortage of manpower pushed up the cost of production and businesses are now shifting this extra burden to the prices of end-products. Yet, corporate America has delivered better-than-expected first-quarter 2022 earnings results buoyed by robust demand in the United States.

The Fed can not do anything to streamline the devastated supply-chain system. However, it can cool the economy by reducing aggregate demand. Therefore, the central bank initiated the rapid hiking of the Fed fund rate and termination of stimulus to squeeze a large amount of liquidity from the system.

Despite these measures, several measures of inflation are showing no sign of any meaningful abatement. Market participants are expecting the Fed to take a more harsher strategy to combat inflation. On May 12, Fed Chair Jerome Powell admitted that he can not give any guarantee for a soft landing of the economy under a higher interest rate regime.

Markets Lacking Trigger to Rebound

A large section of economists and financial experts have already warned of an imminent recession either in 2022 or 2023. These negatives have converted market's sentiment to extremely bearish.

The Dow, the S&P 500 and the Nasdaq Composite – have tumbled 14.1%, 18.4% and 29.9%, respectively, from their recent highs. By any means, these are significant corrections within 4-6 months. Markets are trying to rebound but have failed since investors are expecting more pain ahead.

As sentiments turn completely bearish, "sale on the rise" is the buzz word and not "buy on the dip". At this juncture, Wall Street needs a trigger to rebound. However, that silver line is still not visible. The first-quarter 2022 earnings session is at its last leg. Perhaps, good economic data, especially inflation data, will turn the tide.

Our Top Picks

At this stage, investment in low-beta (beta >0 <1) stocks with a high dividend yield and a favorable Zacks Rank may be the best option. If the markets turn northbound, the favorable Zacks Rank of these stocks will capture the upside potential. However, if markets remain bearish, low-beta stocks will minimize portfolio losses and dividend payment will act as a regular income stream.

We have narrowed our search to five low-beta stocks with a solid dividend yield. These companies have strong growth potential for 2022 and have seen positive earnings estimate revisions in the last 30 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

C.H. Robinson is benefiting from favorable freight market conditions, such as increased volumes and higher pricing, amid tight capacity. CHRW's growth-by-acquisition policy is also impressive.

To this end, in May 2021, C.H. Robinson acquired freight forwarding company Combinex Holding B.V. to strengthen its European Surface Transportation business. The acquisition not only broadens its customer base but also improves customer services by clubbing Combinex's expertise.