UNP - Here are your stock picks for the week: March 7 2022
As the Ukraine war continues to unfold, the commodities market will continue to be impacted. This month investors will be keeping a keen eye on the Federal Reserve meeting. The big report to watch will be the monthly release of the consumer prices which arrives March 10.
Watched closely will be food and energy prices, as well as airline fares and car/truck rentals. Corporate events this week from AT&T (NYSE:T), General Electric (NYSE:GE), Apple (NASDAQ:AAPL), and Kohl’s (NYSE:KSS) are also on the horizon this week.
Union Pacific
As the crisis in Ukraine unfolds, oil prices continue to rise. Due to railroad operators’ flexibility and efficiency, traditionally, shippers increasingly rely on truck and rail services when the price of oil is high. This is good news for Union Pacific (ticker: UNP ), the freight-hauling railroad that operates 8,300 locomotives over 32,200 miles routes in the US.
As other rail stocks start to gather momentum, including CSX, Union Pacific is one to watch. In 2021 the company increased the length of its train to 9,300 feet and as Covid created bottlenecked ports, the company’s operating efficiency gains increased the company’s operating income by 16%. While supply-chain limitations start to bounce back in 2022, Union Pacific is likely to also recover.
Palo Alto Networks
Another company likely to perform well amidst the war in Ukraine is California-based cybersecurity company Palo Alto Networks (ticker: PANW ). The stock bounced 13% last Thursday, shortly after the Ukraine-Russia conflict instigated fears of cybersecurity attacks.
The company’s earnings recovered 26% in fiscal 2021 after the pandemic, and, according to FactSet, Wall Street analysts predict that its earnings will continue to accelerate a further 19% in 2022 and 24% in 2023. Sales are predicted to grow 19% in 2022 and 24% in 2023.
Commercial Metals
As a growing construction backlog continues in North America and Europe post-pandemic, steelmakers are set to profit. Companies such as Nucor and Commercial Metals (ticker: CMC ) are poised for growth despite steel prices taking a dive from peaks in summer 2021.
Commercial Metals noted to investors that its November-quarter earnings had “a growing construction backlog in North America, as well as broad strength across key end markets in both North America and Europe” and that margins for steel products in North America were increasing.
The company is building its third and fourth micro mill, which is designed to produce higher strength steel at a lower cost than its previous mini-mills. “The new micro mill will fortify our position in the large construction markets within the region and optimize CMC’s existing Eastern U.S. operational footprint through enhanced production flexibility, improved service capabilities, and logistical efficiencies,” CEO Barbara Smith said in a statement.
Dollar Tree
Specialty discounter Dollar Tree (ticker: DLTR ) announced recently that its Chairman Bob Sasser is due to retire. Investor Mantle Ridge bought up shares of the stock, sending shares soaring. Amidst inflation scares, in November the firm announced it was rolling out new $1.25 price points across its Dollar Tree locations, starting by the end of its fiscal first quarter. The company announced that its decision was permanent and would apply to most products.
Although Dollar Tree was hit hard by the pandemic, with shares diving 11% over the last three quarters, analysts expect its earnings to skyrocket 32% in fiscal 2023 and 15% in 2024.
Disclaimer: Market Buzz contributor as no position in any of the stocks mentioned.
This does not constitute investment advice and is for entertainment purposes only.
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