M&A drives Altra to top industrial gainer, Chinese stock slump amid Xi Jinping new term

M&A drives Altra to top industrial gainer, Chinese stock slump amid Xi Jinping new term


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The Industrial Select Sector SPDR (XLI) was the biggest gainer among all 11 S&P 500 (SP500) sectors for the week ending Oct. 28 (+6.69%) which saw the earnings season get going at full pace. Altra was driven by M&A activity, while Chinese stocks took a hit amid Xi Jinping being elected as President for a third term, as his previous stint saw crackdown on tech companies.

The SPDR S&P 500 Trust ETF (SPY) gained for the second week in a row (+3.94%) amid mixed results from tech giants at the start but closed well on Friday driven by Apple’s earnings and hopes that the U.S. Federal Reserve may show some signs of leniency at the upcoming meeting even though the rates are expected to be raised by 75 basis points. YTD, SPY has fallen -18.09%, meanwhile XLI is -10.58%.

The top five gainers in the industrial sector (stocks with a market cap of over $2B) all gained more than +20% each this week. However, YTD, only two these five stocks are in the green.

Altra Industrial Motion (NASDAQ:AIMC) +57.33%. The stock gained after Regal Rexnord agreed to buy the Braintree, Mass.-based company for $4.95B which makes electromechanical power transmission motion control products. YTD, the stock has risen +16.54%.

The SA Quant Rating on AIMC was Hold, which takes into account factors such as Momentum, Profitability, and Valuation among others. AIMC has a factor grade of A- for Momentum and C for Profitability. The average Wall Street Analysts’ Rating differed with a Strong Buy rating, wherein 4 out of 6 analysts saw the stock as such.

Frontier Group (ULCC) +30.41%. The Denver-based airline rose throughout the week but surged the most on Oct. 27 (+16.50%) after its Q3 results. The company saw stronger than expected profits and forecasted a continued improvement.

The SA Quant Rating on the shares is a Hold, with Growth possessing a factor grade of B and Valuation with a B- score. The rating is in contrast to the average Wall Street Analysts’ Rating of Buy, wherein out of the 7 out of 12 analysts tag the stock as Strong Buy. YTD, the stock has shed -8.03%.

The chart below shows YTD price-return performance of the top five gainers and SP500:

Avis Budget (CAR) +28.51%. The stock gained the most at the start of the week (Oct. 24 +11.88%) after J.P. Morgan upgraded the shares to to Overweight calling the Parsippany, N.J.-based car rental company an attractive investment opportunity and being well-positioned to leverage growth in the industry.

Avis was back among the top five gainers after three weeks and was the top performing industrial stock of 2021 +455.95% (in this segment). YTD, the shares have risen +17.35% and is the only one other than AIMC in this week’s top five gainers which is in the green for this period. The SA Quant Rating on the shares is Buy, with an A factor grade for Profitability and B for Growth. The average Wall Street Analysts’ Rating differs with a Hold rating, wherein 2 out of 5 analysts see the stock as such.

Rocket Lab USA (RKLB) +20.99%. The California-based launch services provider too gained throughout the week. However, YTD, the stock has lost -58.22%, the most among this week’s top five performers. The SA Quant Rating on the shares is Sell, with a score of D+ for Valuation and C for Momentum. The average Wall Street Analysts’ Rating differs completely with a Buy rating, wherein 5 out of 9 analysts tag the stock as Strong Buy.

Trinity Industries (TRN) +20.62%. The stock continued its rally as the rail transport products and services provider saw its Q3 revenue soar ~18% Y/Y and earnings beat estimates. YTD, TRN has declined -6.82% and has an SA Quant Rating of Buy, with a factor grade of A+ for Growth and B for Valuation. The average Wall Street Analysts’ Rating concurs with a Buy rating of its own, with 3 out of 5 analysts seeing the stock as Strong Buy.

This week’s top five decliners among industrial stocks (market cap of over $2B) all lost more than -12% each. YTD, four out of five of these stocks are in the red.

Kanzhun (NASDAQ:BZ) -24.53%. The Beijing-based online recruitment platform was among the top five decliners for the second week in a row. The stock has been very volatile this year and YTD has fallen -69.21%. BZ has swung from gains to losses dramatically, as it was among the top five (in this segment) in June (+30%) but landed among the worst five performers for Q3 (-38.60%).

The SA Quant Rating on the shares is Strong Sell, with a factor grade of D- for Momentum and D+ for Profitability. The rating is in complete contrast to the average Wall Street Analysts’ Rating of Strong Buy, wherein 8 out of 12 analysts tag the stock Strong Buy.

ZTO Express (Cayman) (ZTO) -19.08%. The Chinese logistics services provider declined -37.91% YTD, and has SA Quant Rating of Hold, with a B score for Growth and C+ for Valuation. The average Wall Street Analysts’ Rating differs with a Strong Buy rating, wherein 16 out of 22 analysts view the stock as such.

The chart below shows YTD price-return performance of the worst five decliners and XLI:

FTI Consulting (FCN) -17.14%. The shares fell the most on Oct. 27 (-18.62%) after the Washington, D.C.-based company narrowed its FY22 outlook for revenue and adjusted EPS while reporting its Q3 results. YTD, the stock has gained +0.36% and is the only stock among this week’s top five decliners to be in the green for this period. The SA Quant Rating on the stock is Hold, with a B- factor grade for Profitability and B for Momentum. The average Wall Street Analysts’ Rating differs with a Strong Buy rating, wherein the 2 analysts see the stock as such.

Gol Linhas Aéreas Inteligentes (GOL) -13.65%. The Brazilian low-cost airline reported a GAAP loss for the third quarter but saw revenue rise Y/Y. The average Wall Street Analysts’ Rating on GOL is Hold, wherein 3 out of 9 analysts tag the the stock as Hold. The SA Quant Rating agrees with a Hold rating of its own, with a B score for Growth and A for Valuation. YTD, the shares have fallen -45.59%.

Carlisle Companies (CSL) -12.59%. The Arizona-based company’s stock fell despite Q3 results beating analysts expectations. YTD, the shares have shed -3.51%. The SA Quant Rating on CSL is Hold, with a factor grade of A- for Momentum and B+ for Profitability. The rating is in contrast to the average Wall Street Analysts’ Rating of Buy, with 4 out of 7 analysts viewing the stock as Strong Buy.

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