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The Zacks Analyst Blog Highlights: Limbach, Salem Media, Hallmark, Sonic Automotive and Xcel

For Immediate Release

Chicago, IL –July 11, 2019 – 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: Limbach Holdings Inc. LMB, Salem Media Group Inc. SALM, Hallmark Financial Services Inc. HALL, Sonic Automotive Inc. SAH and Xcel Brands Inc. XELB.

Here are highlights from Wednesday’s Analyst Blog:

Small Business Optimism Remains Strong in June: Top 5 Picks

Small business organizations’ optimism remained at a high level though it took a modest hit in June. Lingering trade conflict with China, intensification of tariff issues with the European Union, several geopolitical concerns and fears of global economic slowdown made small enterprises slightly skeptical last month.

Small Business Optimism Remains Solid Despite Weakness

On Jul 9, the National Federation of Independent Business (NFIB) reported that the NFIB Small Business Optimism Index declined to 103.3 in June from 105 in May. Notably, May’s reading was the highest since October. However, the uncertainty index rose to its highest level since October 2017.

While optimism remains at historically high levels, the June figure reversed the gain posted in May, with six of the total 10 survey components lagging, three components improving and one remaining unchanged. Both capital spending plans and actual capital spending declined in June.

Why Small Business Is Important

Small corporates create a significant amount of jobs in the U.S. economy. More than 50% of the newly created jobs in the private sector originate from this sector. These people constitute a large part of customers for big businesses.

Moreover, small companies are a major part of the supply chain management systems of large companies for innovative and technologically superior inputs. Additionally, small businesses often end up being an important part of corporate America's customer base.

Is the Trump Administration a Big Boost for Small Enterprises?

A survey conducted by the Wilmington Trust clearly revealed that small business owners strongly favored President Donald Trump’s pro-business policies, especially the corporate tax cut and deregulations. The survey was conducted between May 24 and Jun 14.  

Overwhelmingly 59% respondents out of a sample size of more than 1,000 small enterprises strongly backed the ways by which the Trump administration handled business-related issues. Moreover, 53% said the administration’s policies have had a positive impact on their businesses, while 46% respondents said that their business confidence increased during Trump’s administration.

Small Caps Are Important During Volatility

Small-cap stocks carry some special features which make them very useful in a volatile market. Small-cap stocks are mostly immune to any external shock since the United States is the primary market of their products. This is aiding this segment to outperform the broader market defying extreme volatility.

Owing to their domestic business strategy, small-cap stocks are immune to the movement of the U.S. dollar.  A strong U.S. dollar will make exports of large companies uncompetitive. However, small-cap stocks remain unaffected by foreign exchange volatility.

Our Top Picks

At this stage, it will be prudent to invest in small-cap stocks with a favorable Zacks Rank and strong growth potential. We have narrowed down our search to five stocks with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Limbach Holdings Inc. provides commercial specialty contract services in the United States. It operates in two segments, Construction and Service. The company has an expected earnings growth rate of 305.8% for the current year. The Zacks Consensus Estimate for the current year has improved 35.4% over the last 60 days.

Salem Media Group Inc.operates as a multimedia company in the United States. It operates through three segments: Broadcast, Digital Media, and Publishing. The company has an expected earnings growth rate of 216.7% for the current year. The Zacks Consensus Estimate for the current year has improved 55.6% over the last 60 days.

Hallmark Financial Services Inc. underwrites, markets, distributes, and services property/casualty insurance products to businesses and individuals in the United States. The company operates in the Specialty Commercial, Standard Commercial, and Personal segments. The company has an expected earnings growth rate of 33.7% for the current year. The Zacks Consensus Estimate for the current year has improved 3.8% over the last 60 days.

Sonic Automotive Inc.operates as an automotive retailer in the United States. It operates in two segments, Franchised Dealerships and EchoPark. The company has an expected earnings growth rate of 18.1% for the current year. The Zacks Consensus Estimate for the current year has improved 3.5% over the last 60 days.

Xcel Brands Inc.operates as a media and consumer products company in the United States. The company designs, produces, licenses, markets, and sells branded apparel, footwear, accessories, jewelry, home goods and other consumer products. The company has an expected earnings growth rate of 33.3% for the current year. The Zacks Consensus Estimate for the current year has improved 27.3% over the last 60 days.

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Zacks Investment Research

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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 for information about the performance numbers displayed in this press release.

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Sonic Automotive, Inc. (SAH): Free Stock Analysis Report
Salem Media Group, Inc. (SALM): Free Stock Analysis Report
Hallmark Financial Services, Inc. (HALL): Free Stock Analysis Report
Xcel Brands, Inc (XELB): Free Stock Analysis Report
Limbach Holdings, Inc. (LMB): Free Stock Analysis Report
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