Do Deutsche Bank’s World Cup bets shed light on their stock picks?

Do Deutsche Bank’s World Cup bets shed light on their stock picks?

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Deutsche Bank entered the World Cup prediction fray this week. Will they spot winning teams and stocks?​

It's all about Brazil this World Cup. At least that's the case according to BloombergGoldman Sachs (GS), Nate SilverYahoo! (YHOO), nearly every participant in this survey, and, now, Deutsche Bank (DB). Well, kind of. 

Analysts at Germany's largest investment bank released a report this week that says England will win the World Cup because, in part, "the last time England had so many Liverpool players in the team, it won." It's worth noting that Luis Suarez, the team's striker and the top scorer in the Premiere League last season, plays for Uruguay and might not be ready for his country's match against England on June 19th.

However, the report also states that Brazil is most likely to win: "Our models point to Brazil having most chance of winning followed by Germany, Spain, and France. But to leave it at that would be boring and too conventional. So we introduce what some would call our bias but we like to think of as a discretionary overlay."

Thursday's opening game between Brazil and Croatia resulted in a 3-1 victory for the Seleção, an outcome that may be boring and conventional for the Deutsche Bank analysts but exciting for others. On the other hand, it's still too early to tell if Brazil will end up winning the World Cup.

When Deutsche Bank analysts aren't using quantitative models to figure out the team most like to win the World Cup, they're using that analysis to determine which stocks investors should buy, hold, or sell. Their access to said models, troves of data, and in-depth knowledge of different industries can provide investors with an enhanced perspective on potential investments. 

We decided to follow Deutsche Bank's leads while creating the following list. To begin, we created a universe of companies that currently have Deustche Bank buy ratings. Since earnings season is less than a month away, we decided to then screen for stocks with a history of beating market expectations with positive earnings reports. Specifically, we looked for stocks with an average earnings surprise of at least 5% over the last four quarterly reports.

For our last screen, we looked for stocks potentially undervalued with a price-to-sales ratio of 2 or below. This means that a stock's market capitalization isn't more than double its annual sales.

We were left with nine stocks on our list. Do you think Deutsche bank has it right with these stocks and Brazil? Use this list as a starting point for your own analysis, and let us know what you think in the comments.

Click on the interactive chart to view data over time. 

 

1. On Assignment Inc. (ASGN, Earnings, Analysts, Financials): Provides flexible and permanent staffing solutions in the United States, Europe, Canada, Australia, New Zealand, and Bermuda. Market cap at $1.97B, most recent closing price at $36.21.

On 02/03/2014, Deutsche Bank had a Buy rating on the stock.

In Jun 2013: Reported EPS at 0.32 vs. estimate at 0.28 (surprise of 14.3%). In Sep 2013: Reported EPS at 0.38 vs. estimate at 0.35 (surprise of 8.6%). In Dec 2013: Reported EPS at 0.35 vs. estimate at 0.33 (surprise of 6.1%). In Mar 2014: Reported 0.26 vs. estimate at 0.25 (surprise of 4%. [Average earnings surprise at 8.25%].

P/S at 1.17.

The average analyst EPS estimate for the second quarter is $0.36 per share. 

 

2. Builders FirstSource, Inc. (BLDR, Earnings, Analysts, Financials): Engages in the manufacture and supply of structural and related building products for residential new construction primarily in the southern and eastern United States. Market cap at $758.52M, most recent closing price at $7.74.

On 03/31/2014, Deutsche Bank had a Buy rating on the stock.

In Jun 2013: Reported EPS at 0.01 vs. estimate at -0.04 (surprise of 125%). In Sep 2013: Reported EPS at 0.09 vs. estimate at 0.03 (surprise of 200%). In Dec 2013: Reported EPS at 0.03 vs. estimate at 0.02 (surprise of 50%). In Mar 2014: Reported -0.01 vs. estimate at 0 (surprise of N/A. [Average earnings surprise at 125%].

P/S at 0.5.

The average analyst EPS estimate for the second quarter is $0.12 per share. 

 

3. Deere & Company (DE, Earnings, Analysts, Financials): Provides products and services primarily for agriculture and forestry worldwide. Market cap at $33.26B, most recent closing price at $91.42.

On 02/20/2014, Deutsche Bank had a Buy rating on the stock.

In Jul 2013: Reported EPS at 2.56 vs. estimate at 2.17 (surprise of 18%). In Oct 2013: Reported EPS at 2.11 vs. estimate at 1.89 (surprise of 11.6%). In Jan 2014: Reported EPS at 1.81 vs. estimate at 1.53 (surprise of 18.3%). In Apr 2014: Reported 2.65 vs. estimate at 2.48 (surprise of 6.9%. [Average earnings surprise at 13.7%].

P/S at 0.9.

The average analyst EPS estimate for the third quarter is $2.24 per share. 

 

4. Ferro Corp. (FOE, Earnings, Analysts, Financials): Engages in the production of specialty materials and chemicals for a range of manufacturers worldwide. Market cap at $1.08B, most recent closing price at $12.44.

On 08/02/2013, Deutsche Bank had a Buy rating on the stock.

In Jun 2013: Reported EPS at 0.14 vs. estimate at 0.11 (surprise of 27.3%). In Sep 2013: Reported EPS at 0.14 vs. estimate at 0.1 (surprise of 40%). In Dec 2013: Reported EPS at 0.09 vs. estimate at 0.07 (surprise of 28.6%). In Mar 2014: Reported 0.19 vs. estimate at 0.15 (surprise of 26.7%. [Average earnings surprise at 30.65%].

P/S at 0.67.

The average analyst EPS estimate for the second quarter is $0.19 per share. 

 

5. The Goldman Sachs Group, Inc. (GS, Earnings, Analysts, Financials): Provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Market cap at $73.98B, most recent closing price at $165.43.

On 10/24/2013, Deutsche Bank had a Buy rating on the stock.

In Jun 2013: Reported EPS at 3.7 vs. estimate at 2.82 (surprise of 31.2%). In Sep 2013: Reported EPS at 2.88 vs. estimate at 2.43 (surprise of 18.5%). In Dec 2013: Reported EPS at 4.6 vs. estimate at 4.22 (surprise of 9%). In Mar 2014: Reported 4.02 vs. estimate at 3.45 (surprise of 16.5%. [Average earnings surprise at 18.8%].

P/S at 1.85.

The average analyst EPS estimate for the second quarter is $3.28 per share. 

 

6. Lincoln National Corp. (LNC, Earnings, Analysts, Financials): Engages in multiple insurance and retirement businesses in the United States. Market cap at $13.37B, most recent closing price at $50.68.

On 07/18/2013, Deutsche Bank had a Buy rating on the stock.

In Jun 2013: Reported EPS at 1.27 vs. estimate at 1.15 (surprise of 10.4%). In Sep 2013: Reported EPS at 1.34 vs. estimate at 1.22 (surprise of 9.8%). In Dec 2013: Reported EPS at 1.4 vs. estimate at 1.28 (surprise of 9.4%). In Mar 2014: Reported 1.34 vs. estimate at 1.29 (surprise of 3.9%. [Average earnings surprise at 8.38%].

P/S at 1.08.

The average analyst EPS estimate for the second quarter is $0.36 per share. 

 

7. Trina Solar Limited (TSL,Earnings,Analysts,Financials): Designs, develops, manufactures, and sells photovoltaic (PV) modules worldwide. Market cap at $804.9M, most recent closing price at $11.30.

On 09/27/2013, Deutsche Bank had a Buy rating on the stock. In Jun 2013: Reported EPS at -0.47 vs. estimate at -0.57 (surprise of 17.5%). In Sep 2013: Reported EPS at 0.14 vs. estimate at -0.14 (surprise of 200%). In Dec 2013: Reported EPS at 0.13 vs. estimate at -0.02 (surprise of 750%). In Mar 2014: Reported 0.37 vs. estimate at 0.03 (surprise of 1133.3%. [Average earnings surprise at 525.2%].

P/S at 0.45.

The average analyst EPS estimate for the second quarter is $0.17 per share. 

 

8. Time Water Cable Inc. (TWC, Earnings, Analysts, Financials): Operates as a cable operator in the United States. Market cap at $39.84B, most recent closing price at $143.01.

On 11/04/2013, Deutsche Bank had a Buy rating on the stock.

In Jun 2013: Reported EPS at 1.69 vs. estimate at 1.64 (surprise of 3%). In Sep 2013: Reported EPS at 1.69 vs. estimate at 1.65 (surprise of 2.4%). In Dec 2013: Reported EPS at 1.82 vs. estimate at 1.73 (surprise of 5.2%). In Mar 2014: Reported 1.78 vs. estimate at 1.68 (surprise of 6%. [Average earnings surprise at 4.15%].

P/S at 1.79.

The average analyst EPS estimate for the second quarter is $1.97 per share. 

 

9. Valero Energy Corporation (VLO, Earnings, Analysts, Financials): Operates as an independent petroleum refining and marketing company. Market cap at $28.38B, most recent closing price at $53.19.

On 12/09/2013, Deutsche Bank had a Buy rating on the stock.

In Jun 2013: Reported EPS at 0.96 vs. estimate at 0.93 (surprise of 3.2%). In Sep 2013: Reported EPS at 0.57 vs. estimate at 0.41 (surprise of 39%). In Dec 2013: Reported EPS at 1.78 vs. estimate at 1.66 (surprise of 7.2%). In Mar 2014: Reported 1.54 vs. estimate at 1.38 (surprise of 11.6%. [Average earnings surprise at 15.25%].

P/S at 0.21.

The average analyst EPS estimate for the second quarter is $1.83 per share. 

 

(List compiled by Mary-Lynn Cesar. Analyst and monthly return data sourced from Zacks Investment Research. Earnings data sourced from Yahoo! Finance. All other data sourced from finviz.)

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