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Screen of the Week

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Every week the government and other entities release economic reports that cover all areas of the economy; from retail sales and housing to international trade and consumer sentiment.

In fact, on virtually any given day there could be anywhere from one to a handful of reports.

And while the financial media does cover them, they usually focus on headline numbers without doing a deeper dive.

This is unfortunate because often within these reports exists money making details that can quickly be uncovered with just an extra few minutes of reading.

For example: in the Employment Situation report, it details what sectors saw the most new jobs, or labor force expansion, and which ones contracted.

I remember getting into several restaurant stocks earlier this year that took off after the report cited 'food services and drinking places' (that's apparently how the government refers to restaurants) were one of the largest creators of jobs that month. But the headline number and the obligatory one or two sentence write ups on many news sites missed the best part of the story by not going the extra mile (or paragraph).

Another favorite report of mine is the State Street Investors Confidence Index. This is a unique report that tracks the buying and selling of Institutional Portfolio Managers. It won't tell you what stocks they are buying and selling. But it will show if professional investors are buying or selling.

In short, portfolio managers add risk (buy stocks) when they are bullish, and reduce risk (sell stocks) when they are bearish. Sure, this report can and will change from month to month. But by knowing that large portfolio managers can take a little longer to add or reduce a position (due to their size) than other smaller traders, it can give you an idea as to which way they are leaning. Better yet, seeing whether the numbers are trending up or down can provide a big clue as to whether institutional money is coming into the market or leaving it.

In fact, seeing these numbers trend up in mid 2009 was a clear signal to me that the market's new move to the upside was indeed the real thing and not some bear market suckers rally.

In last week's International Trade data, it showed that one of the biggest export categories was in the industrial products and materials industry. That was a tip that the industrial stocks should see more of a lift and that others in the global economy were doing better. A welcome bit of news after the relentless Euro-zone stories that painted a depressing economic picture at best.

Screening

Once these reports point you in the right direction, you can then plug in the appropriate sectors and industries to capitalize on this information and find the best stocks within those groups.

In another article I'll go over some winning ways to do top/down analysis to zero-in on the best stocks within a larger group.

But for now, once you uncover these not so hidden clues, go to any screener and locate the sector or industry of interest. Then consider looking for Zacks #1 Ranks or Zacks #2 Ranks (Strong Buys or Buys); market beating growth rates; below industry valuations; and upward earnings estimate revisions.

Here are 5 industrial stocks that came thru my screen after last week's International Trade data:

(CFX - Analyst Report) Colfax Corp.
CNH CNH Global N.V.
(GWW - Analyst Report) W.W. Grainger, Inc.
(IRBT - Snapshot Report) iRobot Corp.
(PH - Analyst Report) Parker Hannifin Corp.

Profitable stock ideas can come at any time and any place. But instead of waiting for the next great stock to fall into your lap, you can actively search for them. And by reading a few extra reports and then putting those ideas into a capable screener, you'll soon be amazed at some of your newest picks. And you'll feel pretty smart after finding them too.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. The next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Start your trial to the Research Wizard today.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: http://www.zacks.com/performance.

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