Thursday - January 12, 2006
 Want to view the archive of past issues? Go to: http://at.zacks.com/?id=2337. Manage Profit from the Pros subscription: 1. ZACKS EQUITY RESEARCH Though we had been asking many questions of senior analyst Paul Raman, CFA about the automobile industry lately, he also covers many companies within the chemicals industry. Though some of these companies do cross-over with one another, we wanted to focus specifically today on the up-tick in chemical company earnings at this time. Are we entering an up-cycle for the chemical industry? It seems more attention is being drawn to firms like Lubrizol and Praxair lately. What's your take on this? Yes indeed, we are entering a new up-cycle for the chemical industry. Mainly, I would say this is due to falling oil and gas prices, though continued economic growth in the U.S. has also helped volumes. Also, the group is experiencing continued strong pricing power. After the down-cycle of the past couple years, the better chemical companies like Lubrizol (LZ) and Praxair (PX) managed to tighten their belts and now look to make stronger gains going forward. Margins are already expanding for several of these companies, which may also explain the increase in attention. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - I noticed you recently came out with a Buy report on BASF, so I assume that company's recent aggressive M&A activity might be a main reason why. Do you expect more M&A in the chemicals industry in the months ahead? Actually, I don't really agree with this. My recent Buy recommendation of BASF (BF) was driven by the fundamentals I just mentioned - strong pricing power, margins expanding - not just simply the recent purchase of Englehard. BASF is one of my top picks even if you disregard its extensive M&A activity recently, as it is currently not only benefiting from an improving chemical market overall but also from a falling U.S. dollar, as BASF is a European-based stock. I do not expect much M&A activity in the coming months in the chemical industry. Until sufficient levels of revenue are built up after its extensive lean period, M&A will not likely even be a consideration for most companies in this space. When considering playing the chemicals market, is it better to look at it from a value or a growth perspective? These stocks should definitely be looked at from a value perspective. The best way to do this is to look at relative P/E, P/Cash Flow, P/Book and P/Sales ratios. That said, simply displaying attractive numbers on these measures is not enough. The best companies in the chemicals space have earnings estimates that happen to be rising also. Looking forward to, let's say, the first half of 2006, what are you expecting to see from this industry? I can give you the first half outlook for 2006, or I can give you the whole year's outlook; they are both the same thing. The year 2006 should show rising profits being generated, and these will have been driven by falling energy prices, rising prices and strong volume growth. Earnings estimates should increase, especially for those strongest companies in this space. Overall, the chemical industry is poised for success at this time, and most of this group's stocks should do well. Paul Raman, CFA is a senior Zacks analyst covering the automotive and chemical industries. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - BULL OF THE DAY Amphenol Corp. (APH) - Providing Upside Potential. For full Zacks research report, click here. Centennial Communications (CYCL) - Debt Raising Risk. For full Zacks research report, click here. Earnings growth expected to continue in 2007 Zacks Industry Rank for the Week of Jan 9
2. Zacks Challenge: Top Player Interview Zacks.com features a free investment simulator where our customers can prove their stock picking skills to the rest of the world. In these articles we will share with you the insights and recommendations from Top Simulator Players. Learn more about the current Zacks Challenge at: http://at.zacks.com/?id=2514. This week Zacks interviewed Rhonda Weiss-Gomez, who is known as “rhonda” in the new Simulator competition, Zacks Challenge. While the username “rhonda” may not be the most original, it is one that is hard to miss in this recently initiated Simulator game. That is because “rhonda” has managed to maintain outstanding ranking since the contest started. Currently in second place, Rhonda garners an overall return of 94% since Jan 3, 2006! This avid user of Zacks’ screening tools and featured experts’ advice entered the new Zacks Challenge and has demonstrated terrific investment prowess. Rhonda’s portfolio includes UBS AG (UBS) and F5 Networks Inc. (FFIV) as well as several options on names such as Google (GOOG) and Exxon Mobil Corporation (XOM). Check out this player’s recent trades by clicking: http://at.zacks.com/?id=2515. Having survived, and enduring loss as a result of, the tech bubble, Rhonda describes herself as a cautious investor, who is less inclined toward risk. One way that the Zacks Challenge contender strives to minimize risk is by investing in securities that she has researched and understands. Rhonda watches a lot of financial television programs, including overnight news from the UK. She uses the Internet as a research tool by visiting sites like Yahoo, AOL Finance and Zacks just to name a few. What does this savvy stock picker look for when considering and investment? Rhonda keeps her ear out for any excitement or hype that may be buzzing around about a stock. But the market player is not one to jump on the first bit of news she hears as it may turn out to be nothing but fluff. This investor also looks for names that have a lot of daily volume and price movement. Some of Rhonda’s favorite stocks include Apple, Yahoo, Time Warner and Google. “I think that nearly every person who is on the Internet is using either Yahoo or Google. Each of these companies has added a lot of value to the Internet,” said Rhonda. She added, “Apple is continuing to reinvent itself with the iPod and is continuing to set trends for new products with the music industry tightly wrapped around their little nano.” In fact, it was Google that brought in the big bucks for Rhonda. Referring to it as her big winner, the market watcher was not surprised to see this Internet player soar. According to Rhonda, when Bear Stearns and Goldman Sachs came out with their recommendation for the stock it was only a matter of time before there would be a big jump in share price. When is it time to sell? The Simulator competitor looks for pattern changes. If a company’s product is less popular than it used to be and purchases of it are slowing down then for Rhonda it may be time to dump that company. She also points out that the ability to detect the beginning of a change in sentiment about a stock or sector could help one to execute a successful sell trade. Rhonda’s style of investing has been influenced by many years of employment at investment banking firms and by market gurus, such as Jim Cramer and Peter Lynch. She mentioned that she would like to meet Jim Cramer because she likes his style and “he makes things that might sometimes seem a bit arcane easier to understand.” As far as her outlook, Rhonda is upbeat. She sees the Dow reaching 12,500 in the next 12 months. Her advice to those just starting out? Stay informed and invest in what you know and use. Also, it doesn’t hurt to follow the smart guy in the market. “If you see a Warren Buffet doing well look at what he's done, it's okay to copy,” Rhonda stated. The Challenge is On! Sign up now for the Zacks Investment Challenge. Its free. Its fun. It’s the place to show your investing prowess. The best stock pickers will be rewarded with thousands of dollars in prizes. Learn more. 3. PROFIT TRACKS Zacks.com is proud to share with you some of the best trading
strategies that truly allow you to Profit from the Pros. Today
we highlight... Profit Tracks: Low Price Stocks Many investors prefer stocks priced below $20 because the low prices allow them to accumulate more shares. Fortunately, lower prices do not necessarily mean lower quality. This strategy identifies stocks priced below $20 that are trading at discount valuations and have a Zacks Rank of #1 ("Strong Buy") or #2 ("Buy"). The stocks identified by this search strategy trade at price-to-sales (P/S) multiples of 1.0 or below. The strong Zacks Rank is indicative of positive revisions in earnings estimates. Combining these characteristics can result in high-dollar returns. In 2004, this strategy generated a stellar +54.8% return. Equally impressive, the strategy has a win ratio of nearly 75% for the past 4-1/2 years. Here are four stocks that make the grade for the Return on Equity Profit Track: AEGON N.V. (AEG), an insurance company, reported third-quarter earnings of 39 cents per share in early November. The result outperformed the year ago level. The company stated that in the U.S. there were notable increases in life sales to institutional clients as well as in AEGON's variable annuity business sold to individuals. The stock is currently trading around $16.00 per share, with a price-to-sales ratio of 0.36. AEG has earned $1.80 per share over the past 12 months. Continue your research on AEG at: http://at.zacks.com/?id=2354. Mesa Air Group, Inc. (MESA) announced its fiscal fourth-quarter financial results in mid-November. Earnings per share were ahead of analysts’ expectations by nearly 17% and surpassed the prior year’s performance. Total operating revenues increased 18.9% year-over-year. The stock is currently trading around $11.50 per share, with a price-to-sales ratio of 0.29. The company has earned $1.30 per share over the past 12 months. Continue your research on MESA at: http://at.zacks.com/?id=2355. More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Movado Group Inc. (MOV), a designer, manufacturer and distributor of quality watches, released fiscal third-quarter earnings in early December. Earnings per share of 54 cents topped the year ago total of 44 cents and exceeded the consensus estimate by 15%. Net sales increased 11.6% year-over-year. Comparable store sales increased 10.6% at the Company's Movado boutiques versus a 12.8% gain achieved last year. The stock is trading at nearly $19.00 per share, with a price-to-sales ratio of 0.75. The company has earned $1.19 per share over the past 12 months. Continue your research on MOV at: http://at.zacks.com/?id=2356. Rex Stores Corp. (RSC) is a specialty retailer of consumer electronic products and appliances as well as a Zacks #1 Rank (Strong Buy) stock. The company recently announced that its merchandise sales for the fiscal 2005 fourth quarter-to-date through January 1, 2006 rose approximately 3.5% over the previous year’s result. Comparable store sales quarter-to-date rose approximately 7.5%. RSC, which has a price-to-sales ratio of 0.39, delivered solid fiscal third-quarter earnings per share that more than doubled the year ago performance. The earnings, which were reported in late November, also jumped ahead of the consensus estimate by about 20%. RSC’s shares currently trade around the $15.00 level and the company has realized earnings of $2.15 per share over the past 12 months. Continue your research on RSC at: http://at.zacks.com/?id=2357. To see the full list of stocks that currently pass this winning screen, go to: http://at.zacks.com/?id=2358. All the Profit Track strategies were created and backtested using the Research Wizard software from Zacks Investment Research. If you like this screening strategy, but want to narrow down the list of stocks and even improve the performance, then you should start a free trial to this powerful stock picking tool. Learn more about the Research Wizard free trial offer and our new special report “Top 10 Stock Screening Strategies” at: http://at.zacks.com/?id=2359. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Kevin Matras looks at Cash Flows (and increasing Cash Flows) for a winning stock picking strategy: http://at.zacks.com/?id=2360. 4. ZacksAdvisor.com TIMELY BUY of the WEEK Here you'll discover a Zacks #1 Rank stock hand selected by Ben Zacks to outperform the market over the next 30 to 90 days. This week's Timely Buy is...
Headquartered in Memphis, TN, FedEx Corporation (FDX or FedEx) provides global transportation, ecommerce, logistics, urgent shipment deliveries, and custom brokerage solutions. The company operates four business segments: FedEx Express, FedEx Ground, FedEx Freight, and FedEx Kinko’s. FedEx Express, which generated 66% of fiscal year 2005 revenue, delivers documents, packages, and freight throughout its network across 215 countries. FedEx Ground (16% of fiscal 2005 revenue) offers business and residential customers money-back guaranteed, small-package ground delivery services. FedEx Freight (11%) provides next-day and second-day regional less-than-truckload (LTL – consolidates shipments from multiple shippers into a single truckload) freight services. On February 12, 2004, the company acquired Kinko’s, Inc., from Clayton, Dubilier & Rice, Inc., for $2.4 billion. FedEx Kinko’s (7%) was reported as a new business segment. This segment offers document management solutions and business services, including color printing, finishing and presentation services, Internet access, video conferencing, outsourcing, managed services, and Web-based printing in ten countries, through 1,440 retail outlets. FDX’s long-term goals include: (1) grow revenue by 10% per year (19% in fiscal 2005); (2) achieve a 10% operating margin (8.4% in fiscal 2005); (3) increase EPS by 10-15% per year (36% in fiscal 2005); and (4) increase cash flow and returns. The strengthening worldwide economy, cost-cutting initiatives, and rapid business growth in Asia are expected to propel earnings growth for FDX. As with all transportation firms, recovery of the global economy will be a key factor in the performance of the company’s stock. Apart from the economic recovery, the rollout of FedEx counters at Kinko’s is expected to accelerate the company’s volume and top-line growth by increasing demand for its services across all business segments. We also expect margins to expand due to the company’s efforts to reduce expenses. Recently, the U.S. Department of Transportation (DoT) allocated 12 weekly flights to China, which would be in addition to the 11 allocated in August 2004. The company also has launched the express industry’s first direct flight from mainland China to Europe, as well as the first overnight express link between India and China as part of its new eastbound around-the-world flight, which connects Europe, India, China and Japan with the FedEx Express U.S. hub in Memphis. These routes further enhance FedEx Express’s service offerings between the fastest growing economies in Europe and Asia. FedEx Express also received tentative approval from U.S. DoT for three new flight frequencies into China, effective March 2006. This will provide the company a total of 26 weekly flights to China. FDX is keeping with our theme of liking large cap stocks in this environment. The stock is a good hedge against the oil stocks in our portfolio in case oil prices were to turn down. Even in the face of soaring oil prices, FDX has performed remarkably well. Analysts have been raising earnings estimates and we feel comfortable with the company's reasonable valuation. The stock is currently trading around 15.7x next year’s earnings estimates of $6.48 per share. Their price-to-earnings ratio is right in line with its long-term growth rate of 14.44%.
OTHER TOOLS FROM ZACKS At the heart of Zacks Investment Research is the Zacks Rank investment philosophy that continues to vastly outperform the market. Our Zacks #1 Rank (Strong Buy) List has produced the following results for investors:
And just as importantly, our #5 Ranked stocks (Strong Sells) have alerted investors as to which stocks to dump from their portfolios to avoid unnecessary losses. To truly take advantage of the Zacks Rank, you need to first understand how it works. That's why we created the free special report; Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions. Download a free copy now to prosper in the years to come, by visiting: http://at.zacks.com/?id=2350. Or view the full list of Zacks #1 Ranked stocks at: http://at.zacks.com/?id=2351. FREE PORTFOLIO TRACKER Do you believe that these events affect stock prices?
If you answered yes, then how are you staying on top of these changes for your stocks? If you are one of the 45,000 investors who wake up every morning to the Daily Portfolio Updates emails from Zacks.com, then you are all set. If not, then sign up now to get this vital information sent to you daily to help take definitive action to improve your portfolio's performance. Did we mention it's free? Get started now! We hope you enjoyed this issue of "Profit from the Pros", And we look forward to visiting with you again next week. REFER-A-FRIEND If you enjoy this e-mail newsletter, then please pass it along to a friend. Simply forward them the link below to sign up for their own free subscription. If you're reading a forwarded copy, sign up for your own, so you get this wealth of information every week. Just click here. THANKS! Regards and Happy Investing, Charles Rotblut, CFA p.s. What is the mission for Zacks Profit from the Pros? Click here to find out how we will help you become a more successful investor. *The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor's. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index. Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security. To contact us by mail: Zacks Investment Research To unsubscribe from receiving "Profit from the Pros" e-mail newsletter, click here. | ||||||||||
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Zacks #1 Stocks on the Move 05/17/2013
| Company Name | Symbol | %Change |
|---|---|---|
| VIASAT INC | VSAT | 19.35% |
| OLD SECOND B | OSBC | 5.76% |
| GAMCO INVEST | GBL | 4.61% |
| CORNING INC | GLW | 4.47% |
| SYNCHRONOSS | SNCR | 4.23% |
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