Tuesday - March 7, 2006
 Want to view the archive of past issues? Go to: http://at.zacks.com/?id=2372. Manage Profit from the Pros subscription: 1. ZACKS EQUITY RESEARCH Providing ‘interesting’ commentary on a market that is essentially range-bound may be one of the more difficult tasks for a market analyst to accomplish. Although the Dow is managing to keep its head above the 11,000 mark, the S&P 500 has fluctuated within an approximate 50-point range this year. As I opined last week, the markets are trying to climb a wall of worry. Fourth-quarter earnings season was positive (more on this in a few paragraphs) and multiple companies are enjoying pricing power, but interest rates are on the rise. While there is more than enough evidence to support both a bull and bear scenario, the economy does appear to be staying in a sweet spot of steady growth and contained inflation. Specifically, GDP is expected to increase at average rate of 3.6% this year and next year, while core-CPI should only increase at a 2.3% annualized rate. In the background of a trending market with some uncertainties (e.g. the January’s negative personal savings rate and February’s weak University of Michigan consumer confidence number), stock picking is of utmost importance. As evidenced in last week’s mixed bag of retail sales, performance can vary widely, even within a given sector. Therefore, investors need to put an increased focus on identifying stocks with positive momentum in earnings estimate revisions. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Investors seeking large-cap stocks with upward earnings estimate revisions may want to investigate Insurance-Multiline. This group has 15 Zacks #2 Rank (“Buy”) stocks, nine of which have a market capitalization in excess of $14 billion, including Cigna (CI) and Metlife (MET). CI provided bullish guidance last month and eight of the ten covering analysts raised their forecasts in response. The current consensus estimate of $8.04 per share is 17 cents higher than the estimate of just 30 days ago. In regards to MET, five analysts have raised their forecasts for 2006 profits within the past four weeks; the company’s acquisition of Travelers Life & Annuity contributed materially to topline growth in the fourth quarter. Investors who are not as concerned with market capitalization may find some opportunities in the Metal Processing & Fabrication group. There are two Zacks #1 Rank (“strong buy”) stocks in this group with strong earnings momentum: Century Aluminum (CENX) and Dynamic Materials (BOOM). CENX, a company that produces aluminum, is an unusual Zacks #1 Rank stock. The company missed expectations for five consecutive quarters, but four of the six covering analysts have materially raised their estimates for 2006. The new consensus estimate for profits of $4.82 per share is 15% higher than the forecast of just a month ago. Clearly, analysts are expecting higher aluminum prices and higher production rates. BOOM is arguably a micro-cap stock, given its market cap of $380 million; however, the stock is covered by one analyst and it has decent daily volume. More importantly, the company generated double-digit revenue and income growth in the fourth-quarter. BOOM is experiencing strong demand for its explosion-welded metal plates, which are used in the petrochemical and refining industries. (Alert readers will recall that two weeks ago I discussed the strength in the Oil Field and Machinery group. The same factors that are aiding oil field companies, increased drilling and maintenance expenditures, are also helping Dynamic Materials.) In regards to fourth-quarter earnings season, the results are firming and look pretty good. Among companies within the Zacks Rank universe that have reported, 2.1 have exceeded earnings expectations for every company that has missed. The ratio of revenue surprises to misses2 is 1.5:1. The trend in earnings estimate revisions for 2006 worsened last week. Analysts raised estimates on 1217 companies and lowered estimates on 1387 companies. The average revision was -1.1%, versus -0.8% last week. Analysts project the average company to grow profits 12.7% this year. Charles Rotblut, CFA is a senior market analyst for Zacks.com. Read the complete Industry Outlook at: http://at.zacks.com/?id=2379. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Analyst Blog - NEW! Get real-time market insights from Zacks Equity Research Analysts. To see their latest posts, click here. ACADIA Pharmaceuticals (ACAD) - Strong Pipeline. For full Zacks research report, click here. Cerus Corp. (CERS) - Resources Stretched Thin. For full Zacks research report, click here. Top Hotel Brands Maintain High Growth Earnings Season Just about Over
2. 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: High Rank Value Two of the most commonly accepted measures of a value stock are a price-to-earnings (P/E) multiple of 15.0 and a price-to- book (P/B) multiple of 3.0. Although many studies have shown performance advantages to investing in value stocks, not all value stocks are actually bargains. A value stock is only a good buy if earnings are expected to improve in the future. High Rank Value is a strategy designed to find the true bargains among value stocks. By requiring a Zacks Rank of #1 ("Strong Buy") or #2 ("Buy"), this strategy restricts the pool of value stocks to only those with positive revisions in earnings estimates. In other words, profits are expected to improve in the future at a faster pace than originally anticipated. The combination of a low valuation and a high Zacks Rank is very profitable. This Profit Track has consistently topped the S&P 500 during the past five years. In 2005, this strategy generated a return of +13.7%. American Electric Power Co., Inc. (AEP) recently reaffirmed its 2006 full year earnings guidance of $2.50 to $2.70 per share. Analysts are in agreement as evidenced by current estimates of $2.61 per share, up from two months-ago levels of $2.60. In early February, the company reported ongoing earnings for the fourth quarter of 29 cents per share, beating the consensus estimate by almost 12%. The public utility holding company has a price-to-earnings (P/E) multiple of 13.35 and price-to-book (P/B) multiple of 1.58. Continue your research on AEP at : http://at.zacks.com/?id=2389. Energy East Corp. (EAS) recently released unaudited fourth-quarter earnings of 43 cents per share, exceeding the year-prior result. EAS noted that earnings were ahead of last year primarily due to higher margins on electric sales and an increase in electric deliveries. This stock offers a price-to-earnings (P/E) multiple of 13.49 and a price-to-book (P/B) multiple of 1.27. Continue your research on EAS at: http://at.zacks.com/?id=2390. First Community Bancshares, Inc. (FCBC) satisfies the criteria for this Profit Track with a price-to-earnings (P/E) multiple of 14.60 and price-to-book (P/B) multiple of 1.93. The company posted fourth-quarter earnings in late January. The result outperformed the previous year’s earnings and surpassed analysts’ expectations. Full year 2005 earnings were also ahead the year-prior total. Continue your research on FCBC at: http://at.zacks.com/?id=2391. Laclede Group, Inc. (LG), a Zacks #1 Rank (Strong Buy) company, is a public utility engaged in the retail distribution and transportation of natural gas. LG released fiscal first-quarter financial results in late January. Earnings per share of $1.23 topped the consensus estimate by approximately 48% and improved on last year’s 79 cents. The company offers a price-to-earnings (P/E) multiple of 14.18 and a price-to-book (P/B) multiple of 1.80. Continue your research on LG at: http://at.zacks.com/?id=2392. To see the full list of stocks that currently pass this winning screen, go to: http://at.zacks.com/?id=2393. 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=2394 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Kevin Matras shows you how to find great growth stocks at an excellent value: http://at.zacks.com/?id=2395. 3. OPTIONS CENTER Zacks has partnered with the leading options experts, Schaeffer's Investment Research, to provide you the best options commentary, research, and trading tools on the market today. Last week we looked at the Unusually High Option Volume filter for puts. This week we want to take the other side of this filter and look at it using calls. Before we can go any further, lets talk briefly about our methodology here at Schaeffer's. We are contrarian-based investors, meaning that we want to see skepticism toward an outperformer as a sign that money is still on the sidelines. Conversely, we want to see optimism toward an underperformer. We view too much optimism as a potential sign that nearly everyone who wants to invest in a particular stock already has. Now, just because a stock sees substantial optimism doesn't mean that we will blindly short a particular security; we need to see some negative price action or a major catalyst for a downside move in order to pull the trigger in most cases. Other indicators that we tend to utilize in measuring overall sentiment include put/call ratios, short interest, magazine cover stories, media comments, and analyst ratings. So what exactly is the Unusually High Option Volume for calls filter? First off, lets look at what a call is. Calls are simply a bet that the underlying stock is going to move higher. From our contrarian point of view, we like to see a lot of bullish calls trade on a stock that is underperforming. This shows us that even though the shares are lagging, there’s still optimism left. One more very important item we must touch upon regarding this filter before we get started is that the majority of the stocks it suggests are likely to be the big names that have lots of activity, such as the Nasdaq 100-Trust (QQQQ) , the Spyders (SPY) , or Microsoft (MSFT) . These big names don't take away from the importance of this filter; they are just something to keep in mind. Looking at the list from Thursday, one name that looks interesting is Juniper Networks (JNPR) – as over 27,000 bullish calls traded amounting to over three times the average daily call volume. Also networkers have been one of the hottest sectors recently, so you’d expect some bullish calls to trade. The only problem is JNPR has been a big time laggard, as the shares have lost nearly 30% since their July peak. But what about the quantitative sentiment you ask? Well, to us it looks like there’s a deal of optimism – exactly what we want to see. One indicator that we like to use to measure sentiment is the Schaeffer's put/call open interest ratio (SOIR). This ratio shows how many bearish puts there are compared to bullish calls for the front three months of options. Currently, JNPR’s SOIR checks in at 0.59. That doesn’t tell us much, so we compare it to the other readings over the past year. Doing this indicates that this reading is higher than 58 percent of the readings over the past 12 months – a rather neutral reading and it honestly doesn’t tell us much about what the short-term option players are thinking. But the next two indicators do show some optimism. First off, we like to see what the shorts are doing. Remember to short a stock means you are betting it’ll go lower and you sell it first before buying it back at a lower price. So for a bullish pick we like to see a big build up of bearish shorts, as this could lead to a short covering rally should the shares continue to gain. The flip side for a bearish play is we like to see a dearth of shorts, suggesting no one is bearish. Well, as you might have expected, JNPR’s short interest ratio is only 1.42 days to cover. This very low number reduces the odds of a short covering rally on any good news. Finally, according to Zacks, analysts have plenty of room to downgrade the underperforming shares, as there is only “one” sell rating out of 21 total recommendations. Should the shares continue to lag, analysts might be pressured to lower their ratings. Add it all up and JNPR sports a Gold Equity Scorecard Score, only 3.0 out of 10.0 – suggesting the path of least resistance is probably lower. Note: Schaeffer's Equity Scorecard is a proprietary equity ranking feature found in Schaeffer's Gold Product on SchaeffersResearch.com - a vital informational source for the active trader! With all of that said, let’s hypothetically buy some puts on JNPR. As of Thursday afternoon you could have bought the JNPR July 22.50 put (JUXSX) for $3.40 a contract. Write this one down and follow it to see how it does, but we must say that it looks like a decent play. We'll be back next week to take a look at yet another filter. In the mean time, please continue to use all of the filters on these pages and try to find out which one's work best for you. Also be sure to visit Zacks.com's Option Center brought to you by Schaeffer Investment Research to follow up on this filter and more. Remember; don't be afraid to paper trade a few here and there, as this is a great way to learn. Finally, options are highly leveraged vehicles, and the odds favor that most of your trades are going to be losers. But, thanks to this high leverage, all it takes are a few winners here and there to be more than profitable. Keep on using the filters and good luck! To learn more about the High Open Interest filter, click here. Discover all the tools and commentary available from the Zacks.com Options Center at: http://at.zacks.com/?id=2382. 4. ZACKS RANK BUY STOCKS Every day on Zacks.com we highlight four Zacks Rank Buy stocks. Each individual stock is chosen based on how well they match the criteria for the four main schools of investing: Aggressive Growth, Momentum, Growth & Income and Value. Aggressive Growth – Encore Wire Corporation (WIRE) More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum – AMERICAN SCIENCE & ENGINEERING (ASEI) AMERICAN SCIENCE & ENGINEERING (ASEI), a Zacks #1 Rank Stock, is being rewarded by the market for management’s successes. While initial market reaction to the Dec 2005 earnings report was subdued, ASEI has since rallied into new 52-week high territory. The most recent new 52-week high was made on yesterday at $75.50. Read the full analysis on ASEI at : http://at.zacks.com/?id=2496. By achieving record financial results in 2005, coupled with a revised EPS outlook, Oceaneering International, Inc. (OII) was one of four Value Zacks Rank Buy Stocks featured last week. Read the full analysis on OII at: http://at.zacks.com/?id=2497.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Zacks Rank #1 and #5 Additions Zacks #1 Rank List: 36 New Additions (alpha by ticker)
To see the full list of Zacks #1 Ranked stocks (approximately 220 stocks), then click here. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Zacks #5 Rank List: 35 New Additions (alpha by ticker)
To see the full list of Zacks #5 Ranked stocks (approximately 220 stocks), then click here. 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 Ranked (Strong Buys) have produced the following results for investors:
And just as importantly, the Zacks #5 Rank stocks (Strong Sell) List has 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=2385. Or view the full list of Zacks #1 Ranked stocks at: http://at.zacks.com/?id=2383. 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 and improve your portfolio's performance. Did we mention it's free? Get started now by going to: http://at.zacks.com/?id=2386. 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
- Latest News
- Most Popular
- FED Front & Center Again
- Roundtable Top Picks of the Week
- RTI: Sector Strength Charts - Where's the Opportunity Now?
- Surging Financial ETFs Beating the Market
- Utility Industry Stock Outlook - June 2013
- 3 Japanese Stocks to Buy Now
- Your Next Stock Should Be Making New Highs
- Anatomy of Success: Stoneridge (SRI)
- RTI: What Will the Fed Do Wednesday?
- AWS 6/19: Will Bernanke Clarify Matters Today?
- PFP 6/19: Investors Bold in Wake of the Fed
Recent Quotes
| No Recent Quote currently available |
My Portfolio
|
My Portfolio Tracker One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts. Set yours up today. |
Zacks #1 Stocks on the Move 06/19/2013
| Company Name | Symbol | %Change |
|---|---|---|
| SUPPORTCOM I | SPRT | 3.97% |
| SUMITOMO MIT | SMFG | 3.50% |
| HOOKER FURNI | HOFT | 3.31% |
| NIPPON TELEG | NTT | 2.87% |
| INGLES MARKE | IMKTA | 2.87% |
Quick Links
Resources
Client Support
Zacks Research is Reported On:
Zacks Investment Research
is an A+ Rated BBB
Accredited Business.
Copyright 2013 Zacks Investment Research
At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1986 it has nearly tripled the S&P 500 with an average gain of +26% per year. These returns cover a period from 1986-2011 and were examined and attested by Baker Tilly, an independent accounting firm.
Visit performance for information about the performance numbers displayed above.
NYSE and AMEX data is at least 20 minutes delayed. NASDAQ data is at least 15 minutes delayed.