Tuesday - July 25, 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 Earnings season began to heat up last week and the numbers are good. Positive surprises are outnumbering negative surprises by a ratio of 2.7:1. Second-quarter growth is running at 18.6% for companies that have reported — good, but admittedly down from 23.1% in the first quarter. Full-year earnings estimates, however, are basically unchanged. This is an important point because it means that analysts are maintaining their expectations for strong second-half growth in corporate earnings. In other words, concerns about an economic slowdown are not showing up in profit forecasts. Nonetheless, the volatile market conditions have caused a higher degree of risk aversion. During such periods, industry groups such as Beverages-Soft Drinks tend to receive more attention. As luck would have it, PepsiCo (PEP) and The Pepsi Bottling Group (PBG) recently delivered bullish earnings and raised guidance. PepsiCo topped expectations by three cents with profits of 80 cents per share. Net revenues rose 12%, boosted by growth in non-carbonated beverages and snacks. Citing positive momentum in its business, PEP projected full-year earnings of $2.95 per share – a two-cent increase from prior guidance. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - The Pepsi Bottling Group topped earnings expectations by two cents per share with earnings of 61 cents per share. Lipton Iced Tea, Tropicana juice and energy drinks helped to drive revenue growth of 10%. PGB raised its EPS guidance to a range of $1.82 to $1.88 per share. Coca-Cola (KO) also topped expectations, beating estimates by two cents with profits of 74 cents per share. Revenues rose 3% and gallon sales increased 5%. Six of the 16 covering analysts have raised their full-year estimates on KO, causing the consensus estimate to edge up a penny to $2.31 per share. Coca-Cola Enterprises (CCE) will report on Thursday, Jul 27. Second-quarter estimates have been holding steady at 55 cents per share, though full-year estimates are up slightly from a month ago. Investors who want a more aggressive stance should to take a look at Mining-Non Ferrous. The group contains three Zacks #1 Rank stocks: Southern Copper (PCU), Chaclo (ACH) and Falconbridge (FAL). Full-year estimates on PCU have been continuously rising and are up 60 cents over the past month to $13.81. The sustained bullishness on PCU reflects elevated copper prices and expectations that production capacity will be further increased in the future. Similarly, earnings estimates have been raised on ACH to reflect elevated aluminum prices and the company’s plans to expand production capacity. The full-year estimate on ACH calls for profits of $13.65, unchanged from a month ago, but up by nearly two bucks from 60 days ago. One analyst recently raised his full-year estimates on Falconbridge (FAL), causing the consensus estimate to jump by 35 cents to $4.95 per share; however, merger activity is likely to dictate FAL’s price. The company is part of three-way merger with Phelps Dodge (PD) and Inco (N). Read the complete INDUSTRY RANK at: http://at.zacks.com/?id=2379. Charles Rotblut, CFA is a senior market analyst for Zacks.com. He can be reached at crotblut@zacks.com. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include Eli Lilly (LLY), Broadcom (BRCM), Unilever (UL) and Safeway (SWY). To see their latest posts, click here. Find out which stocks have been recently upgraded by Zacks Equity Research: click here. Read the reports on all of the stocks on the Zacks Equity Research Buy List: click here. CSX Corporation (CSX) - Strength & Consistency. For full Zacks research report, click here. Infineon Tech (IFX) - Sluggish Demand. For full Zacks research report, click here. Reasonable Valuations at U.S. Banks Second Quarter Earnings Season off to Strong Start
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: Discounted Fundamental Strength Fundamental strength is often a key criterion for many investors. A strong balance sheet and a history of profitability indicate that a company has the ability to meet its obligations and the flexibility to pursue opportunities for growth. Therefore, such stocks are often perceived as having a lower level of risk. The lower level of risk often results in higher valuations. Occasionally, however, the markets undervalue a stock relative to its company's fundamental strength. When this occurs, opportunities for profits are created. This Profit Track identifies such opportunities. Backtesting results show just how successful this Profit Track has been. Double-digit returns have been achieved during each of the past four years. In 2005, this strategy continued to handedly beat the S&P 500. Barrett Business Services, Inc. (BBSI) reaffirmed its earnings guidance last month, stating that it anticipates earnings per share for the second quarter to range from 33 to 35 cents per share. This forecast is in line with current analysts' projections of 35 cents per share. Financial results for the second quarter will be available on July 27, 2006. BBSI offers a current ratio of 1.98 and has very low levels of debt as evidenced by its debt/equity level of 0.01. Continue your research on BBSI at: http://at.zacks.com/?id=2389. CTS Corp. (CTS) meets the requirements of this Profit Track with a current ratio of 1.60 and a debt/equity level of 0.25. The company will release earnings for the second quarter on July 26, 2006. Excluding a restructuring charge, CTS Corporation’s adjusted first-quarter earnings per share were 20 cents. The result was ahead of the consensus estimate 100% and topped the year-ago total. Continue your research on CTS at: http://at.zacks.com/?id=2390. Drew Industries, Inc. (DW) reported first-quarter earnings of 47 cents per share in early May. The result exceeded analysts’ expectations by nearly 15% and outpaced the year-prior earnings. The company mentioned that earnings were driven by sales growth in both Drew's RV and MH segments. Results for the second quarter will be released on August 2, 2006. DW has a PEG ratio of 0.72 and a price/sales multiple is 0.71. Continue your research on DW at: http://at.zacks.com/?id=2391. Triumph Group, Inc. (TGI) will report fiscal first-quarter earnings on July 26, 2006. TGI’s current ratio is 2.58 and its debt/equity level is 0.90. The company announced financial results for the fourth quarter in early May. Quarterly net sales as well as earnings improved year-over-year and earnings per share were 2% ahead of the consensus estimate. Continue your research on TGI 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 goes over his ‘Big Money’ screening strategy, which has trounced the market year after year: http://at.zacks.com/?id=2395. 3. 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 – Apple Computer (AAPL) More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum – Schlumberger (SLB) Schlumberger (SLB) shares lifted last week as profits jumped due to extremely strong overseas business and high oil prices. The company also said growth for the rest of 2006 will continue to be strong, particularly in the Eastern hemisphere, though at slightly lower levels than in the second quarter. Estimates have soared over the past 90 days for this year and next. The chart still looks good as the 50-day moving average is acting as strong support. Read the full analysis on SLB at: http://at.zacks.com/?id=2496. On Jul 17, 2006, Timken Co. (TKR) upped its second-quarter earnings per share guidance to about 89 cents, from its previous outlook between 75 cents and 80 cents. Furthermore, full-year profits are now expected to be between $3.00 and $3.15 per share, excluding special items. The company previously called for $2.80 to $2.95 per share. The revision was fueled by the strong results of the company's steel group. Read the full analysis on TKR at: http://at.zacks.com/?id=2497.
4. 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. Free Online Options Research at: http://at.zacks.com/?id=2664. Zacks/Schaeffer’s Options Trading service at: http://at.zacks.com/?id=2665. We are writing this commentary on Wednesday; and the market is extremely tough to trade, as the Dow closed up over 200 points. This comes after last Wednesday through Friday’s 500-point drop in the Dow due to fears over fighting in the Middle East. But all stocks aren’t up. There is one former leader getting crushed. Shares of Internet giant Yahoo! (YHOO) were down huge on the day thanks to a very disappointing earnings outlook. This might sound familiar to our readers since we wrote bearishly on YHOO during the first week of June. In fact, here’s what we concluded regarding YHOO back then: So, we have a potentially weakening stock with lingering optimistic sentiment. Add it up, and this equity looks like a nice bearish play to help offset our recent bullish picks. With that said, I'd recommend playing an intermediate- to long-term, slightly in-the-money put. Write it down and see how it does, but it looks like it could be a potential winner. On Jun 2, YHOO closed at $31.52, and as of Wednesday’s close it was down to $25.20 for a gain of over 20% if you were bearish. We don’t care what type of bearish put option you bought. As long as you gave it some time to play out – you’re sitting on some great gains right now. And it’s not like here at Schaeffer’s we don’t listen to the filters, as we had two different July put options on YHOO that we closed for great winners on Wednesday morning. What this shows is that the filters can help to pick a winner. Of course, they don’t always pick a winner, but with smart money management and maybe a little luck – you will find more than enough winners from the filters’ lists. In addition, these trades are similar to the trades that you will find in our Zacks/Schaeffer's Options Trader: http://at.zacks.com/?id=2666. Today, we want you to re-read exactly what it was that lead us to play YHOO puts back in early June. Whenever we have a nice winner, we like to go back and see exactly what was used to find the play – hopefully noticing something that might give us an edge over time. If you listened to the filters and played YHOO bearishly: congrats. Remember everything below is from Jun 2: The past two week's we've looked at bullish filters. However, we noted earlier, the market at this juncture isn't easy to trade within - so, let's find a bearish play to hedge ourselves. To do this, I want to take another look at the Schaeffer's Equity Scorecard, focusing on lower-rated stocks this time around. The scorecard is a combination of sentiment and technical indicators with scores ranging from 10 to zero. On this scale, 10 is the best rating and thus the "most bullish," while zero is the worst and thus the "most bearish." Before we can go any further, we want to talk briefly about our Expectational Analysis® methodology here at Schaeffer's. We are contrarian-based investors, meaning that we seek 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 has done so already. 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 analysts' ratings. Looking at the SPX, we took all 500 names and filtered for Schaeffer's Equity Scorecard ratings of 1.0 or less. Additionally, we filtered those results for stocks trading in the bottom 20% of their daily trading ranges. Using these criteria, we felt that we had a true selection of market laggards. Following this stringent selection process, we were left with 21 names. After looking at the technical charts of all 21 stocks, we think that Internet giant Yahoo! (YHOO) looks like a nice bearish play. We'll get into all reasons in just a bit, but one of our main reasons is that YHOO is a weak performer in a very weak sector. The Internet sector has been a definite poor performer this year, with the Internet HOLDRS Trust (HHH) slumping last week after running into resistance from its downward sloping 50-day moving average - suggesting that an ultimate bottom for the group hasn't been reached yet. Looking at YHOO's recent price action, we don't see much to get bullish about. The shares have been held in check by the $33.50 level since early February. In fact, on a year-to-date basis, the security has given back about 19% - significantly underperforming the broader market. So, we have a technically weak stock, but how does the sentiment picture look? Remember, we want to see optimism as a sign that most investors are already heavily bought into the shares, thus reducing the chances of a rush of money from the sidelines. 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 puts are open in the front three months of options compared to calls. Currently, YHOO's SOIR checks in at 0.59. When compared with other readings taken during the past year, we find that this ratio ranks lower than 71%, suggesting that short-term option players remain bullish. Short selling is a stock-trading strategy that involves selling a stock with the intention of buying it back later at a lower cost. In other words, you are betting that the shares will fall. We view a lot of short interest as bullish, as it increases the odds of a short-covering rally on any good news. For a potential short position, we like to see a lack of investors betting against the shares, as it reduces any potential support from short covering. Looking at YHOO, we see that it would take 3.5 days for investors to buy back their bearish bets. This isn't a huge number, but at the same time we don't think it's small. So all in all, this is a rather neutral reading in my opinion. Finally, according to Zacks, analysts are pretty bullish. Currently, there are 21 "buys," four "holds," and no "sells." We view a lot of optimism among weakening price action as a chance for an influx of analyst downgrades; or if nothing else, it reduces the chances of the stock receiving upgrades. So, we have a potentially weakening stock with lingering optimistic sentiment. Add it up, and this equity looks like a nice bearish play to help offset our recent bullish picks. With that said, I'd recommend playing an intermediate- to long-term, slightly in-the-money put. Write it down and see how it does, but it looks like it could be a potential winner. There you go, exactly what we said and why we thought it would go lower. Please continue to use all of the filters here at Zacks.com: http://at.zacks.com/?id=2382 and remember to always take profits if they present themselves. This opportunity we shared with YHOO was the perfect example of how the filters can help you become a better trader. Again, this it the type of trade that you can experience with Zacks/Schaeffer's Option Trader at: http://at.zacks.com/?id=2666. Good luck with your trading - Yahoo! Discover all the tools and commentary available from the Zacks.com Options Center at: http://at.zacks.com/?id=2382. Leverage the timeliness of Zacks #1 Ranked stocks with options trades that maximize profits and minimize risks. Learn more about our new Options Trading service at: http://at.zacks.com/?id=2666. 5. FEATURED EXPERTS Here we cast the spotlight on a timely Featured Expert commentaries that recently appeared on Zacks.com. Charles Mizrahi says thinking about stocks as pieces of businesses makes all the difference in the world. http://at.zacks.com/?id=2641. Dr. Pasternak likens Bernanke's statements to Dr. Jeckyl and Mr. Hyde. Learn why and check out three companies. http://at.zacks.com/?id=1487. 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. | |||||||||
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Zacks #1 Stocks on the Move 05/23/2013
| Company Name | Symbol | %Change |
|---|---|---|
| WESTELL TECH | WSTL | 6.67% |
| MAXWELL TECH | MXWL | 4.02% |
| ALLIANCE FIB | AFOP | 3.05% |
| SYNAPTICS IN | SYNA | 2.72% |
| STEIN MART I | SMRT | 2.56% |
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