Thursday - May 10, 2007
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1. ZACKS RANK BUY STOCKS
Zacks #1 Ranked stocks average a 31.8% annual return. Every day on Zacks.com we highlight four new 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 – Crocs, Inc. (CROX)
Listen to the audio podcast on CROX through Zacks' NEW Audio Feature
Crocs, Inc. (CROX) soared almost 20% after reporting blowout first-quarter earnings. Earnings estimates have dramatically jumped in the wake of this announcement. This year's numbers soared 53 cents to $2.95 per share over the past week. Zacks Equity Analyst Robert Plaza, CFA recently raised his rating to a "Buy" from a "Hold”. Read the full analysis on CROX now!
Baldor Electric Company (BEZ) is a Zacks #1 Rank stock that recently beat the Street’s first-quarter earnings estimate by an impressive 44.4%. Furthermore, revenues more than doubled to $395.7 million. Consensus estimates for both this year and next are up over the past week. The company has a current dividend yield of 1.5% and its return on equity easily surpasses that of the industry average—19% compared to 12%. Read the full analysis on BEZ now!
Momentum – B/E Aerospace Inc. (BEAV)
B/E Aerospace Inc. (BEAV) recently reported a fifth consecutive double-digit earnings surprise and raised full-year guidance ahead of expectations. With the stock trading at nine-year highs on stronger-than-average volume, look for continued momentum in the direction of the underlying trend. Read the full analysis on BEAV now!
TBS International Limited (TBSI) posted fourth-quarter earnings that beat the consensus estimate by 27.5%. The company continued to expand and renew its fleet in 2006. Analysts’ earnings estimates have been climbing upward for this Zacks #1 Rank company. TBSI has a price-to-book ratio of 2.1, compared to 4.5 for the market. Its PEG ratio currently resides at 0.76. Read the full analysis on TBSI now!
2. Best of the Zacks $100,000 Challenge
Zacks is conducting a nationwide talent search to find the very best stock pickers. The winner gets a $100,000 dream job with Zacks! . Sign up for free to join the competition, or just read what stocks the leading players are trading on the Zacks Challenge Player Blogs.
Here's what the leading players are saying lately:
Mightymo MO (Rank #66 with $129,067)
MAKE SOME MONEY ON THESE THREE GOOD PLAYS! (TUBR, ZYTC, FLE) After winning on DNDN, here are three stocks I’m playing or planning to play. There’s good money to be made…
Java J (Rank #24 with $142,521)
>> JAVA’S MARKET MUSINGS #48 <<
The overriding theme of the Zacks $100K Challenge seems to be momentum investing, and Clark Chung (aka: Clark2005) is no exception. This simulator player likes to ride the momentum of small caps for the most part on a short-term basis.
This competitor and brand new blogger has experienced success in the Zacks $100K Challenge, used the game’s blog to his advantage and has earned close to 30% since the beginning of the year.
Clark’s investment style has led to purchase such stocks as Novastar Financial Inc. (NFI), Atherogenics Inc. (AGIX), Rochester Medical Corp. (ROCM), Movie Gallery Inc. (MOVI) and UFP Technologies Inc. (UFPT). Take a look at his complete trading history by clicking here.
3. ZACKS EQUITY RESEARCH
Listen to the audio podcast of the Industry Rank Analysis through Zacks' NEW Audio Feature.
During the past two weeks, there have been multiple bullish reports from companies that are suppliers to larger aerospace companies. These reports are not surprising given that the entire aerospace sector is benefiting from a combination of sustained economic expansion, both domestically and abroad, and spending on defense. These positive sector trends are leading to upward revisions in brokerage analysts’ profit forecasts. For example, Aerospace/Defense Equipment now encompasses four Zacks #1 Rank (“strong buy”) and 11 Zacks #2 Rank stocks.
The biggest of the Zacks #1 Ranks stocks in Aerospace/Defense Equipment is BE Aerospace (BEAV), a mid-cap company. BEAV earned 40 cents during the first quarter, nine cents above expectations and more than double the profits of a year ago. Revenues spiked to a record $387.8 million and reflected higher demand for retrofits, particularly those involving seating. The company stated that international carriers are in the process of or intend to upgrade the cabin interiors of their wide-body jets. Based the positive momentum, BEAV raised its full-year earnings guidance to $1.55 per share. Five of the seven covering brokerage analysts raised their forecasts in response, pushing the consensus estimate up 10 cents to $1.56 per share.
Goodrich Corporation (GR) also cited increased demand from the airlines for its favorable performance. GR earned 78 cents per share in the first quarter, eight cents above expectations and about 45% above year ago adjusted profits. Revenues rose 12% and were paced by higher sales of both original and aftermarket airplane equipment. The company raised its earnings guidance for the full year to between $3.20 and $3.35 per share from $2.95 to $3.15 per share. Most of the 16 covering analysts raised their projections in response, causing the consensus estimate to rise by 22 cents to $3.35 per share.
More. . .
It’s important to note that it’s not just demand from the airlines that are driving growth for the sector. EDO Corporation (EDO) credited higher sales of its electrical systems and TransDigm Group (TDG) benefited from strength in the commercial business jet market. EDO is a Zacks #1 Rank stock and TDG is a Zacks #2 Rank stock.
Given the inflated prices for corn products caused by the current push for ethanol, it was not surprising to see Corn Products International (CPO) say that pricing power helped both first-quarter revenues and margins. CPO, which makes corn syrup and dextrose, earned 66 cents last quarter, besting expectations for profits of 41 cents per share. Net sales surged by 24% to $762 million, reflecting a combination of pricing power, a favorable product mix and, to a lesser extent, acquisitions. CEO Sam Scott was cautiously optimistic following what was a record quarter for his company, though he did raise his company’s full-year profit forecast. Scott anticipates CPO earning between $2.10 and $2.30 per share this year versus prior guidance of $1.84 to $2.01 per share. All five covering brokerage analysts promptly raised their forecasts in response, resulting in a revised consensus earnings estimate of $2.28 per share. CPO is a Zacks #1 Rank stock and is classified in Food-Miscellaneous/Diversified.
Higher corn prices are resulting in higher earnings for multiple companies that have exposure to agriculture. For example, last week, I discussed the positive earnings estimate revisions occurring for fertilizer companies Potash Corporation of Saskatchewan (POT) and Terra Industries (TRA). Machinery companies such as CNH Global (CNH) are also doing well; excluding the impact of exchange rates, CNH generated a 5% improvement in agricultural equipment sales. CNH is a Zacks #1 Rank stock classified in Machinery-Farm.
Investors should understand that while the strength in the agricultural sector is widespread, it is not universal. Last week, Dean Foods’ (DF) CEO, Gregg Engles, cautioned that supplies of raw organic milk are growing at a faster pace than demand. This imbalance comes at time when commodity costs (e.g. cattle feed) are rising. Based on this scenario, DF told investors that full-year profits could come in at the low end of the company’s previously stated guidance of $1.72 to $1.78 per share. Six of the covering brokerage analysts cut their forecasts in response, causing the consensus estimate to decline by nine cents to $1.73 per share.
DF is a Zacks #4 Rank (“sell”) stock that is classified in Food-Dairy Products. This group contains one other Zacks #4 Rank stock, Lifeway Foods (LWAY).
To read the complete Industry Rank Analysis, click here.
Charles Rotblut, CFA is the senior market analyst for Zacks Equity Research.
Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include Comstock Resources (CRK), APAC Customer Services (APAC), DJO, Inc. (DJO) and Stone Energy (SGY). To see their latest posts, click here.
Listen to the audio podcast of Earnings Trends through Zacks' NEW Audio Feature.
Positive Surprises Leading to Upward Estimate Revisions
4. 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
Profit Tracks: Recent Price Strength
This screen looks for stocks trading in the upper range of their 52-week highs along with attractive Zacks Rank and Broker Ratings. This strategy proves that the "trend is your friend" with a +35.5% return versus +4.9% for the S&P 500 in 2005.
Anixter International, Inc. (AXE) announced first-quarter results in late April, stating that same trends that drove record performance in 2006 have remained largely intact through the first few months of the new year. At this time, all indications are that these trends will continue for the next few quarters. Earnings per share beat the consensus estimate by 9% and increased on a year-over-year basis. AXE has seen its share price increase by 10% during the past four weeks and is currently hovering right around its 52-week high. Continue your research on AXE now!
DryShips, Inc. (DRYS), a Zacks #1 Rank (Strong Buy) company, has advanced in share price by 45% over the past four weeks and recently established a new 52-week high. The company recently declared a quarterly cash dividend of 20 cents per share. DRYS reported full-year and fourth-quarter results in late February. Earnings per share, excluding an item, totaled 77 cents for the fourth quarter, beating the consensus by 3%. Continue your research on DRYS now!
FARO Technologies, Inc. (FARO) recently posted first-quarter earnings of 22 cents per share, soaring past the previous year’s three cents and exceeding the consensus estimate by 57%. The company noted that ongoing strength in its sales performance, combined with gross margin improvement, sales force productivity and reduced legal expenditures drove solid first quarter earnings. FARO is trading very close to its 52-week high and has seen its share price increase 15% over the past four weeks. Continue your research on FARO now!
Koppers Holdings, Inc. (KOP) satisfies the criteria of this Profit Track as evidenced by its increase in share price of 13% over the past four weeks. KOP is currently trading within reach of its 52-week high. Koppers Holdings recently released results for the first quarter. Earnings per share jumped ahead of the consensus estimate by 37.5% and increased year-over-year. Continue your research on KOP now!
To see the full list of stocks that currently pass this winning screen, click here.
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”.
Listen to the audio podcast of the Screen of the Week through Zacks' NEW Audio Feature.
Kevin Matras shows how you can beat the market with his Upgrades and Revisions2 strategy: Click here.
5. ZacksElite.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...
Chicago-based Jones Lang LaSalle, Incorporated (JLL) is a leading full-service real estate firm that provides corporate, financial, and investment management services. The company caters to corporations and other real estate owners, users, and investors worldwide. A broad real estate product and service range, and extensive knowledge of domestic and international real estate markets, enable Jones to operate as a single-source provider of real estate solutions.
JLL continues to post strong organic and acquisition driven revenue growth. Given the growing demand for commercial real estate worldwide, Zacks senior analyst Greg Sukenik anticipates increasing demand for Jones Lang’s services, particularly in leasing and management services. Although, margins continue to erode; the company is planning for future growth as it continues to hire, open new offices around the world, and invest in IT infrastructure. Sukenik believes the company’s investment management division will see higher fund inflows and JLL will continue to grow recurring advisory and incentive fees.
Jones Lang is uniquely positioned to capture incremental returns in China and India, where increasing levels of off-shoring by U.S.-based companies is driving strong demand for real estate services in these countries. Sukenik also likes the prospects for the Chinese economy and real estate markets as valuations and deal flow will continue to create opportunities for JLL.
The company recently released its results for the first quarter, referring to it as a strong quarter. Earnings per share of 81 cents soared past last year’s 10 cents and surpassed the consensus estimate by an impressive 523%. Jones Lang LaSalle exceeded analysts’ expectations four times out of the past five consecutive quarters.
As one of its highlights for the quarter, the company noted that on a year-over-year basis revenue increased 45% to $490 million with growth in all business segments.
"The strength of our first-quarter performance is a clear sign that we are sustaining the momentum that drove us successfully through last year," said Colin Dyer, Chief Executive Officer of Jones Lang LaSalle. "Our results reflect the investments we have made over the past two years; healthy conditions in the world's major economies, global real estate and capital markets; and the commitment of our people to superior client service. This strong start positions us well for the rest of 2007," Dyer added.
The real estate firm also declared a semi-annual dividend of $0.35 per share.
Wall Street took notice of the solid quarterly performance and increased full-year 2007 earnings expectations. Current year 2007 estimates of $5.28 per share moved up from last week’s forecasts of $4.93. Three months ago, earnings estimates stood at $4.85 per share.
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.
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Regards and Happy Investing,
Charles Rotblut, CFA
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*Zacks Rank performance is the total return (price changes + dividends) of equal weighted portfolios, consisting of those stocks with the indicated Zacks Rank, assuming zero transaction costs. These returns are not the result of a backtest; these are actual returns since 1988. The stocks in the Zacks Rank portfolios were available to Zacks clients before the beginning of each month (monthly rebalancing). Performance results from 1988 through September 2006 are based on a subset of all Zacks Rank stocks that excludes stocks covered by only one analyst and ADR’s.
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.
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