Thursday - May 17, 2007
Want to view the archive of past issues? Click here.
Manage Profit from the Pros subscription:
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 - Foster Wheeler (FWLT)
Listen to the audio podcast on FWLT through Zacks' NEW Audio Feature
Foster Wheeler (FWLT) blew the cover off the ball in its latest quarter, exceeding the consensus estimates by 85 cents, or 113%. Needless to say, the stock has been on fire, approaching its 52-week highs in recent trading. Earnings estimates have exploded higher in the wake of the company's blowout quarter. Over the past week, this year's estimates have rocketed $1.24 to $4.59 per share. This kind of earnings momentum takes some time to play out. Read the full analysis on FWLT now!
Cohen & Steers, Inc. (CNS), last presented as a Growth and Income pick on Jan 30, is up over 11%. The company exceeded analysts. earnings expectations for the past four quarters by an average margin of 16.3%. Consensus earnings estimates have risen over the past 30 days for this Zacks #1 Rank stock. On Mar 13, the Board of Directors boosted the company.s quarterly cash dividend by 54% to 20 cent per share. CNS.s return on equity quadruples that of the industry average. Read the full analysis on CNS now!
Momentum – Texas Instruments Inc. (TXN)
Texas Instruments Inc. (TXN) broke through long-term resistance and soared to 52-week highs after raising second- quarter guidance. The news followed a second consecutive earnings surprise and should reinforce the stock.s underlying trend. Read the full analysis on TXN now!
Barnes Group, Inc. (B) topped analysts. earnings expectations for three straight quarters by an average margin of 18.4%. After reporting solid first-quarter results, the company boosted its full-year profit guidance to between $1.74 and $1.83 per share. Analysts responded to B.s bullish guidance by upping their earnings estimates. This Zacks #1 Rank stock has a price-to-book ratio of 2.8, compared to 4.5 for the market and 2.9 for the industry average. Its PEG ratio currently resides at 0.86. Read the full analysis on B 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:
GDX ROLLS OVER (GDX, QID, TWM, SDS, DXD, MZZ, MYY, RWM)
Java J (Rank #17 with $147,020)
>> JAVA.S MARKET MUSINGS #53 <<
Beris Vidovic (aka: Beris) is an aggressive investor, who has made a transition from what he described as .extremely aggressive. to aggressive. He said, .In the past I.d trade all kind and any kind of stocks no matter their valuations, outlook, growth potential, sector rotations or favorable industry positioning. What mattered to me is the quick turnover for smaller gains on each roundtrip trade. That, however, required a lot of time, a lot of cash in a bank to cover all those commission charges and the luck on my side. Nothing else, really, but luck. No investment tools, no financials, no fundamentals, just a good story that propels the stock and me hopefully on the right side of the trade..
These days Beris is still brazen with his trades, but he now puts more emphasis on researching solid companies with great growth opportunities. The technical player noted that he studies a specific industry of interest, picks a few solid names from that arena, watches them for few days to recognize their trading patterns and when technicals as well as the charts are close to perfection for this market watcher, he pulls the trigger. .That strategy works extremely well,. commented Beris.
This milder version of aggressive investing has resulted in Beris buying shares of companies like Fronteer Development Group Inc. (FRG), Statoil ASA (STO), Companhia Paranaense de Energia (ELP), Northern Dynasty Minerals Ltd. (NAK) and Uranerz Energy Corp. (URZ). 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.
As many of you are already aware, Home Depot (HD) reported disappointing first-quarter results yesterday. The home improvement retailer earned 53 cents per share, six cents less than brokerage analysts had forecast and 17 cents below year- ago profits. Same-store sales dropped 7.6%. The earnings miss was not completely unexpected as four of the 16 covering brokerage analysts had cut their first-quarter and full-year forecasts during the seven day period leading up to the report. (Two brokerage analysts also lowered their first-quarter forecasts on Lowes (LOW)). Changing weather conditions in February and March played a role, though there are company-specific issues at HD that are not helping profits either. Plus, there is the competitive pressure being placed on the Home Depot by Lowes.
More. . .
At the macro level, the housing slump is major issue. A lower number of home sales mean fewer trips to the home improvement store for things. Flat-to-falling home prices make it less desirable to pursue home improvement projects. Tightening in credit standards are also likely playing a role to the extent that they make home equity credit loans more expensive and/or harder to get. Combined, these factors explain why Building Product-Retail/Wholesale has three Zacks #4 Rank stocks, including HD and LOW, and one Zacks #5 Rank stock, Builder.s First (BLDR).
Higher oil prices and worldwide economic growth helped to support otherwise volatile freight rates in the first quarter. The overall increase in dayrates over the fourth quarter was significant because shipping rates have fallen materially from year-ago levels. The improvement is leading brokerage analysts to raise their forecasts on multiple companies within Transportation-Shipping, which contains nine Zacks #1 Rank stocks (.strong buy.) and seven Zacks #2 Rank (.buy.) stocks.
Among the Zacks #1 Rank stocks within this group, Hornbeck Offshore (HOS) and Teekay Shipping (TK) both delivered bullish results within the past two weeks.
HOS earned 67 cents in the first-quarter, 13 cents above expectations and 22% above year-ago results. (Investors should note that the boost in profitability also reflects a material increase in interest income. Excluding interest income, profits rose 10.6%.) Dayrates for tug and tank barges jumped 19.7% to $17,680 versus $16,799 in the fourth quarter. Dayrates for the company.s offshore supply vessels were relatively stable at $19,073 versus $19,352 in the fourth quarter. Based on the assumption that dayrates will remain relatively stable throughout the remainder of the year, HOS raised its full-year profit guidance to a range of $2.29 to $2.77 per share from a range of $2.19 to $2.68 per share. Six of the 10 covering brokerage analysts raised their forecasts in response, pushing the consensus earnings estimate up 14 cents to $2.57 per share.
TK earned $1.12 in the first quarter, two cents above expectations, but down from year-ago profits of $1.58 per share. Revenue per day for the company.s Aframax tanker fleet was $36,904 versus $34,789 in the fourth quarter. Revenue per day for the company.s large and medium size tankers was $25,117 versus $24,544 in the fourth quarter. Six of the nine covering brokerage analysts raised their forecasts following the earnings report. The impact of these revisions was a 29- cent increase in the full-year consensus earnings estimate. The estimate now calls for profits to total $3.67 per share this year.
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 ConocoPhillips (COP), Pepsi Bottling Group (PBG), Microsemi Corporation (MSCC) and Williams Companies (WMB). To see their latest posts, click here.
Listen to the audio podcast of Earnings Trends through Zacks' NEW Audio Feature.
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: 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.
Amkor Technology, Inc. (AMKR) recently posted first-quarter earnings of 18 cents per share, beating the consensus estimate by 20%. The company stated that quarterly financial performance was in line with guidance and is further evidence of its success in achieving consistent levels of profitability and generating free cash flow. AMKR meets the criteria for this Profit Track as evidenced by its price-to-sales ratio of 0.90 and earnings per share profitability of $1.02 over the past 12 months. Continue your research on AMKR now!
Books-A-Million, Inc. (BAMM) earned $1.12 per share during the past 12 months and sports a price-to-sales ratio of 0.52. The company reported fourth-quarter earnings of 90 cents per share in late March, outpacing the consensus estimate by 11%. Books-A-Million said improvements in margin, better inventory management and discipline in cost control contributed to solid results. Continue your research on BAMM now!
Phoenix Companies, Inc. (PNX), a Zacks #1 Rank (Strong Buy) company, has a price-to-sales ratio of 0.69. During the past 12 months, PNX earned $1.21 per share. The company recently announced first-quarter earnings of 33 cents per share, exceeding the consensus estimate by 43.5% and outperforming the year-prior result. Phoenix Companies mentioned that this quarter provides a strong start to the year for both top and bottom line growth and continues the favorable results of last year's second half. Continue your research on PNX now!
SYNNEX Corp. (SNX) released its fiscal first-quarter report in late March. Earnings per share of 43 cents were ahead of last year's 34 cents and surpassed the consensus estimate of 40 cents. The company noted that it continues to deliver improved results due to increased efficiencies in its business model and solid execution in its core distribution business. SNX expects second-quarter earnings per share to range between 43 cents and 45 cents. Analysts are in agreement as evidenced by current forecasts of 44 cents per share, which up from the two months-ago projections of 41 cents. The company.s price-to-sales ratio stands at 0.10, and it experienced earnings per share profitability of $1.70 over the past 12 months. Continue your research on SNX 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 goes over the popular ROE2 strategy. See what items go into this winning screen and get three of its newest picks: 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...
Schering-Plough Corporation (SGP) is a global healthcare company that offers both prescription and over-the-counter (OTC) products. The company specializes in anti-infective, anticancer, allergy/respiratory and cardiovascular products such as Temodar (brain cancer), Clarinex (allergy relief), Nasonex (allergy relief), Remicade (anti-inflammatory) and Zetia (cholesterol inhibitor). Besides Afrin (nasal spray), its prescription drug Claritin is also available over-the- counter. In addition, the company makes foot-care products under the Dr. Scholl.s brand and sun-care products under the Coppertone label. Through a joint venture, Merck and Schering- Plough codeveloped and now co-market the cholesterol-lowering combination drug Zocor/Zetia called Vytorin. Schering- Plough is in the process of a massive restructuring and reorganization program to cut costs and reduce its dependency on the now-OTC-available Claritin franchise. This Value Enhancement Initiative (VEI) aims to increase productivity and efficiency while reinvesting for growth.
On March 12, 2007 Schering-Plough announced that plans to acquire Organon BioSciences N.V., the human and animal health care businesses of Akzo Nobel N.V., for approximately 11 billion in cash ($14.4 billion based on closing exchange rate on March 9, 2007). The transaction, which is expected to close by the end of 2007, is anticipated to be accretive to Schering- Plough's earnings per share (EPS) by about 10 cents in the first full year, excluding purchase-accounting adjustments and acquisition-related costs. Schering-Plough expects to achieve annual synergies of $500 million; it will take three years from the closing to reach this level of synergies. Schering- Plough will finance the acquisition through a mix of cash, debt and equity.
The turnaround is complete! CEO Fred Hassan believes that Schering-Plough has now entered the next phase of the Value Enhancement Initiative (VEI) plan known as build a base . Over the course of the last year Schering- Plough has delivered positive reported revenue growth and a substantial increase in earnings. The company was able to grow the adjusted top-line (includes-Zetia/Vytorin) by 18% to $3,191 million in the fourth quarter. This was $108 million above our forecast, led by strong sales of almost all key products. This growth is tops in large-cap pharma, and rivals several biotechnology companies as well.
Schering-Plough Corporation released financial results for the first quarter in mid-April. Earnings per share of 42 cents almost doubled last year.s first-quarter total of 22 cents and eclipsed the consensus estimate by 45%. The company has managed to stay ahead of analysts. estimates four times out of the past five quarters and matched the other time.
"Our first quarter performance demonstrates that we continue to hone our competitive edge, extend our core businesses and deliver very strong results," said Fred Hassan, chairman and CEO. "We sustained the momentum in the first quarter that we built in our business over the last three years. At the same time, we are gaining momentum in R&D. And our planned combination with OBS and its Organon, Intervet and Nobilon businesses promises to build on that momentum."
Earnings estimates for the 2007 year are on the rise. Current Wall Street projections of $1.24 per share edged up over last week.s $1.23 and climbed 13% from the one month-ago level of $1.10.
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.
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.
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.
*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.
To contact us by mail:
Zacks Investment Research
To unsubscribe from receiving "Profit from the Pros" e-mail newsletter, click here.