Thursday - December 16, 2004
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1. FEATURED EXPERTS
Here we cast the spotlight on a timely Featured Expert commentary that recently appeared on Zacks.com. Following the article you will find previews of other profitable commentaries with insights and recommendations from leading investment experts.
The American art critic Bernard Berenson wrote “There are two futures, the future of desire and the future of fate, and man’s reason has never learned to distinguish between them.” The success of the entrepreneur rests on his or her ability to achieve the future of desire – to create things others believed to be impossible, against the statistical odds; in contrast, the successful investor understands the future of fate, cognizant that statistical odds will prevail most of the time. While Jim Oberweis and his team usually focus their outlook on the months to come, they think “big picture” this month and imagine what the statistical odds might favor in the decades to come.
With that in mind, Oberweis and his team suggest that the successful investor may need to look beyond the U.S. for the optimal combination of opportunities in the years to come. In the short run, the U.S. cannot continue to run a large trade deficit without experiencing a loss of wealth over time. If the U.S. continues to import more than it exports, it must finance the difference with foreign debt. However, as the amount of U.S. debt increases, the ability to pay it all back declines. Investors will eventually require higher returns or buy debt of other countries instead. In other words, the relative attractiveness of U.S. debt to foreign investors will decline as the aggregate amount of such debt expands over time. This will lead to higher interest rates in the U.S., inflation, and a further devaluation of the dollar vis-à-vis the Euro and Yen. Those who agree would be wise to consider gold stocks, oil stocks, and most importantly, foreign investment opportunities.
In short, Oberweis and his team are making preparations to be ready for the future. While they think there will always be interesting opportunities within the U.S., they believe that there is a compelling story to consider opportunities on a global basis. In addition to being concerned about the long- term prospects of the U.S. economy, they are intrigued by the opportunities created by the rapid change occurring in developing countries.
More. . .
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Build-A-Bear Workshop, Inc. (NYSE: BBW) is the leading national retailer of “make your own” stuffed animals, operating over 170 retail stores in 40 states and Canada and 10 franchised stores internationally. The company also licenses the Build-A-Bear brand to leading manufacturers of greeting cards, children’s books, and toys. Store customers create, personalize, and customize their stuffed animals in an interactive “retail entertainment” experience. The company offers an extensive and coordinated selection of merchandise, including 30 different styles of animals to be stuffed and a wide variety of clothing, shoes and accessories for their stuffed animals. The concept appeals to a broad range of customers including children, teens, parents, and grandparents. In the company’s latest reported third quarter, sales increased approximately 39% to $66.5 million from $48.0 million in the third quarter of 2003. Build- A-Bear reported earnings per share of $.19 in the latest reported third quarter versus $.03 in the same quarter of last year. Build-A-Bear completed their initial public offering (IPO) of 1.5 million shares on 10/28/04 at $20 per share. Selling stockholders sold an additional 7.1 million shares.
Ceragon Networks Ltd. (NASDAQ: CRNT) develops and sells high- capacity (broadband) wireless networking systems. The company’s products provide high-speed, fiber-like transmission quality, and can be deployed more rapidly and cost effectively than fiber-optic lines. Ceragon primarily targets fixed and mobile communications service providers, and private networks that require high capacity connectivity. Its products consist of a compact high performance antenna, an outdoor unit, an indoor unit, and Ceragon’s SNMP-based proprietary network management software. The company markets its products through direct sales, distributors, resellers, third-party integrators, and OEMs. Ceragon products are used by more than 150 customers in over 50 countries. Revenue in the third quarter increased approximately 59% to $14.5 million from previous year levels of $9.1 million. The firm reported earnings per share of $.02 in its latest reported third quarter versus a loss in the same quarter of last year.
Altiris, Inc. (NASDAQ: ATRS) offers a full line of Web-enabled solutions that empower organizations to easily manage desktops, notebooks, handhelds and servers throughout the IT lifecycle. Altiris provides fully integrated, complete systems management solutions including deployment and migration, software operations management, inventory and asset management, and help desk management.
Audible, Inc. (NASDAQ: ADBL) provides premium spoken audio content, such as audio versions of books and newspapers and radio programs, that is delivered over the Internet and can be played back on personal computers and hand-held electronic devices. The Audible service allows consumers to purchase and download content from our Web site, store it in digital files and play it back on personal computers and electronic devices. Euronet Worldwide, Inc. (NASDAQ: EEFT) is an industry leader in providing secure electronic financial transaction solutions. The company offers financial payment middleware, financial network gateways, outsourcing and consulting services to financial institutions and mobile operators.
The Oberweis Report is a proprietary investment advisory letter specializing in stocks of extraordinarily rapidly growing companies. Each issue contains new stock recommendations along with a review of those previously recommended stocks that have yet to be sold. Learn more about this newsletter and free trial offer at: http://at.zacks.com/?id=438.
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Is your interest turning towards a higher-yielding and more
risky investment? Richard Moroney focuses on higher income with
lower risk, and highlights several of his favorite choices for
income among utility stocks. More...
Ben Zacks expects an upward bias through the year’s end, but
warns of pressures impacting the indices early in 2005. Use
this expert’s market analysis and Focus List additions to
prepare for the New Year and beyond. More...
Walter Frank says the market can still be characterized as
undervalued, but may not be for much longer. Read this expert`s
insightful commentary and then learn about the Boston Partners
All Cap Value fund. More...
Adam Oliensis says there’s a lot of love for dollar-denominated
assets at the moment. Find out why through this expert’s
analysis, and get his take on the merger mania sweeping the
Is the increase in M&A activity a sign of attractive buying
opportunities, or are companies having trouble generating
organic growth? Bill Martin and Matt Ragas tackle this question
and explain what it can mean for the market. More...
Featured Expert articles are courtesy of the 60+ leading investment newsletters that have partnered with us to create the Zacks Expert Advice service. Check out the Experts section of Zacks.com daily to find profitable stock picks and timely market commentary at: http://at.zacks.com/?id=637.
2. WEEKLY COMMENTARY: Experts Watch
Zacks.com offers 3 unique weekly commentaries that all further
our mission to help you Profit from the Pros. Today is the
latest installment of Experts Watch from Trace Johnson. Each
week Trace shares winning strategies from leading investment
experts to outperform in any market environment.
Examining Market "Statistics"
The flipping of the calendar year brings a number of predictable events, including holiday shopping, new calendar ordering, event planning and others in many of our lives. For investors and market statisticians, it is also the time of tax loss selling, "Santa Claus" rallies, and the "January Effect." Some investors are disciples of these trends and the "statistical" studies supporting them, while others counsel not to put too much faith in these events. Learn more about this debate, a market trend under many people's radar that points to impressive returns in 2005, and the stocks to be used to extract returns for your portfolio.
Gregory Spear, editor of The Spear Report, notes that year-ends bring out the disciples of perennial market trends in full force, armed with "statistical" studies. Spear critiques a recent article from a consulting firm that predicted downward pressure in the last days of December due to tax-loss selling for individuals, window-dressing for institutions, and portfolio realignment to control for risk in hedge funds. In spite of the fact that the study focuses on Decembers from 101 months, which is a large enough sample size to have some integrity, Spear feels the study has no predictive value for what will happen in the last days of this December.
Click here to read the full article with commentary and
recommendations from leading market experts. http://at.zacks.com/?id=14
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SCREEN OF THE WEEK
Kevin Matras goes over one of his favorite strategies for
finding cheap stocks with big returns. So far this year, its
average annualized gross returns are up 45.5%. Find out how and
get this week’s 5 newest picks. More...
ALL STAR TOP PICKS
The homebuilding industry may not grow as sharply in the near-
term future, but it's still a space with good visibility for
the long haul. Build a better portfolio with five All Star
3. BEST OF ZACKS INDEPENDENT RESEARCH
The analysts from Zacks Independent Research create a mountain of insightful equity research everyday of the week. Here you will find the best of that information recently published on Zacks.com.
BULL OF THE DAY
Canadian National Railway (CNI) - Improved Earnings Outlook
ProQuest (PQE) - Cutbacks in Library Spending Hurt Sales
IT in India Looks to Move Up the Value Chain
Construction Services Expected to Moderate in 2005
Early Earnings Report May be Great Indicator
4. TRADING STRATEGIES: 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…
This Profit Track strategy uses Return on Equity (ROE) to discover solid stocks. ROE is one of the quickest ways to gauge whether a company is creating assets or gobbling up investors’ cash. ROE = income / common equity. For instance, if the ROE for a company is 10%, then ten cents of income (earnings) are created for each shareholder dollar that was originally invested. Finding that a company is generating healthy income on invested capital rather than burning through it is good to know when deciding whether to invest in a stock. Investors should look for companies with an ROE that is high and growing, especially relative to its peers. This is truly one of the best indicators of management’s ability to generate exceptional profits that should drive the stock price in the future.
One of the quickest ways to gauge whether a company is creating assets or gobbling up investor`s cash is to look at their ROE. This fast moving Profit Track returned a respectable +70.4% in 2003 and is up over 16% YTD for 2004 (thru 11/5/04).
Bunge Ltd. (NYSE: BG) is an integrated global agribusiness and food company spanning the farm-to-consumer food chain. Bunge processes, produces, moves, distributes and markets food on five continents. It’s easy to see why Bunge has a Zacks Rank of 1 since the company put together a positive earnings per share surprise of almost +88% in the third quarter. All three of its division performed well, and the company raised its 2004 guidance and the base for its long-term EPS growth target. Bunge’s ROE is at 20.59 and its price to sales ratio is .24, both of which meet the parameters for this Profit Track. To continue your research on BG, click here.
Metal Management, Inc. (NASDAQ: MTLM) is primarily engaged in the collection and processing of ferrous and non-ferrous metals for resale to metals brokers, steel producers, and producers and processors of other metals. Investors like to see an ROE at 39.64, which Metal Management enjoys with a price to sales ratio of .43. The company showed off in its fiscal second quarter with net income of $1.40 per common diluted share, topping the consensus by as much as +94%. Metal Management believes its financial foundation provides for greater flexibility and an enhanced platform for growth. To continue your research on MTLM, click here.
The Ryland Group, Inc. (NYSE: RYL) If there is a bubble in the homebuilding industry, no body has bothered to tell Ryland. This Zacks #1-ranked stock saw its highest third quarter consolidated net earnings, revenues, new orders, closings, backlog and earnings per share in its history. On top of that, investors can look forward to a generous ROE of 33.77. Furthermore, with a price to sales ratio of .69, this company continues to earn its spot on this Profit Track. To continue your research on RYL, click here.
All the Profit Track strategies were created and backtested using the Research Wizard software from Zacks Investment Research. If you like this Upgrades and Revisions strategy, but want to narrow down the list of stocks and even improve the performance, then you should start a free trial to the this powerful stock picking tool. Learn more about the Research Wizard and Free Trial offer at: http://at.zacks.com/?id=1370
5. ZacksAdvisor.com TIMELY BUY of the WEEK
Parker Hannifin (PH)
Motion-control equipment made by Parker Hannifin helped sink the replicated Titanic in the Academy Award-winning film. Parker Hannifin's motion-control products use hydraulic (liquid) or pneumatic (gas or air) systems to move and position materials, or to control equipment. Its industrial products include fluid connectors, hydraulic and automation systems, climate and industrial controls, and process instrumentation. These are sold to the processing, manufacturing, and transportation industries. The company also makes aerospace components such as fuel systems.
Parker Hannifin Corp. more than doubled its earnings in the first quarter, due in part to strong North American sales. The company earned $132.8 million, or $1.11 per share, for the three-month period completed Sept. 30, compared with year-ago period earnings of $56.7 million, or 48 cents per share. Analysts surveyed by Thomson First Call expected Parker Hannifin to earn 83 cents per share in the quarter. Earnings were reduced by 7 cents per share for an investment write-down and a one-time pension plan adjustment.
Parker is poised for a solid long-term growth on the back of buoyant fundamentals in its industrial business, which is projected to be the primary growth driver over the coming quarters. Both North American and global industrial operations are riding high on formidable end-market dynamics. In the North American segment, strong order growth in mobile original- equipment (particularly in agricultural, construction, and forestry machinery sectors), heavy-duty trucks, and industrial equipment continue boosting the company's top-line.
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, 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 at: http://at.zacks.com/?id=1424.
Or view the full list of Zacks #1 Ranked stocks at: http://at.zacks.com/?id=1423.
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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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