Thursday - February 17, 2005
 Want to view the archive of past issues? Go here. Get the latest investment alert technology and receive the most up-to-date Profit from the Pros content as it’s published, in Real Time, with no waiting. Learn more about this free tool at: http://at.zacks.com/?id=1517. Manage Profit from the Pros subscription: 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.
In their commentary last month, James Oberweis and his team stated, “Our advice is straightforward for the early part of the year: CAUTION! … Valuations are simply getting ahead of themselves.” The year DID begin with a walloping. Small-cap stocks, as measured by the Russell 2000 Index, have declined 5.86% so far in 2005. Using the Ibbotson & Associates universe, small-company stocks have experienced only three Januaries this bad since Ibbotson began collecting data in 1926. Those three years were 1939, 1970, and 1990. Dubiously, each of those years turned out to be tough years. According to Ibbotson and Associates, smallcap stocks returned 0.00%, -17.4%, and -21.6%, respectively, during the years 1939, 1970, and 1990. So is January an omen for the rest of 2005? Oberweis and his team are not so pessimistic. Correlation is usually used when knowledge is incomplete, and many times it leads to unsound conclusions. Every statistics student knows the story of the man who had a hangover after drinking scotch and water one night, bourbon and water the second, and vodka and water the third. A statistician advised him to stop drinking water. So goes the tendency of investors. One cannot simply extrapolate a short-term trend and assume that the year will continue as such without understanding the causes BEHIND the decline. In 1939, investors were nervous as U.S. involvement in the war overseas became more prominent. The government began placing increased emphasis on balancing the budget, which caused growth to slow even further and unemployment to rise. In 1970, Americans faced a period of civil unrest as the debate on the Vietnam War raged on. Confidence was low and valuations were high after a big run for equities in the late 1960s. 1990 was marked by sharply reduced economic growth, the beginning of a recession according to some. Admittedly, we have our share of problems in 2005, with the war in Iraq dragging on, deficit spending continuing, a trade deficit building, and inflation simmering along. But it is also important to remember that the domestic economic situation remains quite favorable. The weaker dollar will bolster the attractiveness of U.S. exports and help to moderate the trade deficit issue. In short, the economic, geopolitical, and stock market valuations vary markedly from bad Januaries of the past. In contrast to their January issue, which was uncharacteristically cautionary, Oberweis and the team are beginning to get their optimism back. The risks of investment in companies within their Model Portfolio is significantly lower than at year’s end. Specifically, the average P/E of their universe of high growth companies, which stood at 37.6 last month, is down to 34.1. For comparison, this is about the same level as Oct 2004. It is substantially lower than at the beginning of 2004 (when the universe P/E hit a high in the mid 40s), but still quite a bit higher than the beginning of 2003 (when the universe P/E was exceptionally low at a level between 25 and 30). They are not nearly as concerned about valuations as they were a month ago. Bottom line: There are good reasons for optimism for 2005. The Superstock Investor Master List Portfolio is positioned well to profit and Manera and his team are going to continue to find ways to capitalize. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - International DisplayWorks (NASDAQ: IDWK) is a low cost component manufacturer of small form Liquid Crystal Displays (LCDs) and assembler of LCD modules for use in cell phones, medical equipment, PDAs, digital cameras, and consumer/industrial appliances. The company operates its LCD manufacturing and assembly operations out of its wholly owned facilities based in Shenzen, China, with sales offices in the United States, Europe, Singapore, Hong Kong, and China. The company’s clients include several original equipment manufactures including Fortune 500 companies, Asian and European corporations, and smaller companies operating in a variety of discrete markets. In the company’s latest fourth quarter, sales increased approximately 101% to $14.3 million versus $7.1 million a year earlier. Earnings per share grew to $.04 versus a loss in the same year-ago period. Infospace, Inc. (NASDAQ: INSP) markets web search and online directory products that help users find information and create new revenue opportunities for merchants. The company provides its online search services through four websites: Infospace.com, Dogpile.com, Webcrawler.com, and Metacrawler.com. These websites allow users to locate information, merchants, and products online, and allow merchants to strategically position themselves in search results to generate sales leads. The company also provides content and applications for wireless devices to wireless carriers through its Infospace Mobile division, which is seeing rapid growth. In the company’s latest reported fourth quarter, sales increased approximately 104% to $79.7 million from $39.0 million in the third quarter of 2003. Infospace reported earnings per share of $.50 versus $.23 in the same quarter of last year. 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. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Nadine Wong says investors should treat Chiron’s stock as a
short-term play that can move either direction. Discover why
no one knows for sure what damage, if any, Chiron may or may
not suffer as it tries to get back on track. More... Jim Collins believes the Federal Reserve has a strong desire
to get short-term rates back to neutral. Learn why this expert
doesn`t think stocks will have a problem overcoming higher
rates. Then take a look at some stock picks for the week. More... Ron Rowland explains that the stock market appears more and
more to be stuck in a trading range. Read about the different
index ranges and find out why this mutual fund expert is
staying put at the moment. More... e) Crude Oil Could Make or Break the Market From a big-picture view, the stock market remains in a wait-
and-see state, according to Dennis Slothower. Discover how oil
prices may determine the market’s next move. Then take a look
at some stock recommendations. More... John Reese says the federal funds rate could be at 3.25% by
mid-year. Find out what impact this will have on the economy
and what to expect afterwards. 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: All Star Top Picks Zacks.com offers 3 unique weekly commentaries that all further
our mission to help you Profit from the Pros. Today we will
uncover the current top picks of 5 Star analysts in a hot
sector (a.k.a. All Star Top Picks). Why? First, it makes sense
to tap into industries that have potential to outperform the
market. Second, within that sector you want to be on board the
stocks with the best prospects. To help us uncover these top
picks we employ the keen insights of 5-Star analysts. Who are
they? Check out the "About Zacks All Star Analyst Survey"
section below. This week we explore the Leisure and Recreation Products Industry The leisure and recreation products industry is closely tied to the macro-economic environment, and there are a number of factors on the horizon suggesting that 2005 could be a tough year for many companies. Under such conditions, investors must become very selective to make headway. At the moment, the space has a Zacks Industry Rank of 2.92, according to Nick Raich’s ‘Weekly Earnings and Sector Update,’ which places it 78th out of more than 200 industries. There are obviously companies in this industry that can help investors realize their goals, and the All Star analysts are best-positioned to get you on the right track. 2005 is still a young year with an uncertain future, but there are certainly factors already put in motion that we know will impact the landscape. Unfortunately, these conditions are likely to pose challenges for many leisure companies. For example, interest rates will continue to rise throughout the year at a ‘measured pace,’ which was reiterated at the most recent Fed meeting. This will probably have enough of an impact on consumer spending to be felt by leisure and recreation companies. Furthermore, oil may be off of its recent highs but is still quite expensive by historical standards. OPEC expressed their contentment with the current situation at a recent meeting, suggesting that higher-than-normal oil prices are here to stay for the foreseeable future. The domino effect that results from high oil prices is well known. Raw material costs move higher as well as transportation expense. Such factors impact a significant portion of the market, and leisure is no exception. Under such circumstances, leisure companies have an added obstacle, since recreation products and activities are usually expendable in a difficult environment. However, there are a number of companies that will succeed in spite of the challenges. Harley-Davidson is one of the mainstays in this industry. It has spent the past century revolutionizing motorcycles, and has taught the market a thing or two about financial strength as well. The company recently completed its 19th consecutive record year, with fourth quarter earnings and revenues above year-ago levels. Retail sales for its motorcycles improved +6.7% domestically and +14% internationally. Harley-Davidson will have its own problems in 2005 with the above-mentioned factors, but it continues to be one of the most closely- followed leisure and recreation companies and is likely to continue reiterating its spot as a popular and solid company. The toy industry is another significant portion of the leisure and recreation industry. Many analysts are rather cautious of the space right now, especially after a rather lackluster holiday selling season. Chief among concerns for toys is rising commodity costs, as companies must resort to price increases and other actions to offset the impact. In addition, the toy industry is changing and has become much more difficult, as many people flock toward video games. Nevertheless, Mattel surprised the Street recently with fourth quarter earnings per share above the consensus, as the company’s plans to reinvigorate the slumping Barbie brand apparently showed some results. Therefore, just because a certain industry will face obstacles, doesn’t mean investors can’t find and profit from companies in the space. The difficultly, though, arises from finding the right stock at the right time. Investors could try this on their own, but it can usually be tantamount to throwing darts on a board. However, analysts study all the angles and are in a much better position to find the best opportunities for you. But the best part of consulting the analysts is that you get to put your feet up and let these experts do the heavy-lifting in the leisure and recreation industry. Who are the All Star Analysts of the Business Services Industry? What stocks do they recommend now? The answers to these questions are found in the remainder of this All Star Top Picks article at: http://at.zacks.com/?id=1451. To see the full All Star Survey with access to all ratings, research and stock picks, then visit: http://at.zacks.com/?id=12. These are the best stock picks from the best stock pickers in the business. This portfolio only includes stocks recommended by five or more of the 5-Star analysts based on stock picking performance. In 2003 it gained 46.6% nearly doubling the performance of the S&P 500. See the full portfolio at: http://at.zacks.com/?id=13 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - SCREEN OF THE WEEK Earnings Acceleration: The Difference Between Good Stocks and Great Stocks Kevin Matras goes over two ways to find stocks with increasing
earnings and accelerated earnings growth. Learn how to find
the best stocks with the best earnings and get 6 new picks. More... ZACKS MARKET COMMENTARY Final earnings growth for the fourth quarter should be about
+28%. As the market looks toward the next quarter, discover
the industries out in front. More... 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 BT Group - ADR (BT) - Promising Global Acquisitions Martha Stewart Omnimedia (MSO) - Near-Term Troubles Latin American Growth Brings Opportunities Footwear and Apparel Growth Continues
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 provides an attractive shorter term trading strategy for those who want a stocks price momentum to be in their favor. Then just to be sure, we also want the fundamentals to be sound as well. The end result is a strategy that has been consistently beating the market each of the last 3 years. The key element in this screen is finding stocks currently on the move and that are trading in the upper ranges of their 52 weeks highs. 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 an average annual return of +48.1% over the last 4 years compared to only +1.1% for the S&P 500. American Science and Engineering, Inc. (NASDAQ: ASEI) announced earlier this month the receipt of a one-year $1.3 million service, maintenance and spare parts contract from the U.S. Government for its breakthrough Z® Backscatter Van™ X-ray screening systems. The company’s technology is gaining greater acceptance, so it’s no wonder that its share price advanced +25.52% over the past four weeks. Also, the company is very close to its 52-week high of almost $47. American Science and Engineering is an innovative company that has good momentum moving forward. To continue your research on ASEI, click here. Computer Programs and Systems, Inc. (NASDAQ: CPSI) is a Zacks #1-ranked stock with a price change of +12.02% in the past four weeks. The company reported a solid fourth quarter earlier this month, which it said was further confirmation of the increasing demand for its products and services. Also, it’s Board of Directors increased the quarterly dividend. Computer Programs and Systems is a short jump from its 52-week high, suggesting that this company has good break out potential. To continue your research on CPSI, click here. Metal Management, Inc. (NASDAQ: MTLM) said favorable but choppy market conditions fueled by both strong domestic and international demand for steelmaking raw materials led to fiscal third quarter net sales of $447.6 million, which was up +73.7% from a year ago. The company’s hard work is also paying off in its price, which has advanced +10.66% in the past four weeks. This is certainly an encouraging trend for Metal Management and its shareholders moving forward. To continue your research on MTLM, 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 Resources Connection, Inc., (RECN) Resources Connection, Inc., (RECN) provides outsourced professional services on a project basis to firms of varying sizes in a broad range of industries worldwide. The company’s primary areas of expertise include: accounting and finance, information technology, human resources, risk management and internal audit, and supply chain management. The company also assists clients with periodic needs, such as budgeting and forecasting, audit preparation, public reporting, and assisting clients with their compliance efforts under the Sarbanes Oxley Act of 2002. The company, founded in 1996 as a division of Deloitte & Touche, became a wholly-owned subsidiary of Deloitte in January 1997. Resources Connection completed its initial public offering in December 2000, following a management-led buyout in April 1999. Diversification into new professional service lines, expansion of offices and staff strength, acquisitions, and benefits from the Sarbanes-Oxley Act are the key positives associated with the company. Resources Connection has posted strong internal growth. According to the company, it has grown at a compounded annual rate of 46.8% from fiscal year 1998 to 2003 by broadening its services. Net income for fiscal year 2004 grew 94% to $24.3 million, or $1.00 per diluted share, compared to $12.5 million, or $0.55 per diluted share in fiscal year 2003."Our strong revenue and net income growth can be directly attributed to our unwavering focus on delivering excellent service to our clients, including our growing number of multinational clients," said Chairman and CEO, Donald Murray. Analysts expect RECN to grow earnings over 100% to $0.50/share for the 2/2005 quarter, up from $0.24/share last year. RECN recently announced a 2-1 stock split.
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. FREE PORTFOLIO TRACKER Do you believe that these events affect stock prices?
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Zacks #1 Stocks on the Move 05/22/2013
| Company Name | Symbol | %Change |
|---|---|---|
| ALLIANCE FIB | AFOP | 9.31% |
| SONIC FOUNDR | SOFO | 7.77% |
| TRI TECH HOL | TRIT | 6.62% |
| A M R CP | AAMRQ | 4.52% |
| FLOWERS FOOD | FLO | 4.31% |
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