Tuesday - May 17, 2005
 Want to view the archive of past issues? Go to: http://at.zacks.com/?id=1344. Get Profit from the Pros content in Real-time. Learn more about this free tool at: http://at.zacks.com/?id=1452. 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.
This is a difficult trading and investing environment. There is a great deal of short term “chop” due to concerns about an economic slow-down during a period of rising interest rates….the worst of all possible worlds for Wall Street. Although the monthly trend in the S&P 500 is still positive, and the daily trend is up at the present time, the weekly trend in the major indices is down. When trends are going in opposite directions on key timeframes (daily, weekly, monthly) that produces choppy conditions. Should the monthly trend turn down (a move below 1140 on a monthly closing basis would do it) then we will be in a full-fledged bear market. Accordingly, Gregory Spear and his team want to stress their recommendation that subscribers not underestimate the dangers of investing in a down-trending market. In particular, never underestimate the amount that a small-cap stock can decline, especially if the PE is high and earnings are lacking or lagging. Virtually all dot coms lost more than 90% of their value when the bubble popped and only a few recovered. Don’t be a bag holder; if possible, take losses when they are small to protect capital. Virtually all catastrophic losses start out as small losses. After trading Taser (NASDAQ: TASR) profitably a few times, Spear and his team eventually took a beating when the stock changed character for the worse, based on slowing sales and controversy. Spear and his team exited around $20, which was a large percentage loss but TASR is now trading around $9. The moral of that story: they say “bad news comes in threes,” so get out when the first bell sounds, even if it hurts. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - In downtrending markets we have to also be careful about the “inflatable balloons,” such as Plug Power (NASDAQ: PLUG ), a maker of fuel cells, which rallied from $5 to $8 when oil was rising in February but is back near $5 today. At this time, the $380 million market cap company is merely a “story stock,” with insufficient revenue and no earnings to back up the share price. Evergreen Solar (NASDAQ: ESLR), with a similar market cap, is a story stock that is vulnerable as well, and Spear has seen a great deal of volatility in ESLR, particularly as the price of oil fluctuates. [The alternative energy companies are somewhat correlated with oil prices.] Because Spear and his team are long-term bulls on the energy sector, they will attempt to hold DayStar (NASDAQ: DSTI) and ESLR through this volatility. Spear and his team got in early with DSTI, at less than a $20 million market cap, which is helping greatly. If DSTI delivers and does not dilute shareholder value too much, it could be a “10-bagger” for them over the next few years. Smart cards and authentication tokens, some of which are biometrically enabled, are being used by banks, businesses and software vendors all over the world, with an increasing pace of adoption. Vasco Data Security (NASDAQ: VDSI) is a former A-List member that is a leader in this field. The company recently scored a supplier deal with Verisign, which is impressive, and the stock is starting to move. Spear and his team are placing VDSI on the “A-List Watch” and they re-profile the company below. Much of the spending in the private sector on security is going into data security and user authentication; i.e. preventing the wrong people from getting access to networks and applications through desktop log-on, the Internet, and Wi-Fi. Two-factor authentication (a password and a physical token or card) provides a higher level of security than solutions based on static passwords alone. However, managing disparate, often proprietary authentication mechanisms can be costly and complex, so enterprises are gravitating to one-stop shops, such as Verisign, to create integrated authentication programs that are scalable, updateable, and that allow for collaboration. VeriSign’s Unified Authentication Platform utilizes next generation tokens made by Vasco Data Services that allow users to carry digital certificates and utilize One Time Passwords wherever they go. Vasco develops patented user authentication products for the financial world, remote network access, e-business, and e-commerce. The company, which is doing about $44 million a year on an annualized basis, gets around. Over the years they have sold 15 million Digipass products to 370 international financial institutions and 1,700 “blue-chip” corporations and governments in more than 80 countries, with solid current representation in Europe. First quarter revenues increased 90% year-over-year and 23% quarter-to-quarter, which is great….but with earnings coming in at just four cents (compared to two cents a year ago), valuation is very high. Can they grow the bottomline? That will be the key question. The company has a $10 million backlog of firm orders to be shipped in the second quarter, which is 120% higher than the backlog a year ago and 50% higher than the actual sales reported for Q2 2004. Much will depend on the profitability they can generate in Q2. If it is only a nickel or so, then the stock will have trouble. VDSI is a turn-around play in an industry that is highly competitive. When companies are hot, they garner market share; but eventually someone else usually comes along to displace them. Right now, VDSI has a green light, good connections and the stock is demonstrating excellent relative strength in a challenging market. Can Spear and his team recommend a purchase now? No. The stock has run up about 30% from its recent lows and is over-extended short-term. They are placing VDSI on their A-List watch at this time. A decade-long bull market in security industry stocks has already begun. Growth in this industry will rival the technology sector in the early `90`s. The average return of all stocks on Spear’s Security Industry Analyst A-List is 41% in an average holding period of just 32 days! In 2004, we’ve had 5 stocks return 100% or better! Get in on the ground floor of companies set to receive billions of national security dollars. Subscribe to SSIA now. http://at.zacks.com/?id=1849. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Judy Alster says dividend-bearing stocks are going to be a candle in the darkness: More... Read Jeff Manera’s discussion of this volatile market and take a look at some Master List positions: More... Find out if Walter Frank thinks investors should cut back on stocks right now: More... Paul McWilliams has added a valuation consternation factor to his earnings preview of three tech companies. Learn about it: More... f) Two Companies with Wide Economic Moats Paul Tracy says Anheuser Busch and eBay are two companies with solid competitive advantages. More at: 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=1340.
2. BEST OF ZACKS EQUITY RESEARCH Zacks.com offers three unique weekly commentaries that all further
our mission to help you Profit from the Pros. Today's
commentary is the Earnings & Sector Update from Nick Raich,
Director of Research for Zacks. His weekly article explores
the important trends in recent and upcoming earnings data. This
report is a must for any investor seeking to buy into the
hottest industry sectors and avoid those out of favor. See
the full report at: http://at.zacks.com/?id=1363. Earnings & Sector Update First quarter 2005 earnings season is almost over. Roughly 91% of the companies in the S&P 500 have released results. Of the companies that have reported, 81% have met or exceeded their estimates. The average earnings gain has been 18% from last year’s first quarter. The expectation for the companies that have reported was for 13%. When all companies report, we expect final first-quarter 2005 earnings growth of 16% for the S&P 500. Focus will soon shift away from these actual earnings. Economic data released over the next several weeks will be closely watched. By mid-June, we will enter into preannouncement season. This is where firms guide analysts higher or lower with regards to their second quarter and second half earnings estimates. Typically, we expect two to three companies to lower guidance for every company that raises it during this period. Also, as a rule of thumb, we view no news as good news from companies during preannouncement season. The current Zacks consensus second-quarter 2005 earnings growth estimate for the S&P 500 currently stands at 9%. At this time, we believe that is a very achievable figure. Our best estimate is for second quarter earnings growth of 12-14% for the S&P 500. Our current view is based on the guidance given by companies after reporting first-quarter earnings. More at: http://at.zacks.com/?id=1363. Table of Contents for Rest of the Report
Read this weeks' full report at: http://at.zacks.com/?id=1363. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - BULL OF THE DAY Xoma, Ltd. (XOMA) - High Expectations for Raptiva. For full Zacks research report, click here. Pogo Producing (PPP) - First-Quarter Results. For full Zacks research report, click here. Euro Markets Struggle with Economic Growth Coal Remains Lower Cost Energy Source
3. 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: Recent Price Strength 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 three 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-week 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 four years compared to only +1.1% for the S&P 500. Here are three stocks that make the grade for the Recent Price Strength Profit Track The Advisory Board Company (NASDAQ: ABCO) has experienced a share price increase of almost 3% in the past four weeks and is currently trading very close to its 52-week high. The company recently reported fiscal fourth-quarter earnings of 33 cents per share, outperforming last year’s 30 cents (pro forma). The company stated that its growth continues to be driven by its success in four key areas: the addition of new member institutions, price increases, cross- selling existing programs to current members, and new program launches. Continue your research on ABCO at: http://at.zacks.com/?id=1996. DXP Enterprises, Inc. (NASDAQ: DXPE) recently posted first quarter earnings of 15 cents per share, beating last year’s 12 cents and surpassing the consensus estimate by about 7%. The company, which has seen its stock price rise almost 29% during the past month, said that it is enthusiastic about the current level of business opportunities and its strategic abilities to take market share from the competition. With the stock setting a new 52-week high as of this writing, investors seem to be getting enthusiastic about DXP. Continue your research on DXPE at: http://at.zacks.com/?id=1997. LKQ Corporation (NASDAQ: LKQX), a Zacks #1 Rank (Strong Buy) that provides automotive replacement parts needed to repair automobiles, recently announced first quarter earnings of 37 cents per share. The result was ahead of the consensus estimate by almost 28% and topped last year’s 25 cents. The company noted that it achieved a record quarter with impressive revenue growth of approximately 34% that included organic revenue growth of 11%. It is not surprising that LKQ Corporation is currently trading very close to its 52-week high and has experienced a share price climb of about 11% over the past four weeks. Continue your research on LKQX at: http://at.zacks.com/?id=1998. Premiere Global Services, Inc. (NYSE: PGI) has recently been trading within close range of its 52-week high and has experienced an increase in share price of almost 4% over the past month. The company had a successful first quarter that brought in earnings of 18 cents per share, eclipsing last year’s 13 cents and exceeding the consensus estimate by almost 6%. Premiere Global Services mentioned that the momentum in its current business is growing, and it is continuing to evolve into a business process-centric company providing higher value to its customers. Continue your research on PGI at: http://at.zacks.com/?id=2016. To see the full list of stocks that currently pass this winning screen, go to: http://at.zacks.com/?id=1999. 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 the this powerful stock picking tool. Learn more about the Research Wizard and Free Trial offer at: http://at.zacks.com/?id=1993 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Kevin Matras goes over one of his favorite strategies for finding cheap stocks with big returns: http://at.zacks.com/?id=1474. 4. ZACKS #1 and #5 ADDITIONS 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: Zacks Rank #1 and #5 Additions The Zacks Rank is a powerful stock indicator whose #1 Strong Buy stocks have risen by an average annual return of 32.8% since 1988 versus 11.9% for S&P 500. And just as important, it tells you which stocks to sell now (Zacks #5). Since 1988 the S&P 500 has outperformed the Zacks #5 Rank Strong Sells by 155.5% annually (11.88% vs. 4.65% respectively). Learn more about the Zacks Rank following this section. Below you will find all the stocks added to the Zacks #1 and #5 Ranked lists this week.
More. . .
Zacks #1 Rank List continued...
To see the full list of Zacks #1 Ranked stocks (approx. 200 stocks), then click here. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Zacks #5 Ranked List: 47 New Additions (alpha by ticker)
More. . .
Zacks #5 Rank List continued...
To see the full list of Zacks #5 Ranked stocks (approx. 200 stocks), then click here. 5. OPTIONS CENTER Zacks has partnered with the leading options experts, Schaeffers Investment Research, to provide you the best options commentary, research, and trading tools on the market today. Read below more on Schaeffers Tools to Profit with Options. Schaeffers Investment Research wants to do something a little bit different this week and take a look at a strategy that can be used during earnings season called a straddle. As you might have noticed, the past few weeks have been what is known as earnings season. In short, it is when a good majority of the stocks in the S&P 500 announce their quarterly results. Yes, other companies might release earnings a month from now, but the great majority announce during this two week period. As I'm sure everyone has noticed before, earnings mean volatility. A stock can gap up or down several points due to what is said at earnings. The more you watch how stocks react to earnings you realize that what seems to matter more than anything else is how the company feels about the future. They could crush earnings estimates, but if they say the next few quarters will be rough, then get ready for a tumble in the shares. Ok, so it's safe that on earnings we can anticipate some volatility more often than not, but how can we make money on this you might ask? Well, obviously you could try to guess if earnings will be strong or not and play bullish calls or bearish puts, but Schaeffers Investment Research wants to discuss another way. This strategy is called a straddle. It entails buying both a bullish call and bearish put. The key is: you want to buy the same month and same strike also. The whole point is to have one of your options (you don't care which) move up so much that it offsets the loss in the other one. Let's look at an example. Let's say company ABC has earnings set and you think they will move, but don't know which way. The stock is trading at $25 a share right before earnings so you buy the May $25 straddle on ABC. This means you bought both a call and put on ABC at a strike of $25, putting equal money into each leg. In this example the 25 call would cost you $1.10, while the put would run you $1.05 (I'm making these numbers up). Add those two numbers together and you have a total cost of $2.15 for both options. Now let's say the company comes out with earnings and they lay an egg and get hammered. The stock drops to $21 right after earnings. Now our call of course is worthless, but our put is all of a sudden worth $4 a contract (25 strike minus current price of 21 equals $4). Since we paid $2.15 for both combined, we are up nearly 90 percent. In essence, we were right. Our bet was one that there would be volatility, we don't care which way things go so long as they move. Now this might sound easy but it's not. What if the stock didn’t move at all after earnings? That is the worst possible thing that could happen, as it means that both the put and call will lose value - remember we want movement. In this case you will want to be quick to sell both the put and call and try to preserve any and all capital. But don't let this scare you, as this is a time tested method that can be very profitable and lowers your risk considerably than just trying to pick either a call or put. In conclusion, please feel free to try to paper trade a few stocks in front of earnings and see how you do. In fact, use the filters on this page and try to use some of the past filtering techniques that I've described over the past six months to get some ideas. Once you find a name you like and notice it has earnings coming up you could play the straddle but put more money into the portion of the straddle that you think will be right. This way even if you are completely wrong, you will be rewarded on the other half of the straddle. Please read up on straddles and try to get a good feel for them, because they are another money making tool to add to your arsenal. In addition, be sure to utilize the Schaefer's Filters here at Zacks.com to discover those equities that are primed for a straddle strategy. Good Luck in your trading! Learn about all of Schaeffer's Options Trading Filters by clicking, click here. a) Waiting for a Sustained Rally Discover why Jeff Carter and his team believe it will take time before a sustained rally occurs. More... Discover all the tools and commentary available from the Zacks.com Options Center at: http://at.zacks.com/?id=614. 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=1346. Or view the full list of Zacks #1 Ranked stocks at: http://at.zacks.com/?id=1353. 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=1674 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, Stephen Reitmeister 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 05/22/2013
| Company Name | Symbol | %Change |
|---|---|---|
| ALLIANCE FIB | AFOP | 8.45% |
| SONIC FOUNDR | SOFO | 8.21% |
| TRI TECH HOL | TRIT | 6.63% |
| NOAH HOLDING | NOAH | 5.69% |
| OILTANKING P | OILT | 4.13% |
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