Tuesday - June 14, 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.
The European Union constitution got two strikes against it last week. On Sunday, 55% of French voters rejected it, and on Wednesday, 62% of Dutch voters turned it down. Economically, a consequence of these rejections is a fall in the euro, down to its weakest level against the dollar in seven months. The yield of the Treasury's 10-year note dropped to 3.98%, its lowest since October. May was the best month of the year for stocks. Consumer confidence unexpectedly rebounded in May after declining in April, as worries eased about the economy and jobs, the New York-based Conference Board reports. Activity at the nation's manufacturers slowed in May to the weakest pace in almost two years, as new orders lagged and prices fell, reports the Institute for Supply Management. Manufacturing, which accounts for about 13% of gross domestic product, grew for the 24th month in a row, the longest period of growth in the last 16 years. But the expansion was the most modest since June 2003, and suggests the sector is losing momentum. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - A Sampling of the Additions to Hot List ConocoPhillips (NYSE: COP) James P. O'Shaughnessy's Cornerstone Value Strategy, based on John Reese’s interpretation of it, looks for strong cash flows. The company's cash flow per share must be greater than the mean of the market cash flow per share, which is $0.78. COP's cash flow per share of $17.14 passes this test. The strategy also looks for companies whose total number of outstanding shares is in excess of the market's average, which is 628 million shares. These are the more well known and highly traded companies. COP passes this test with 710 million shares outstanding. The strategy selects the 50 companies from the market leaders group (those that have passed several criteria) that have the highest dividend yield. COP, with a dividend yield of 2.30%, is one of the 50 companies that satisfy this last criterion, giving it high marks from this strategy. Royal Dutch Petroleum (NYSE: RD) Reese applies two guru strategies to this stock. One the gurus is John Neff. The John Neff strategy, based on Reese’s interpretation of Neff's approach to investing, favors RD. It looks for non-cyclical companies with P/E ratios between 40% and 60% below the market P/E. The current market P/E is 21.00, so the acceptable P/E range is from 8.40 to 12.60. The current P/E Ratio for RD is 9.32, which gives it a passing grade. For dividend payers, this strategy likes to see a historical earnings growth rate between 7% and 20%. The historical EPS growth rate for RD is 14.0%. The historical growth rate should be confirmed by the consensus future growth estimate of analysts for both the current fiscal year and the long-term. As a result, both growth rates must be greater than 6% for dividend paying stocks. The projected future EPS growth rate for RD is 9.3% for the current year and 11.7% for the long-term, thereby passing this criterion. This methodology requires that earnings growth be fueled by a corresponding growth in sales. As a result, sales growth must be either greater than 7% or at least 70% of EPS growth. The sales growth rate for RD is 21.3%, again getting a passing grade. This strategy prefers stocks whose total return (EPS growth + yield) divided by the P/E ratio is at least double that of the market or of its industry. This methodology would consider the Total Return-to-P/E ratio for RD of 1.93, based on the average historical EPS growth rates, to be acceptable because it is more than double the market average total return-to-P/E ratio of 0.65. ING (NYSE: ING) James P. O'Shaughnessy's Cornerstone Value Strategy likes ING, in part, because it likes strong cash flows. ING's cash flow per share of $4.84 is greater than the mean of the market's cash flow per share of $0.78. This particular strategy looks for companies whose total number of outstanding shares is in excess of the market average, which is 628 million shares. These are the more well known and highly traded companies. ING has 2.17 billion shares outstanding. The final step in the Cornerstone Value strategy is to select the 50 companies from the market leaders group (those that have passed the previous four criteria) that have the highest dividend yield. ING, with a dividend yield of 5.39%, is one of the 50 companies that satisfy this last criterion. Invest with the confidence of knowing that your decisions have been validated by strategies of Wall Street legends that have proven to outperform the market. The Validea Hot List contains a portfolio of stocks that pass our interpretation of the strategies of the world’s most astute investment minds, including Graham, Lynch, Zweig, Buffett and others. Validea’s extensive research has shown that when these strategies agree, the result is market beating returns and low levels of risk. http://at.zacks.com/?id=1776. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - b) Low Rates – Good News or Bad News? Richard Lehmann expects investment grade rates to decline further as economic growth worldwide continues to slow. More... c) Clawing Back, but NOT Out of the Woods Jack Schannep finds it disconcerting to see the fall-off of volume. More... Walter Frank says we could see a prolonged period of low rates and relatively slow growth. More... e) Microchip giant still plenty mobile Richard Moroney says industry leader Intel remains a long-term buy. More... f) Texas Instruments Comes Through Paul McWilliams says Texas Instruments delivered with a strong mid-quarter update. 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. SCREEN OF THE WEEK 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=1388. “Upgrades and Revisions -– A Winning Strategy for Beating the Market” This week, I’m going to highlight a screening strategy that primarily focuses on stocks with Increasing Earnings Estimates and Rating Upgrades. Studies have shown that “earnings estimate revisions are the most powerful force driving stock prices.” And stocks receiving upward EPS revisions will generally see the brokers that cover them upgrade their ratings too. This screen generates on average only 8-10 stocks per month, has an excellent win ratio, and has shown consistently impressive returns, year after year after year. Zacks Rank = 1 (The Zacks Rank is probably one of the best, if not the best rating system out there.) % Change Q1 Estimates over the last 4 weeks >= 0 (earnings with fresh upward revisions) % Rating Change over 4 weeks >= 0 (since analysts have such a huge upside bias, I’m excluding anything that’s been even slightly downgraded) P/E using 12 mo. Forward EPS Estimates <= 65 (that’s right, 65) % Change Actual EPS Q0/Q-1 >= 0 (positive EPS growth this quarter over last) and % Change Actual EPS Q-1/Q-2 >= 0 (positive sequential quarterly EPS growth. In other words, two quarters of positive EPS growth.) % Change Actual EPS F0/F-1 >= 0 (positive EPS growth this year over last) 5 Year Historical EPS Growth >= 17 (yes, 17) Last EPS Surprise >= 0 (no negative surprises allowed) Price/Sales ratio <= 4 (actually, I had great success with the Price-to-Sales ratio being between 2, 3 and 4, but I went with 4 because it didn’t narrow down the stock selection so much, ... but if you want to narrow it down, tighten the ratio up a bit) And finally, the stocks all had to be trading at a minimum of $3 or higher. I ran a series of tests over the last 4-year time span (thru 2004), as well as a series of tests for each of the last 4 years. individually. I rebalanced the portfolio every four weeks and started each run on different start dates so each test would be rebalanced over a different set of four-week periods. (This exercise was done to eliminate coincidence and verify robustness.) Over the last four years, this strategy has shown an average annualized gross return of 63.7% a year, with an average win ratio (winning periods divided by the total number of periods) of 73%. And again, it produces on average of 8-10 stocks for your portfolio each month. To break it down further; in 2001, the average annualized gross returns were 55.8% with an average win ratio of 71%. In 2002, the average annualized gross returns were 42.1% with an average win ratio of 68%. In 2003, the average annualized gross returns came in at a whopping 125.8%. (In fact, even the smallest run produced a gross return of over 100%.) The average win ratio came in at 87%! And in 2004, the average annualized gross returns were up 41.8% with an average win ratio of 68%. This strategy comes loaded with the Research Wizard program and is called: Upgrades and Revisions2. Here’s three stocks from this week’s list (6/13/05).
Get the rest of the stocks on this list and start using this winning strategy in your own portfolio. Sign up now for your free trial to the Research Wizard and start making better decisions today. Go to: http://at.zacks.com/?id=1388. All the Screen of the Week strategies are created and back-tested using the Research Wizard software from Zacks Investment Research. Learn more about the Research Wizard and Free Trial offer. Discover all the Free Screening Tools on Zacks.com at: http://at.zacks.com/?id=1389. Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - BULL OF THE DAY TOTAL - ADR (TOT) - Raising Our Earnings Estimates. For full Zacks research report, click here. Cambrex Corp. (CBM) - Overcapacity Pressuring Prices. For full Zacks research report, click here. Profiting from Retail Mergers Not Easy No Short-Term Relief for Paper Industry
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: Earnings and Margins This Profit Track goes to the heart of fundamental investing by finding companies with healthy earnings. The main ingredients are the search for Earnings Growth and Net Profit Margins. Then for good measure we make sure earnings estimates are moving higher which is a strong indicator of future performance and that brokerage firms are positively rating the stock. Earnings are the single most important metric for a company. Combine that with a healthy Net Profit Margin and you find a screen that has generated a return of +362% in the last 4+ years compared to -4.8% for the S&P 500. Here are four stocks that make the grade for the Upgrades and Revisions Profit Track Baldor Electric Co. (NYSE: BEZ) operates in one industry segment which includes the design, manufacture, and sale of electric motors and drives and related products. In mid April, the company reported unaudited results for its first quarter. Earnings were 27 cents per share compared to last year’s 22 cents. BEZ also announced record sales for the first quarter of $170.6 million, an increase of 12% year-over-year. In addition to having a successful quarter, the earnings for company’s most recently completed year grew almost 42% above the year prior. Continue your research on BEZ at: http://at.zacks.com/?id=1996. Bluegreen Corp. (NYSE: BXG) has a net margin of 6% and finished its most recent year almost 32% ahead of the previous year in terms of earnings per share. In late April, the company posted first-quarter earnings of 21 cents per share, surpassing last year’s 17 cents and exceeding the consensus estimate by about 31%. Total sales increased 20.7% to $104.0 million from $86.2 million in the same period last year, reflecting higher sales at both the Resorts and Communities business segments. Continue your research on BXG at: http://at.zacks.com/?id=1997. Conns, Inc. (NASDAQ: CONN), a Zacks #1 Rank (Strong Buy) stock, recently released record earnings results for its fiscal first quarter. Earnings per share were 41 cents, which topped last year’s 33 cents and beat the consensus estimate by almost 14%. Total revenues increased 17.3% year-over-year. The company said its continuing focus on improving execution in merchandising, store operations, logistics, training and credit resulted in satisfying results during the quarter. CONN also satisfies this profit track with earnings growth of approximately 15% last year when compared to the year prior. Continue your research on CONN at: http://at.zacks.com/?id=1998. DSP Group, Inc. (NASDAQ: DSPG) is a profitable company that sports a net margin of 32%. In mid-April, the company posted first-quarter earnings of 17 cents per share, jumping ahead of the consensus estimate by about 13%. Revenues totaled $40.2 million versus $38.7 million for the first quarter of the previous year. In addition to completing a favorable quarter, DSPG completed its recent full year with earnings that were approximately 4% ahead of the prior year. Continue your research on DSPG 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 this powerful stock picking tool. Learn more about the Research Wizard and Free Trial offer at: http://at.zacks.com/?id=1370 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: 25 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, Schaeffer's Investment Research, to provide you the best options commentary, research, and trading tools on the market today. One of Bernie's favorite sectors this year has been foods and one of his favorite stocks has been food retailer Whole Foods Market (WFMI). He has played it bullishly numerous times this year and continues to like its prospects. As you might remember, I wrote bullishly on WFMI back in the middle of February when the stock was trading near $98 a share. Well, fast forward to today and we see that the shares are nearly 20% higher, not a bad return for only four months. But a funny thing happened as I was looking at some of the filters on this page for this week's blurp, WFMI's name popped up once again and for that reason I think it might be worth playing long once more. The filter that I want to discuss today is the Put/Call Ratio Over 1.0 (Bullish) filter. What I especially like about this filter is you have the option to then sort the list by the Schaeffer’s Put/Call Open Interest Ratio (SOIR) from highest to lowest. I’ll explain what this means next. Taking a step back, the SOIR is simply the number of bearish puts divided by the number of bullish calls in near term options. With that, to see a number of 1.0 or greater means that there are more bearish puts than bullish calls among short-term traders. From our contrarians-based approach, we love to see a huge number of puts compared with calls in a strong performing stock. The reason is, if a stock can advance amid bearish sentiment, then that means there is still plenty of money left on the sidelines to push the stock up more once that crowd begins to turn bullish. Now getting back to the filtered list of SOIRs over 1.0 from highest to lowest, just because it has a high SOIR doesn't mean it is a good play to the long side. Remember, we want to see the bearish puts and outperformance. But following a SOIR is just one aspect of trading, as we also like to see what the analysts are saying, the media is saying, and how many bearish short positions are on the stock. If you can find a trade that encompasses all of those areas of sentiment, then my friends, you could have a good winner on your hands. Scanning about half way down the list, once again I see good ol' WFMI coming in with a SOIR of 1.48. So even though the shares have gained 20% since I talked about them back in February and over 36% the past 12 months, this tells us that there is still some pessimism left toward the shares - exactly what we like to see. Let's take a look at some other areas of sentiment that we track first, before we go out and load up on WFMI. The more sure we are about the sentiment being negative amid strong price action, then the better the odds are that the trade will work. Two quick and easy things I like to look to figure this out are the shorts and the analysts. To short a stock means you are selling it first, with the intention of buying it back later. In other words, you are betting the shares will go down. We love to see lots of shorts betting against a stock, because that means should the shares continue to advance all of those bearish bets will be forced to cover (or buy back) their bearish bets and that will push the shares up that much quicker. Turning back to WFMI we find that over 8% of the float is sold short, more than enough to spark a short covering rally on any good news. Now for the analysts. If they are bearish on a stock that is a top performer this is actually good, because it means the shares should benefit from any positive upgrades. As you might have expected, WFMI has only four "buys" out of 15 total recommendations. Any upgrades from this bearish bunch should really help out the shares. Well, I think we've seen enough and it might be a good idea to buy some calls. Let's hypothetically say we'll buy the WFMI August 115 Calls (FMQHC). As of the afternoon on Thursday, June 8 it was trading at $7.50 a contract and this is the price that we'll use to track it. What does this all mean? – First off, ANY option is a high level of risk. No system is fail safe – however, if we stick to our methodology and let the winners ride and cut the losers off before they get too big, over time the results should come out in our favor. Good Luck with your trading and please use the all materials and filters at Zacks.com and the Option Research Center provided by Schaeffer’s Investment Research. To learn more about the Put/Call Ratio over 1.0 (Bullish) filter, click here. Discover all the tools and commentary available from the Zacks.com Options Center at: http://at.zacks.com/?id=614. Jeff Carter says options investors should focus on the longer-term. 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 05/17/2013
| Company Name | Symbol | %Change |
|---|---|---|
| VIASAT INC | VSAT | 19.35% |
| OLD SECOND B | OSBC | 5.76% |
| GAMCO INVEST | GBL | 4.61% |
| CORNING INC | GLW | 4.47% |
| SYNCHRONOSS | SNCR | 4.23% |
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