Wednesday - June 29, 2005
 Want to view the archive of past issues? Go to: http://at.zacks.com/?id=62. Get Profit from the Pros content in Real-time. Learn more about this free tool at: http://at.zacks.com/?id=1509. 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 the wake of strong share-price gains over the past two years, more than 80% of the 109 utility stocks in the Quadrix® research universe trade a premium to their three-, five-, and 10-year average price-to-earnings ratios. The average utility trades at 20.8 times trailing earnings, a 19% premium to the S&P 500 Index. Over the last 10 years, utility stocks have averaged a discount of more than 46% to the S&P 500. But most utilities pay a dividend, and as such compete for investors’ money with income securities as well as stocks. Using a variant of the Fed Model, which compares stock valuations to bond yields, the utility sector’s valuation looks more reasonable relative to fixed-income investments, though still not cheap. Earnings yield, the reciprocal of the P/E ratio, measures per-share earnings as a percentage of per-share stock price. The higher the earnings yield, the cheaper the stock. Over the last 10 years, the average utility’s earnings yield has exceeded the 10-year Treasury bond yield by 1.9%. That spread represents a type of equity premium, or a barometer of the excess market return utility-stock investors expect to receive relative to the guaranteed return from the bond. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - The spread between utility earnings yields and T-bond yields has fallen sharply since topping out at 5.7% in September 2002, though it remains healthy at 2.2%. While the earnings premium is currently higher than the 10-year average, the Federal Reserve appears ready to continue raising short-term interest rates. So far, short-term rates have not had much effect on long bonds. But over the next year, long-term rates are likely to trend somewhat higher, potentially tightening the spread. There is value in the utility sector, but it takes some effort to find. According to the Forecasts’ back-testing, the Quadrix Value score has had good predictive power for utility stocks. Richard Moroney and his team have also had success recommending high-quality utilities with profit- and dividend-growth potential, which tend to have lower Value scores. Two utilities with strong Value scores or reasonable P/E ratios relative to the sector average or the individual company’s profit growth potential are discussed below: New Jersey Resources’ (NYSE: NJR) primary business is distributing natural gas to nearly half a million residential and commercial customers in New Jersey — a fast growing service territory. For fiscal 2005 ending September, the utility projects customer growth of 2.4%, above the industry average. While population growth accounts for about two-thirds of the gains, New Jersey Resources also grows its customer base by converting heating systems from electricity and oil to natural gas. New Jersey Resources operates a non-regulated wholesale business, NJR Energy Services, which buys natural gas from producers and sells and transports the fuel to energy marketers and utilities. The division stands to benefit from high natural-gas prices and growing demand. The company has increased per-share-earnings and dividends in each of the last five years, paying out more than 50% of profits in dividends every year. The stock trades at 17 times projected fiscal 2005 earnings of $2.67 per share, below the sector average. Questar’s (NYSE: STR) exploration-and production arm continues to drive growth, with results helped by increased production and high natural-gas prices. Despite delays in drilling wells due to inclement weather and a shortage of equipment, production volumes increased 4% in the March quarter. Management projects 2005 production growth of 8% to 10%. The Pinedale Anticline — the company’s best production asset — is located in a largely untapped Wyoming region rich in natural gas. Production from Pinedale, which now includes 106 producing wells, increased 24% last quarter and now comprises about 29% of Questar’s total production. In the March quarter, Questar distributed natural gas to more than 800,000 customers, up 3.1% from a year ago. Customer growth and higher per-customer natural-gas usage more than offset a small rise in expenses. Get clear Buy, Hold and, yes, SELL advice from one of the nation’s oldest and most successful investment newsletters. Our in-depth analysis and advice have been helping subscribers weather market volatility since 1946. Learn more about this newsletter and free trial offer at: http://at.zacks.com/?id=157. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Gregory Spear says there may be too much bullishness to allow the rally to proceed higher and discusses two stocks. More... c) Global Market Braces for a Slowdown Mutual fund expert Dennis Slothower says the global market is preparing for a serious slowdown. More... d) Speculative Real Estate Juices Are Flowing Bill Martin and Matt Ragas have been squeezed in their subprime shorts lately, but still like the odds long-term. More... Ian Wyatt’s team says the right stocks are worth the wait. More... f) Aiming Toward Higher Ground Jeff Carter believes that stocks will eventually break out into higher ground. 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=1386.
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 is
the latest installment of Screen of the Week from Kevin Matras.
Each week, Kevin shares with you another winning screen he has
discovered using the Research Wizard software from Zacks
Investment Research. Learn more about the Research Wizard at: http://at.zacks.com/?id=1388. ‘Tips on Trading the Zacks Rank: Filtering the Zacks Rank’ I’m sure most everyone reading this knows that the Zacks Rank is probably the most effective rating system out there. Good markets or bad, stocks with a Zacks Rank of #1, continue to outperform. In fact, since 1988, the average annualized return of Zacks’ #1 Ranked stocks is up 32.8% a year. But what I want to focus on today is how to try and recreate those returns in a practical trading account. Since there are 200 Zacks Rank #1 stocks at any time, it’s important to know what other filters to apply to the Zacks Rank to generate a smaller (more tradable) watchlist. Two filters in particular, when added to the Zacks Rank of #1, not only narrows down the number of qualified stocks to a practical portfolio size (approx. 10-12 stocks), it often times increases its performance as well. The two filters I’m talking about are;
Get the rest of the stocks on this list and start trading the filtered Zacks Rank in your own account. Remember, the key to successful screening is in discovering those screens that have produced profitable results in the past. And that’s exactly what you get with the Research Wizard stock picking and backtesting program. Click here to learn more. 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 free trial offer and our new special report “Top 10 Stock Screening Strategies” at: http://at.zacks.com/?id=1389. 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. 3. BEST OF ZACKS EQUITY RESEARCH BULL OF THE DAY Kyphon, Inc. (KYPH) - Victorious in Lawsuit. Sony Corp. - ADR (SNE) - Limited New-Market Presence. More Value-Plays in U.K. Than E.U. Drug Industry Under Pressure from Generics Second Quarter Growth Should Reach 12% to 14%
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 we highlight...
This Growth and Income Strategy is pretty straightforward, yet amazingly profitable. The goal is to find solid companies paying out extraordinary dividends. With money market rates being so low, we think many investors will find appeal in this strategy with minimum dividend yield of 8% plus attractive equity appreciation potential. This screen has the least turnover of any of the Profit Tracks and has shown excellent results with both 12 and 24 week holding periods. We know there are those of you who may be worried about too much REIT exposure in this type of strategy. The good news is that we have also backtested this strategy by removing REIT stocks and the results were still outstanding. This Profit Track looks for stocks that are paying dividend yields of greater than 8% along with other attractive fundamental attributes. Although this a longer term and less risky screen, it has still beaten the S&P 500 every year including +49.2% in 2003 and +19.5% in 2004 (YTD, thru 12/3/04). American Home Mortgage Investment Corp. (NYSE: AHM), which has a current yield of 8.11%, recently declared a quarterly cash dividend of 76 cents per share on its common stock. This solid company reported first-quarter adjusted earnings of $1.24 per share eclipsing last year’s earnings result and exceeding the consensus estimate by about 29%. The company mentioned that the quarter saw new highs in adjusted net interest income, origination activity, and adjusted servicing revenue. To continue your research on AHM, click here. Crescent Real Estate Equities Co. (NYSE: CEI) announced first quarter funds (FFO) from operations (FFO) of 25 cents per share in early May. The result beat the consensus estimate by about 25% and eclipsed last year’s first-quarter earnings of 23 cents per share. This real estate investment trust, which is currently yielding 8.18%, declared cash dividends of $0.375 per share for its Common Shares in the same first-quarter report. The company noted that stronger than expected results in office, resorts, and residential segments contributed to the positive performance. To continue your research on CEI, click here. Novastar Financial, Inc. (NYSE: NFI) meets the criteria of this profit track with a healthy yield of 14.47%. Its first quarter report, which was issued in early May, NFI declared a common stock dividend of $1.40 per share. The company stated that while the first quarter is usually a challenging period, it was pleased by an increase in production from the same period a year prior. To continue your research on NFI, click here. Thornburg Mortgage, Inc. (NYSE: TMA) with its yield of 9.20%, pays out a higher dividend than the average stock in the S&P 500. In mid-April, the company posted first-quarter earnings of 72 cents per share, surpassing last year’s 70 cents. Thornburg Mortgage said that despite rising short-term interest rates and continued competitive pressures in the mortgage industry, it experienced another solid quarter across all aspects of its business. To continue your research on TMA, 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 the this powerful stock picking tool. Learn more about the Research Wizard and Free Trial offer at: http://at.zacks.com/?id=1993 5. 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: 37 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. 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 (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=75. Or view the full list of Zacks #1 Ranked stocks at: http://at.zacks.com/?id=72. 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. 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 06/19/2013
| Company Name | Symbol | %Change |
|---|---|---|
| SONIC FOUNDR | SOFO | 4.40% |
| SUPPORTCOM I | SPRT | 3.75% |
| UNISYS CORP | UIS | 3.31% |
| SHORETEL INC | SHOR | 3.22% |
| GREEN MOUNTA | GMCR | 3.13% |
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