Tuesday - July 19, 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.
Bonds are rallying worldwide in defiance of the Fed’s measured increases and Alan Greenspan's attempts to push up rates across maturities, as is the flattening yield curve (short-term versus long-term yields). This “conundrum” hints of weak economic growth going forward, at least as expressed by institutions setting the rates for their long-term loans. Also, the last reading of the index of leading economic indicators (which usually does a fair job of predicting economic trends six months or so ahead of time) fell by 0.5%. That’s a modest decline, but it was a surprise to many. A weak durable-goods orders report hinted at the same thing: a modest decline in economic growth. It’s important to keep in mind that economic indicators are best viewed as a trend, over time, and in the context of many other factors — not as a snapshot. It’s still somewhat murky, but the trend seems to be shifting. Just last month Jeff Manera wrote that the trend was telling us the economy was just right. Now it’s slightly cool, pointing to modest economic slowing. Other supposed threats to the financial universe, which have been subject of much pontification in the mainstream financial media: 1) The hot housing market will, bubble like, collapse or 2) we’ll see any number of hedge funds collapse, as Long Term Capital did in 1998, destroying investment capital and shaking investor confidence or 3) oil will go much higher and freak everything out. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - There are mini “bubbles” or overextensions of real estate prices in confined geographic areas, such as portions of California and Florida and the likes of Las Vegas. Outside these regions, there is little risk that over-inflated real estate values will result in any dire economic consequences. The real estate boom is different than the stock market bubble in the late ‘90s or the famous tulip bubble of the 17th century. It’s driven by real demographics, supply, and demand. So, if you aren’t trying to buy your first home in one of those bubble areas you should be okay — at least for the next several years and as long as interest rates don’t for some reason spike to levels that would cause financial hemorrhaging to those with adjustable interest rate loans. There is always a risk of hedge fund mismanagement or default. However, Manera doesn’t think there’s much chance we will see a large-scale disaster of any kind which would have a meaningful effect on the markets. It’s much more likely to see declining returns as so many hungry fund managers try to pounce on what they hope are the same small arbitrage disconnects (such as with GM, where many hedge funds recently misjudged a long arbitrage play and lost money). The markets are just too efficient for so many funds to find abnormal, low-risk arbitrage. Oil is a concern and will crimp profits, especially in certain industries (airlines, transportation), but it would have to go quite a bit higher before it becomes any kind of serious threat to the economy. Other industries will benefit if oil remains high or goes higher, such as oil exploration, utilities, and alternate energy. It will also spur new innovations and capital expenditures. The solution to all this, as far as investing in stocks: you have to be a stock-picker! There are bull and bear markets embedded in the markets at any time. You just have to have a good grasp on the macro-economic factors and industry trends to know where to look. The most recent Master List addition, Midway Games (NYSE: MWY), has been a real star. Since being added to the Master List on May 13 (assumed cost basis: $8.31), Midway’s shares have tacked on 26%! Last month Manera suggested a profit target of at least 50% on Midway within the next 12 months, but he could easily see more — and sooner. Webex Communications (NASDAQ: WEBX) shares have soared 42% since their April lows and Manera is now sitting on a nice profit. The momentum and media remains on his and his team’s side — he expects more. American States Water (NYSE: AWR) has also been giving Manera and his team a good ride with its shares up 16% since May. Total return on this position is a whopping 81%! It pays a nice 3.1% dividend to boot. Financial columnist Dan Dorfman - who has been around a long time and has seen a lot of so- called ``experts`` come and go – regarded the analytical work as sharp and perceptive. Superstock Investor doesn’t pretend to have a foolproof system. It offers a constant resource for original stock ideas that can provide a valuable balance for the portfolio of a serious investor. These are stocks that have something extra going for them creates returns – regardless of the overall stock market. http://at.zacks.com/?id=219. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Jack Adamo says we should be on firm footing for most of the summer and highlights a Brazilian company. More... Richard Lehmann says some changes are in order for the balance of 2005 and recommends some corporate bonds. More... Mutual fund expert Dennis Slothower says it is a time to be cautious both on a short-term and intermediate basis. More... Dr. Melvin Pasternak says strong earnings results could be enough to forge a powerful rally. More... f) Milestones Gregory Spear expects the choppy conditions to persist a few more days as recent gains are digested. 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 Earnings & Sector Update from Nick Raich, Director of Research for Zacks, is an example of the in-depth analysis provided by Zacks Equity Research. This weekly article explores the important trends in recent and upcoming earnings data. It is a must read 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 Second quarter earnings season kicks into high gear this week. We expect over 1,200 companies to release financial results. By week’s end, we anticipate over 45% of the companies in the S&P 500 to have announced second quarter 2005 earnings. So far, fifty-seven companies in the S&P 500 have released second quarter results, with the average company posting earnings 9% higher than last years second quarter. The expectation for those fifty-seven companies was for 6% growth. When all S&P 500 companies eventually report, we expect final 2005 second quarter earnings growth of 12%. If this occurs, it will mark the 12th consecutive quarter of double-digit profit growth for the S&P 500. This streak is expected to continue into the third quarter. In our view, second half 2005 earnings growth estimates appear too high. However, there has been no concrete evidence earnings estimates are getting cut. In fact, over the past 30 days, consensus growth estimates have actually increased, led by positive earnings estimate revisions in the Energy sector. By the end of this week, we will have a clearer picture of how companies did over the second quarter and how achievable the second half earnings estimates will be. 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 Matria Healthcare (MATR) - Winning New Contracts. For full Zacks research report, click here. Kirkland`s, Inc. (KIRK) - Home Decor Market Struggles. For full Zacks research report, click here. Brazilian Economy Stronger than Scandal Auto Industry Headed for Changes
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 four 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. Genlyte Group Inc. (NASDAQ: GLYT) a lighting fixtures company, has gone up in price by over 13% over the past four weeks and is trading near a 52-week high. In late April, the company announced fiscal first-quarter earnings of 64 cents per share, beating the consensus estimate by 10 cents, or 18.52%. The company noted that new products and price increases contributed to its bottom line. Continue your research on GLYT at: http://at.zacks.com/?id=1996. Kadant Inc. (NYSE: KAI), a Zacks #1 Rank (Strong Buy) company, recently reported a strong earnings report. Fiscal first-quarter earnings were 16 cents per share, ahead of the consensus estimate by 14%. Given this positive momentum in earnings, it is not surprising that shares of KAI are trading at a new 52-week high and have advanced in price by about 6% over the past four weeks. Continue your research on KAI at: http://at.zacks.com/?id=1997. Symyx Technologies Inc. (NASDAQ: SMMX), a materials company, posted first-quarter earnings of seven cents per share, surpassing last year’s six cents and exceeding the consensus estimate by 40%. Given positive earnings momentum, a share price increase of over 13% in the past four weeks, and a current share price that is near its 52-week high, this company is proving that the trend is your friend. Continue your research on SMMX at: http://at.zacks.com/?id=1998. Unit Corporation (NYSE: USTR), a business products distributor, recently reported first-quarter earnings of 80 per share. The result topped the year ago result of 68 cents per share. The company credited its results to success of their sales initiatives. During the past four weeks, USTR’s share price has increased approximately 5% and is trading right at its 52-week high. Continue your research on USTR 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 free trial offer and our new special report “Top 10 Stock Screening Strategies” at: http://at.zacks.com/?id=1993 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 'How' to Create Winning Screens Kevin Matras talks about 'how' he creates his winningest screens. Get five news picks from some of his best strategies: 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: 53 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. Read below for more on Schaeffers Tools to Profit with Options. This week I want to take a look at the High Open Interest Put filter. Over the past few weeks I've looked at some of the more frequently used filters, but this one definitely has the potential to be one of your favorite money make ideas, even it is isn't as popular as some of the other filters. I'll give a brief description of what this filter does, a little on our methodology and how to use the filter, ending up with making an actual pick using the filter. Let's take a look at the High Open Put Interest filter before we go any further. Puts are simply a bet that the stock is going to go lower. We like to see a lot of bearish puts slightly below the stock's current level as a sign of potential support. I won't get into it too much here, but the reasoning is based on how the market makers are hedged. The bottom line you need to know to make some money is that a lot of puts at a certain strike could very well be a solid level of support and thus be a good time to buy. Here at Schaeffer's, we are contrarian-based investors, meaning we want to see skepticism toward an outperformer as a sign that money is still on the sidelines or we want to see optimism toward an underperformer, showing that nearly everyone who wants to put their money to use probably already has. This means just because a stock has lots of skepticism we won't blindly go long, we need to see some positive price action or major news catalyst to pull the trigger in most cases. Things that we tend to use to measure overall sentiment include, but aren't limited to, put/call ratios, short interest, magazine covers, what the media is saying, and what the analysts think. One more very important item we must touch on regarding this filter is the majority of the names on the list are going to be the big names that have lot's of activity - such as the QQQQ, SPX, or Microsoft (MSFT). This doesn't take away from the importance of this filter, it's just something to keep in mind. As I scanned the list from last Wednesday, one name stuck out a little more than the others and that was Ford Motor (F), which made the list thanks to the September 10 puts (FUB). To keep this simple, with the stock currently up near $11 a share, this heavy open interest means that the $10 level should hold on any pullbacks. If you are a regular reader of Schaeffer's Commentaries & Market Insights then you know that both General Motors and Ford are two of Bernie Schaeffer's favorite stocks thanks to the extreme skepticism that the U.S. auto sector has seen over the past few months. There has been a rash of negative articles and magazine covers that placed these companies on his radar. Another attention getter was that back in May, Kirk Kerkorian made a tender offer for 28 million shares of GM stock at $31 per share - heads turned. As Bernie said in a recent Barron's Online interview, "In picking a stock, I look for signs of a price bottom combined with some kind of a catalyst that might mean that the environment is changing for that company. And I think that tender offer could have put the final bottom for the stock." In that same interview it was mentioned that Bernie was also bullish about a year ago on these two stocks and that both have fallen steeply over this time frame. I really like his reply and I can tell you this - it's true - "I did not get that one right. On the other hand, I wasn't exposed up to my eyeballs in that sector as I've gotten over the past month or two. I mean I have a much stronger level of conviction now than I did then. GM is the largest position in my model stock portfolio The Schaeffer's Master Portfolio (A subscription to which you can purchase here at Zacks.com)." As a side note: Ford is in the top 10 holdings of his model stock portfolio as well. So we know that the media sentiment is displaying over-the-top bearishness toward General Motors & Ford, but what about the other areas of sentiment that we track? One such indicator I like to use is the Schaeffer's put/call open interest ratio or SOIR. This shows how many bearish puts there are compared with bullish calls in near term options. Currently Ford's SOIR checks in at 1.02, meaning puts nearly equal calls. Also, it has been trending higher, suggesting more bearish puts have been trading lately. Not surprisingly, there are a lot of shorts betting against the shares, as it would take over five days for all of the bearish shorts to cover. It depends on the person, but personally I would consider anything over five days to cover as a very significant number of shorts. This large amount means that should there be any positive news regarding Ford then those shorts could fuel a strong short covering rally. Finally, the analysts pretty much hate the stock. According to Zacks there are only three "buys," nine "holds," and three outright "sells" on the shares currently. This obviously opens the door for some upgrades should the shares continue to gain. I've seen enough and I think its time to make a pick. Given we know that there are a lot of puts at the 10 strike, let's play a longer-term option and hypothetically buy the December 10 calls (FLB). As of Friday afternoon it was trading at $1.50. Mark it down and let's see how it does going forward. Please continue to use all of the filters on these pages for more money making ideas and don't be afraid to paper trade a few to see what strategy works best for you. But please remember that when it comes to options, the many of your trades are going to be losers but don't get discouraged. Because that's the beauty of options and of the leverage that they provide, it only takes a few winners out of every 10 trades to make you a very happy person. Good Luck! To learn more about the High Open Interest filter, click here. Jeff Carter expects the choppy trading range action to continue. Learn about a pair of option trades he highlights. 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 05/23/2013
| Company Name | Symbol | %Change |
|---|---|---|
| WESTELL TECH | WSTL | 6.67% |
| STEIN MART I | SMRT | 5.38% |
| ALLIANCE FIB | AFOP | 5.21% |
| DAWSON GEOPH | DWSN | 4.33% |
| MARRIOTT VAC | VAC | 3.27% |
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