Thursday - July 28, 2005
 Want to view the archive of past issues? Go to: http://at.zacks.com/?id=114. Get Profit from the Pros content in Real-Time. 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.
China is the latest and greatest investment frontier for growth oriented investors. The combination of China’s massive size and rapid modernization is creating one of the greatest investment opportunities of the 21st century. The Chinese government is increasingly encouraging entrepreneurship in the nation of 1.3 billion people, with promising initial results. Numerous startups and high growth companies have hit the ground running, contributing to China’s rapid GDP growth. As with all things that are big and growing quickly, investment capital has begun flowing into Chinese enterprises, ranging from auto manufacturers to textile plants to Internet and technology companies. While this trend has been emerging over the course of the past few years, Ian Wyatt and his team believe the equity markets are just beginning to warm up to Chinese stocks, and believe the market is at an inflection point after several years of rollercoaster returns. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - At Growth Report Wyatt and his team are increasingly bullish on the continued opportunity for China as a whole, and are specifically keen on the booming Internet sector that remains in its infancy. In their Special Report Wyatt and his team bring investors up to speed on the significant market opportunity that exists today in China. The time for China is now, and investors who want to gain exposure to the massive growth opportunity that exists in China today should begin seriously reviewing investment opportunities that will provide exposure to the unstoppable growth trend that is underway in the East today. Yahoo! (Nasdaq: YHOO) entered the Chinese market directly in 1999, and has followed up with the $120 million acquisition of a Hong Kong company that gives Yahoo! control of search engine 3721. Google (NASDAQ: GOOG) meanwhile captured 25% of the Chinese search market in 2004, and as a result was able to sell $24 million in paid search advertisements, a tiny piece of the company’s $3.2 billion in revenues in 2004. Google is apparently charging only $0.0024 per click for ads on its Chinese search engine, well below the levels bid by U.S. advertisers (average pay-per-click price in the U.S. is +$0.50). Wyatt and his team believe the opportunity for Google in China is monstrous as the company grows in terms of search traffic and bid prices on pay-per-click advertisements. In 2003 eBay (NASDAQ: EBAY) purchased EachNet, a leading China online auction company, for $180 million. EachNet sales reached $100 million in Q1 2005, a 70% increase over the year ago quarter. Following this acquisition, eBay announced its decision to invest $100 million in China in 2005 on marketing and software as the company looks to gain market share against China’s leading auction site Taobao.com, which is owned by business-to-business e-commerce company Alibaba.com (privately held, financed by Softbank and Fidelity Ventures). After a failure in Japan that resulted in eBay pulling out of the country in 2002, the company is aggressively attempting to establish its early presence in China. Jeff Bezos’ Amazon (NASDAQ: AMZN) has also stepped up to the plate with a $75 million acquisition of Joyo.com in September 2004, the leading Chinese seller of books, music, and videos. Amazon clearly does not want to be left out on the booming Chinese economy, and thus entered the market through this acquisition in spite of the fact that e-commerce remains in its infancy in China due to security concerns and low credit card issuance rates. Growth Report’s Ian Wyatt is on a mission to discover undervalued high growth investment opportunities by guiding investors through uncertain markets with sensible investment ideas and a proven investment philosophy. Growth Report’s long-term approach to investing in small-cap growth stocks delivered returns of 40% in 2002, and 52% in 2003. Some of Ian’s individual stock picks were up 1,091%, 849%, and 357% in 2003. Learn more about this newsletter and free trial offer at: http://at.zacks.com/?id=271. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - b) Valuations Reasonable, Not Cheap Richard Moroney says the valuation disparity between the average stock and the capitalization-weighted averages has narrowed. More... Gregory Spear says that when important information suddenly arrives, it can take the market weeks or months to fully price it in. More... d) Investors Could Double or Triple Their Wealth Donald Rowe says the greatest bull market in history will lift-off when the Fed stops raising short-term rates. More... Ken Trester says the market is suggesting that the summer rally will continue to a possible peak in August. More... With earnings growth expected to increase during the second half of 2005, Jim Collins says the stock market is in good shape. 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. BEST OF ZACKS EQUITY RESEARCH BULL OF THE DAY Radware, Inc. (RDWR) - Business Climate Improving. drugstore.com (DSCM) - Stock Price Overvalued. Long-Term, Housing Market Solid Final Second Quarter Earnings Growth Should Be 12%
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… Fundamental strength is often a key criterion for many investors. A strong balance sheet and a history of profitability indicate that a company has the ability to meet its obligations and the flexibility to pursue opportunities for growth. Therefore, such stocks are often perceived as having a lower level of risk. The lower level of risk often results in higher valuations. Occasionally, however, the markets undervalue a stock relative to the company’s fundamental strength. When this occurs, opportunities for profits are created. This Profit Track identifies such opportunities. Backtesting results show just how successful this Profit Track has been. Not only has this strategy outperformed the S&P 500 for four consecutive years, it generated returns of 63.8% in 2003 and 31.0% in 2004. Bluegreen Corp. (NYSE: BXG) sports a current ratio of 3.41, indicating that it is more than able to meet all of its short-term obligations. In late April, the company reported first-quarter earnings of 21 cents per share, beating last year’s 17 cents and surpassing the consensus estimate by about 31%. BXG stated that the quarterly results reflected same-Resort growth at many of its timeshare properties, a solid performance from its new off-site Resort sales offices and continued profitability at its Communities business. Value investors may find BXG attractive with its price/sales multiple of .86 and PEG ratio of .84. To continue your research on BXG, click here. CalAmp Corp. (NASDAQ: CAMP), which provides wireless and content delivery solutions, services and products, has an appealing PEG ratio of .73 and price/sales multiple of .87. The company recently announced fiscal first-quarter earnings of nine cents per share, eclipsing its year prior result and matching the consensus estimate. This Zacks #2 Rank (“Buy”) company has little debt as evidenced by its debt/equity level of .04. To continue your research on CAMP, click here. Finish Line Inc. (NASDAQ: FINL) posted fiscal first-quarter earnings of 26 cents per share in late June, outpacing last year’s result and matching the consensus estimate. Net sales grew 13% year-over-year, while comparable store net sales increased 2% on top of a 14% increase reported for last year’s first quarter. The company stated that it is well positioned and optimistic as it approaches the Back-to-School selling season. Investors are likely to be optimistic about FINL as the company has no long-term debt with a price/sales multiple of .73 and a PEG ratio of .82. To continue your research on FINL, click here. MDC Holdings, Inc. (NYSE: MDC) is a Zacks #1 Rank (Strong Buy) company, which has an appealing PEG ratio of .46 and price/sales multiple of .85. These figures indicate an attractive value, while MDC’s current ratio of 4.61 implies that it is more than able to meet all of its short-term obligations. The company recently posted second-quarter earnings $2.25, exceeding the consensus estimate by almost 8% and outpacing last year’s $1.87. MDC said is has leveraged the strong fundamentals that continue to support the homebuilding industry to produce record quarterly operating profits for the 12th consecutive quarter and for the 23rd time in the last six years. To continue your research on MDC, 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 4. ZacksAdvisor.com TIMELY BUY of the WEEK Here you`ll discover a Zacks #1 Ranked stock hand selected by
Ben Zacks to outperform the market over the next 30 to 90 days.
This week`s Timely Buy is… Amgen (AMGN) Amgen is the world’s largest biotechnology company, with manufacturing, distribution, and sales facilities based all over the world. The company used advances in cellular and molecular biology to develop two of the biotech industry’s earliest and most successful drugs, Epogen (for anemia) and Neupogen (a white blood cell stimulant). The acquisition of Immunex in July 2002 gave Amgen access to the blockbuster arthritis and psoriasis drug Enbrel. The company successfully launched two next-generation products in 2003, Aranesp (a long-acting version of Epogen) and Neulasta (a long-acting version of Neupogen), which currently drives strong top-line growth. These drugs – Epogen/Aranesp, Neupogen/Neulasta and Enbrel – together account for the bulk of Amgen’s revenues. Amgen also has significant research alliances with Roche, Kirin (Japan), and many small-cap biotechnology companies. The company derives the bulk of its revenue from the domestic market, but international sales are growing strongly. The company eclipsed global sales of $10 billion in 2004, up 26% from 2003. Based in Thousand Oaks, CA, Amgen employs nearly 14,300 people worldwide. Existing products remain strong: Next-generation products Aranesp and Neulasta are re-invigorating sales growth. Aranesp market share continues to increase in both the oncology (cancer) and nephrology (concerns of the kidney) settings due to its less frequent dosages and low price. Growth in chemotherapy and pre-dialysis induced anemia offers a sizable opportunity for Amgen to continue to see solid sales the next several years. In addition, Amgen seeks to drive growth of Aranesp on cardiovascular protection in kidney disease and diabetes patents. Clinical trials are underway to expand the Aranesp label into chronic kidney disease (CKD) and anemia caused by congestive heart failure (CHF). This would be yet another large market opportunity for Amgen. Near-term we expect approval for once every three week dosing and increasing penetration into patients with myelodysplastic syndrome (MDS) given the recent positive phase II data. Global Aranesp sales in the second quarter were $837 million, far above our forecast. Epogen sales were $647 million, right in-line with our forecasts. We believe the Erythropoietin franchise remains poised for impressive growth ahead. We see combined Epogen + Aranesp sales of $5.9 billion in 2005, up 17%. Neulasta continues to look very strong as well. We believe the drug is positioned for further growth with its once-per-cycle injections and a direct-to-consumer advertising campaign. Amgen is hoping to drive expanded use of Neulasta in patients suffering from breast cancer and non-Hodgkin’s lymphoma (NHL). Additionally, management stated it would get more aggressive in the remainder of the year converting Neupogen patients to Neulasta. This should drive profitability in the G-CSF franchise going forward. We see combined Neupogen + Neulasta sales of $3.5 billion in 2005, up 20%. The inflammation biologic Enbrel also continues to power ahead as new indications for psoriasis and psoriatic arthritis drive growth. The Food and Drug Administration (FDA) clearance for expansion of Enbrel’s manufacturing facility in Rhode Island should support the growing demand for the drug. The withdrawals of Merck’s Vioxx and Pfizer’s Bextra may drive hundreds of thousands of inflammatory rheumatoid arthritis patients from Cox-II inhibitors to anti-TNF drugs such as Enbrel. Data presented at the American College of Rheumatology in late 2004 demonstrated powerful efficacy when Enbrel was used in combination with methotrexate. In psoriasis, Enbrel dominates the biologic category. Penetrations rates are as low as 5-10% globally, leading us to believe that Enbrel could see enormous growth over the next several years. Enbrel is currently approved for ankylosing spondylitis, juvenile rheumatoid arthritis, psoriasis, psoriatic arthritis, and rheumatoid arthritis. We model $2.6 billion in sales for Enbrel in 2005, up 37%. Pipeline Undervalued: The pipeline looks strong with nearly 40 products under various stages of clinical development. One of the key bases of our recommendation is an opinion that Amgen’s pipeline is significantly undervalued. The company has the largest R&D budget in biotechnology at $2.4 billion this year; that is over a billion more than fellow biotech giant Genentech (DNA). We are very optimistic on two late-stage oncology candidates, panitumumab and AMG-706. Panitumumab, being co-developed with Abgenix, Inc. (ABGX), is a fully-human monoclonal antibody target for the epidermal growth factor receptor (EGFR). Amgen and Abgenix are enrolling a large-scale phase III trial called PACCE (panitumumab advanced colorectal cancer evaluation) in which the candidate will be studied in combination with bevacizumab (Avastin, Genentech) and either oxaliplatin (Eloxatin, Sanofi-Aventis) or irinotecan-based (Camptosar, Pfizer) chemotherapy for first-line metastatic colorectal cancer. Additional monotherapy trials (Study '408) are underway in refractory (3rd-line) colorectal cancer with panitumumab. Data on this trial should be available by October 2005. We believe that panitumumab offers “Erbitux like” efficacy with superior dosing and tolerability. If Amgen can demonstrate a survival benefit when added to chemotherapy and Avastin, the drug may become part of the standard of care for metastatic colorectal cancer. This presents a billion-dollar opportunity in our view. Another potential blockbuster candidate in oncology is AMG-706, a small molecule multi-tyrosine kinase (VEGF, PDGP) inhibitor that intends to compete with Genentech’s Avastin, Pfizer’s Sutent and Bayer’s sorafenib. AMG-706 is in phase II trials (granted FDA “fast track” status) for gastrointestinal stromal tumors (GIST), as well as combination trials with panitumumab for non-small cell lung cancer (NSCLC) and colorectal cancer. Earlier clinical data demonstrates anti-angiogenic characteristics. Data on the phase II GIST trial should be available early next year.
5. WEEKLY COMMENTARY: Zacks Industry Outlook Microsoft is synonymous with software and is, therefore, a bellwether for the industry. For its fiscal fourth quarter, the company’s earnings per share surpassed the consensus, while revenue rose to $10.16 billion. The software giant stated that it closed out a record fiscal year with strong revenue growth driven by healthy, broad-based demand across all customer segments and channels. Furthermore, Microsoft expects double-digit revenue growth this year that should kick off the strongest multi-year product pipeline in its history. But the titans of this industry are only part of the story. The leading players are indicating signs of demand stabilization and cost-cutting initiatives; a clear-cut sign of maturity. Meanwhile, other companies, which operate primarily in select niches, are more hit-or-miss. Gaming, security software, virus protection, and anti-spam software are hot right now, while others are hit particularly hard by soft IT spending. Thusly, Zacks Equity Research has a neutral outlook. “With several important software categories reaching maturity, top-line growth for the industry is likely to remain below historical levels even after the industry recovers,” stated Zacks Equity Research analyst Lawrence Orlowski, CFA, in a research report. “Nevertheless, long-term growth prospects are still modestly above average.” Orlowski also stated that several of the top companies possess stellar fundamentals, including high profit margins, pristine balance sheets, and cash flow well in excess of capital requirements. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - SCREEN OF THE WEEK Kevin Matras talks about the PEG Ratio and explains how to use it for finding undervalued companies. http://at.zacks.com/?id=1410. 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 Rank (Strong Buy) List has 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, by visiting: 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 05/23/2013
| Company Name | Symbol | %Change |
|---|---|---|
| WESTELL TECH | WSTL | 7.69% |
| ALLIANCE FIB | AFOP | 5.73% |
| STEIN MART I | SMRT | 3.67% |
| DAWSON GEOPH | DWSN | 3.52% |
| MARRIOTT VAC | VAC | 3.43% |
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