Thursday - September 22, 2005
 Want to view the archive of past issues? Go to: http://at.zacks.com/?id=114. 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.
Stock prices eased back last week, following a strong run-up during the first part of September and amongst mixed economic news. The Dow Jones Industrial Average and the S&P 500 slipped just 0.3%, but the NASDAQ Composite was impacted harder and lost 0.7% for the period. On the plus side, retail sales (excluding automobiles) were up a robust 1.0% during August. In addition, inflationary pressures outside of energy continue to be well contained, as evidenced by lower than expected August readings at the consumer and producer levels. Conversely, industrial production was weaker than expected during August and the University of Michigan’s consumer sentiment survey indicated a sharp drop in consumer’s attitudes to start September, as the effects from Hurricane Katrina start to show up in economic numbers. Overall, there could be a small September economic slowdown due to Katrina. However, it should prove temporary and regional in nature. More interest rate increases are on the way, as the economy looks like it will end the year on a strong note. A strong economy means that earnings growth should more than counteract any negative effect from higher interest rates. In addition, stock valuations are very reasonable and will keep any market pullbacks to a minimum. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Now is the lull before third-quarter earnings season and is the time when many companies announce they will not meet expectations. Often times the stock market will bide its time during this period and not make any significant headway. This is a good time for investors to reassess their portfolios and make sure their entire portfolios are properly balanced. You’ll want your portfolio positioned to take full advantage of what should be good third quarter results. Building Materials Holding (NASDAQ: BMHC) announced on Tuesday that it has increased the quarterly cash dividend by 50% and declared a third quarter 2005 cash dividend of $0.15 per common share. The dividend is payable on October 14 to common shareholders of record as of September 23. VirtGame announced Wednesday that its stockholders have approved Mikohn Gaming’s (NASDAQ: PGIC) proposed acquisition of VirtGame. The merger is expected to close shortly after both companies receive clearance by the Nevada Gaming Control Board, which is expected on or about September 27. VirtGame is a Nevada licensed provider of innovative sports book software systems and server-based, networked gaming software for regulated gaming applications. OTC Insight® specializes in growth stocks, particularly in the small to mid-cap range. This monthly publication, which focuses on Nasdaq listed stocks, is a by-product of the research we use to select stocks for our managed client portfolios through Insight Capital Research and Management, Inc.® Learn more about this newsletter and free trial offer at: http://at.zacks.com/?id=342. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - b) JP Morgan Eyeing PNC Financial? Bill Martin and Matt Ragas believe that PNC Financial would make a nice fit for JP Morgan. More... c) Conditions May be Ripe for Gold Gregory Spear says gold is the ultimate “Armageddon Hedge.” Discover why and read about a few stocks. More... Mutual Fund Expert Ron Rowland says the recent drop in stocks is attributable to uncertainty about rates, Germany’s election, and energy prices. More... e) Developing a Healthy Portfolio with SFBC Charles Norton and Allen Gillespie profile a company that helps drug makers create new drugs. 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 Petrobras, ADR (PBR) - Positive Production Growth. Stoneridge, Inc. (SRI) - Sluggish Light Vehicle Demand. Katrina to Increase Southern Bank Activity Fourth Quarter Earnings Difficult to Predict
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 its 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. Double-digit returns have been achieved during each of the past four years. In 2005, this strategy continues to handedly beat the S&P 500. Ashland, Inc. (NYSE: ASH) has a current ratio of 2.61. In late July, the company reported fiscal third-quarter earnings that were approximately 11% ahead of the consensus estimate. The company noted that both the Chemical and Transportation Construction Sectors reported higher profits due mainly to improving margins. Value investors may find this stock attractive with its price/sales multiple of .43 and PEG ratio of .67. ASH will announce financial results for the fiscal fourth quarter on October 24, 2005. To continue your research on ASH, click here. Benchmark Electronics, Inc. (NYSE: BHE) has strong fundamentals and low levels of debt as evidenced by its current ratio of 2.77 and a debt/equity level of .01. In mid-July, the company announced second-quarter earnings of 44 cents per share, improving on last year’s 42 cents and beating the consensus estimate by about 2%. BHE stated that its second quarter results reflect revenue growth of 14% driven by the significant level of new program production. This stock has a PEG ratio of .9 and a price/sales multiple of .57. BHE’s third-quarter results will be released on October 20, 2005. To continue your research on BHE, click here. Reliance Steel and Aluminum Co. (NYSE: RS) is a Zacks #1 Rank (Strong Buy) company with a current ratio of 2.75 and a debt/equity level of .35. In mid-July, the company reported second-quarter earnings of $1.48 per share, about 24% ahead of the consensus estimate. RS mentioned that it continues to believe the operating environment, while changing, is still very favorable by historical standards. The company will release third-quarter earnings on October 20, 2005. To continue your research on RS, click here. Seagate Technology (NYSE: STX) recently noted that demand in the consumer electronics, mobile and desktop markets remain relatively consistent with the company's expectations as reported at the end of the fiscal fourth quarter. In mid-July, the company posted fourth quarter earnings of 55 cents per share, beating the consensus estimate by almost 8% and outperforming the year ago result. STX stated that with record revenue, record net income, and record unit shipments, it delivered the strongest quarterly performance that the disc drive industry has ever seen. Seagate has a debt/equity ratio of .29 and a current ratio of 1.97. To continue your research on STX, 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 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 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… AstraZeneca (AZN) AstraZeneca (AZN) engages in the research, development, manufacture, and marketing of prescription pharmaceuticals, as well as the supply of healthcare services worldwide. It provides medicines designed to fight disease in areas of medical need, such as cancer, cardiovascular, gastrointestinal, infection, neuroscience, and respiratory. The company recently received FDA approval for Arimidex to be used in breast cancer treatment. Perhaps the strongest of all AstraZeneca drugs is Seroquel (for schizophrenia). Seroquel continues to gain market share against its chief competition Zyprexa (Eli Lilly), Risperdal (Johnson & Johnson), and Geodon (Pfizer). The U.S. Food & Drug Administration (FDA) approval the drug last year for bipolar I disorder (recurring episodes of mania and depression), and an increased dosing cycle approval to a 12-week regimen. We are optimistic on future trends for Seroquel throughout 2005. The company will likely ring up total sales of nearly $2.7 billion in 2005, growing to over $4 billion in 2008. Recent second quarter 2005 earnings were far above expectations. The company posted upside of nearly $250 million in revenues. Strong products such as Seroquel (schizophrenia), Arimidex (breast cancer), Casodex (prostate cancer), Symbicort (asthma/COPD), and Crestor (cholesterol) all outpaced consensus forecasts. The company raised earnings guidance for the full year to $2.75, well above the previous range of $2.35 – 2.50. We see continued upside from strong drug sales flowing into the third and fourth quarter. AZN’s valuation is attractive given the superior growth rate. We see AstraZeneca being able to deliver a four year CAGR of 16.4%, significantly above that of all other large-cap pharmaceuticals (ex. Schering-Plough). Strong bottom-line growth is driven by a combination of growing revenues, moderating operational costs and aggressive share buybacks. The stock currently trades at 17.4x 2005 EPS. The company is also working on reducing costs to drive profitability beyond 2005. AZN should continue to see selling, general and administrative (SG&A) costs decline as a percent of total revenue for the next several years. Additionally, gross margins should continue to expand, given the ramp in key blockbuster products. Share buy-backs are also a significant driver of the bottom-line. The company has $3 billion in buy-backs authorized for the next year. All of these factors contribute to AstraZeneca's earnings momentum. The company has surpassed expectations for five consecutive quarters. It's Zacks #1 Rank not only reflects the most recent positive earnings surprise, but also the sustained increased in earnings estimates. Analysts have raised their full year forecasts by 9% over the past 60 days, with the consensus estimate most recently being revised upwards by two cents over the past seven days to $2.68 per share.
5. WEEKLY COMMENTARY: Zacks Industry Outlook Signs of demand stabilization and cost-cutting initiatives over the past several quarters speak to the industry maturation. But it’s an uneven process with some companies finding a profitable niche to take them to the next level while others wallow in an environment that is still somewhat frugal when it comes to spending. “While areas like enterprise resource planning systems, supply chain management software, and customer relationship management software have been hit hard by weak IT spending, other niches have held up relatively well,” stated Zacks Equity Research analyst Lawrence Orlowski, CFA, in a research report. The analyst says gaming, video editing and security software are among those with momentum. Furthermore, government spending has also been supportive for some computer software companies. Longer-term growth prospects remain slightly above average for the industry as a whole, which suggests that investors have opportunity to prosper if they make the right decisions. However, top-line growth is likely to remain below historical averages, according to the analyst. “In addition, several of the group’s top companies possess stellar fundamentals, including high profit margins, pristine balance sheets and cash flow well in excess of capital requirements,” said Orlowski. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - SCREEN OF THE WEEK A Return on Equity Strategy for a Return on Your Investment Kevin Matras goes over his 'Return on Equity' strategy that's already up over 40% for 2005: 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?
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, Charles Rotblut, CFA 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 |
|---|---|---|
| ALLIANCE FIB | AFOP | 5.21% |
| CYNOSURE INC | CYNO | 4.42% |
| DAWSON GEOPH | DWSN | 4.33% |
| MARRIOTT VAC | VAC | 3.27% |
| BLOOMIN' | BLMN | 2.93% |
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