Tuesday - October 11, 2005
 Want to view the archive of past issues? Go to: http://at.zacks.com/?id=1344. 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.
If you’re feeling less optimistic than usual these days, you’re not alone. The University of Michigan’s monthly reading on consumer confidence fell from 89.1 in August to 76.9 in September — the lowest it has been in more than ten years. Well, no wonder, with hurricanes battering the Gulf Coast and gas prices soaring. Gas spiked to well over $3 per gallon in southern Florida, where Jeff Manera lives, as well as much of the rest of the country, although they have since reverted back to below $3 for the most part. Add to that worries about a slowing economy and the weight of an ongoing war in Iraq and it’s no surprise the average consumer is feeling a bit disgruntled lately. Now we’re hearing that the cost to rebuild New Orleans and other places hit hard by Hurricane Katrina could reach $200 billion, adding a good chunk to the already bloated federal budget deficit. And that was before Hurricane Rita added an exclamation mark to the situation by re-flooding New Orleans and taking a couple more refineries temporarily offline. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - However, there is a potential positive side to all this. Although the Congressional Budget Office predicts a slowdown in economic growth, many expect it to be temporary. In fact, as that $200 billion gets spent on rebuilding and construction later this year and into next year, we could even see a growth spurt in portions of the economy, which has a way of spreading. This economic impact isn’t a forgone conclusion — if it was, we’d probably wipe out a major city or two every few years just so we could rebuild and help the economy — but the positive impact still might surprise us. Back to consumer confidence: Apparently consumers aren’t taking the potential positives into consideration. In fact, expectations about the future fell to a 13-year low, from 76.9 in August to 63.6 in September as measured by the consumer confidence survey. That could bode ill for retail stocks and the upcoming holiday season, but that’s not forgone. The correlation between consumer confidence and sales isn’t as strong as it used to be — possibly due to the easy wealth people have been extracting from their homes’ equity. People tell the survey takers how bad they feel about the economy, then take out another home equity line or refinance and go on a spending spree. Let’s also consider the Philadelphia Fed’s Business Outlook Survey for the manufacturer’s perspective — in a way, a business confidence survey. Businesses are being hit by higher energy prices, which drive up the cost of manufacturing. Mirroring the weakening consumer confidence levels, the Philly Fed index fell from 17.5 in August to 2.2 last month, indicating a sharp slowdown in business activity. Does that mean the “hurricane effect” will have a bigger-than-expected impact on the economy? Well, the Fed certainly doesn’t seem worried about an economic downturn due to the devastation in the Gulf Coast states. Last month, for the 11th consecutive time, the Fed hiked interest rates a quarter point. Predictably, that weighed on the financial markets. Alan Greenspan and company are more concerned about inflation caused by rising real estate energy and other commodity prices. By raising rates, the Fed is signaling that the economy is still strong, in spite of the natural disasters and costs of rebuilding. The short-term effects are anybody’s guess, but the longer-term picture, along with the $200 billion infusion for rebuilding, could ultimately translate into good news for the markets. Active Power (NASDAQ: ACPW) has been giving Manera and his team a strong run, with its shares trading near $4 as they go to press — a nice pop from their cost basis of $3.10. The strength in Active Power’s shares is being powered by an announcement that the company scored the contract for a continuous power system to China for use at the country’s National Olympics being held in October. Also stoking the flames is a report in August that the company nailed a new order from Caterpillar for four 1200 kVA flywheel uninterruptible power supply systems and two 300 kVA UPS systems. Nice! Active Power has now received 17 orders for its megawatt-class flywheel UPS systems and Manera expects this is just the beginning. Barr Pharmaceuticals (NYSE: BRL) continues to shine, its shares most recently buoyed by the resignation of the FDA commissioner Lester Crawford. Crawford had repeatedly stonewalled the company’s attempts to get its Plan B emergency contraception pills over-the-counter, despite overwhelming endorsements of the product and its safety by the FDA review board. It’s unlikely the next FDA chief will play the types of games Crawford has and Plan B could see a quick over-the-counter approval. Barr also announced that it received U.S. regulatory approval to sell a generic version of Aventis Pharmaceuticals Inc.’s Arava arthritis tablets. It plans to launch the drug immediately. Manera and his team are up 32% in Barr — about 17% of that coming in the past month. Manera expects the momentum and good news to continue. 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. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Nadine Wong says Chiron should be motivated to negotiate a price with Novartis. More... c) Connecting with Simpson Manufacturing Charles Norton and Allen Gillespie explain that August’s rally is still intact and then highlights a building supplier. More... d) Upgrade Boosts Insurance Shares Bill Martin and Matt Ragas have been very pleased with the recent performance of an insurance broker. More... e) Guzzling Gas Mutual Fund Expert Ron Rowland says we now have a twin energy crisis: fuel for cars and power for homes. More... Kelley Wright and his team believe the worst for American International Group may be in the past. 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 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=1363. Earnings & Sector Update Traditionally, the period just before the end of a fiscal quarter is a slow time for estimate revisions. Analysts generally prefer to wait a week or two to get the new data from the earnings report before reconsidering their earnings expectations for the companies they follow. However, as they begin to get a handle on the effects of the storms, they have been adjusting their numbers. Estimate increases for firms in the Energy sector significantly offset declines elsewhere.
More at: http://at.zacks.com/?id=1363. Table of Contents for Rest of the Report
Click here to read this weeks` full report. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - BULL OF THE DAY Amylin Pharmaceuticals (AMLN) - Attractive at Current Levels. For full Zacks research report, click here. Agco Corporation (AG) - Weak Growth Prospects. For full Zacks research report, click here. Auto Sales Slow Down Industry Rank for the Week of October 10
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: Discounted Fundamental Strength 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. CalAmp Corp. (NASDAQ: CAMP), a basic materials company, recently delivered a strong earnings report. Second-quarter earnings were 96 cents per share, ahead of the consensus estimate by 3%. Given this positive momentum in earnings, it is not surprising that shares of Aleris are trading near a new 52-week high and have advanced in price by about 12% over the past four weeks. Continue your research on ARS at: http://at.zacks.com/?id=1996. Chromcraft Revington, Inc. (AMEX: CRC) has a current ratio of 4.26. In late July, the company reported second-quarter earnings of 48 cents per share, matching its prior year total. The company noted that shipments of coordinated upholstered and occasional furniture room packages have been well received at retail. Value investors may find this stock attractive with its price/sales multiple of .47 and PEG ratio of .54. Continue your research on CRC at: http://at.zacks.com/?id=1997. DHB Industries, Inc. (AMEX: DHB), with its PEG ratio of .33, sports one of the most favorable valuations currently listed under this profit track. DHB also has low levels of debt as evidenced by its current ratio of 4.5 and a debt/equity level of .21. In late July, the company announced second-quarter earnings of 17 cents per share, matching both the year ago result and the consensus estimate. The body armor company stated that its quarterly results are indicative of the ongoing demand for its products and reinforce the quality and reliability that its customers have come to depend upon. Continue your research on DHB at: http://at.zacks.com/?id=1998. 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. The company will report financial results for the third quarter on October 20, 2005. In mid-July, the company reported second-quarter earnings of $1.48 per share, about 24% ahead of the consensus estimate. RS, one of the largest metals service center companies in the United States, mentioned that it continues to believe the operating environment, while changing, is still very favorable by historical standards. Continue your research on RS 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 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Kevin Matras goes over a screen that's handily beating the market this year. 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 33% since 1988 versus 12% 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 143.5% annually (12% vs. 4.9% respectively). Learn more about the Zacks Rank following this section. Below you will find all the stocks added to the Zacks #1 and #5 Rank 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 Rank List: 61 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 more on Schaeffers Tools to Profit with Options. How about the start to October? We were able to get out of the usually bearish month of September with small gains across the board, but the first week of October was one of the worst weeks over the past three years. October is known for two things: massive sell-offs and major buying opportunities. My personal opinion is we have more weakness to come before the next major buying opportunity. But that doesn’t mean that if we don’t look hard enough we can still find some bullish plays. With that said, let’s take a look at one of my favorite bullish filters - the Put/Call Ratio Over 1.0 (Bullish). Also we’ll look back at how it’s done with some of the picks we've made using this filter over the past few months. Taking a step back, the Schaeffer's put/call open interest ratio (SOIR) is simply the number of puts divided by the number of calls among near term options. With that, a number of 1.0 or greater means that there are more puts than calls in short-term trading. From our contrarian-based approach, we love to see a huge number of puts compared to calls levied against a strong-performing stock. If a stock can advance amid heavy bearish sentiment, then there is still plenty of money left on the sidelines to help push the stock higher once that crowd begins to turn bullish. Now, just because a stock has a high SOIR doesn't mean it is a good long play. But using a SOIR as an indicator is just one aspect of the Expectational Analysis® approach, as we also like to check in on analysts, media, and short interest as other indicators for investor sentiment. If you can find a potential trade that encompasses all of those areas of sentiment, then my friends, you could have a potential winner on your hands. Feel free to scan the list to see if something strikes you as a potential bullish play, but what we want to do now is show you that this filter can work when used correctly. Over the past four months we’ve looked at this filter twice and both times had a very nice winner. During the week of June 24, 2005 we used this filter to determine that Beazer Homes USA (BZH) would make a nice bullish play and here is exactly what we said back then as to why. ~~~~~~~~~~~~ One name that stands out is homebuilder Beazer Homes USA (BZH). This stock is one that we've played a few times in the past and had some success. During the past year, few industries have had as much negative sentiment as housing stocks have. All you seem to hear is how there is a housing bubble and homebuilders are about to come crashing down. Well, according to our contrarian point of view, we like to see high levels of skepticism toward strong technical performers as a sign that there is still money left on the sidelines. Add it up and homebuilders fit this bill perfectly and for that reason we have been bullish on this sector over this time. BZH has a SOIR of 3.09, which is one of the higher numbers on the filter. We get this number by dividing near-term puts (77,869) by near-term calls (25,170). Now for the fun part, the shares have gained more than 73% during the past 12 months, yet short-term option players continue to pile on the bearish puts. In fact, the firm's SOIR is higher than 91% of the readings taken during the past year. Again this shows that the short-term options crowd is heavily betting against BZH here. Let's take a look at some other areas of sentiment that we track first, before we go out and load up on BZH. The more confident 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, pushing the security up that much quicker. Turning back to BZH we find that more than 25% 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, BZH has only two "buys" out of seven total recommendations. Any upgrades from this bearish bunch should really help out the shares. Overall, the security has earned a Schaeffer's Equity Scorecard ranking of 7.5 out of 10. This relatively high reading indicates that the shares may still have additional upside ahead of these as this pessimism unwinds in the form of increased buying pressure. ~~~~~~~~~~~~ With all of that said, we recommended playing a November 50 call (BZHKJ) for $8.00 a contract. Fortunately the filter was right and the stock went nearly straight up for a month and you could have sold this call on July 28 for a profit of over 120%! ~~~~~~~~~~~~ Then the week of September 5 we used this filter and determined that Cerner (CERN) looked like a nice play and recommended buying the December 80 call (CQNLP) for $5.10 a contract. For the sake of time we won’t give the reasons for going long, but trust me, it is very similar to the reasons given above for BZH. ~~~~~~~~~~~~ Once again the filter nailed it as the stock rallied very strongly and you could have sold that option on September 29 for $10 a contract, or just under a 100% in just a few weeks! ~~~~~~~~~~~~ Now I’ll be the first to admit that if the filters don’t always work quite this nicely, but with proper money management and cutting your losses, overall you should find it very rewarding. Be sure to visit SchaeffersResearch.com and review all the available trading tools, commentaries and market news. Also be sure to check out this and all the other filters at Zacks.com to see which strategy works best for you. Good luck! 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, 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 05/17/2013
| 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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