Friday - November 4, 2005
 Want to view the archive of past issues? Go to: http://at.zacks.com/?id=2283. Manage Profit from the Pros subscription: 1. ZACKS EQUITY RESEARCH The aerospace/defense industry is a tale of two sectors. For obvious reasons the defense half is in great demand, as evidenced by double-digit rate increases in spending outlays. The success of this segment accounts for a lion’s share of the overall industry’s Zacks Industry Rank of 2.50, placing it 21st out of more than 200 industries. However, the other side of that coin is not as encouraging with commercial aerospace still experiencing widespread losses. Nevertheless, there is more than enough potential for investors in the aerospace/defense industry, if they focus where the money is. “Investors should focus on those companies expected to benefit from increased defense spending – those building weapons systems and supplying munitions – and tread lightly in commercial aerospace,” according to a research report from Zacks Equity Research Jon Kolb More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - A look at the headlines coming out of Iraq provides a clear explanation why defense spending is at a premium. The changing nature of the threats for U.S. armed forces and the age of many weapons systems are major reasons for the growth in defense spending in recent years. Several companies have enjoyed double-digit organic revenue increases from year-to-year and outlays are expected to continue growing in the high single-digits for another couple of years. There are concerns that the future growth of defense spending will not be as energetic, but with the larger war on terror and more specific conflict in Iraq suggests that there will be some area in the defense space for investors to participate for the foreseeable future. For now though, defense companies are continuing to get big business. As highlighted in the Industry Rank article for the week of October 31, estimates are rising for General Dynamics (NYSE: GD) and Lockheed Martin (NYSE: LMT), which are two of the biggest forces in the space. Both companies experienced positive third-quarter earnings surprises and increased revenues, helping GD secure a Zacks Rank of #2 (Buy). While LMT is also enjoying increased estimate revisions from analysts, the company, as of this writing, remains a Zacks Rank of #3 (Hold). Meanwhile, the aerospace/defense equipment industry finds itself a bit outside of the top 100 industries, but nevertheless has a number of companies with a Zacks Rank of #2, some of which are profiled below. But the aerospace side of this industry isn’t holding up its end of the bargain. The space has yet to fully recover from the 9-11 attacks, leading to widespread losses and capacity reductions. According to the aforementioned research report, “Looking past 2005, some suppliers to original equipment manufacturers have said that volume production rates will not pick up until the airline industry returns to profitability, which in light of recent bankruptcies, is not widely expected to occur anytime soon.” Full Zacks Industry Outlook report at: http://at.zacks.com/?id=2362. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - BULL OF THE DAY Kyphon, Inc. (KYPH) - Driving Product Awareness. For full Zacks research report, click here. AGCO Corp. (AG) - Low Farm Equipment Demand. For full Zacks research report, click here. EuroTech Looks for Short-Term Boost Take a Look at the S&P Super Composite
2. 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: Return on Equity This Profit Track strategy uses Return on Equity (ROE) to discover solid stocks. ROE is one of the quickest ways to gauge whether a company is creating assets or gobbling up investors' cash. One of the quickest ways to gauge whether a company is creating assets or gobbling up investors' cash is to look at their ROE. This fast moving Profit Track returned an impressive +30.3% in 2004. In 2005, it continues to outperform the S&P 500 by a wide margin. Here are four stocks that make the grade for the Return on Equity Profit Track: Barnes Group Inc. (NYSE: B), an industrial goods company, has a ROE of 12.57 and a price to sales ratio of .76. In late October, the company posted third-quarter earnings of 55 cents per share, beating the consensus estimate of 53 cents and surpassing last year's result. This was the 11th consecutive quarter of double-digit sales growth. To continue your research on B, click here. Dress Barn Inc. (NASDAQ: DBRN), a women’s apparel retailer, has an appealing valuation as indicated by its ROE of 12.30 and a price to sales ratio of .82. In mid-October, the company announced fiscal fourth-quarter earnings of 45 cents per share, meeting the consensus estimate and eclipsing the prior year’s result. The company noted that it used its increased cash flow to pay down some debt. To continue your research on DBRN, click here. Express Scripts Inc. (NASDAQ: ESRX) recently posted third-quarter earnings per share of 67 cents. The result outpaced last year's 55 cents and topped the consensus estimate by almost 10%. The company reported record levels of earnings and cash flow in the quarter. Express Scripts offers a ROE of 27.03 and a price to sales ratio of .72. To continue your research on ESRX, click here. GameStop Corp. (NYSE: GME) satisfies the criteria of this profit track with a ROE of 12.97 and a price to sales ratio of .39. The company recently released its fiscal second-quarter financial results, stating that it is very pleased with its strong hardware sales. Earnings per share were ahead of the consensus estimate by nearly 7% and outperformed the year ago total. To continue your research on GME, click here. To see the full list of stocks that currently pass this winning screen, go to http://at.zacks.com/?id=2294. 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=2295. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - A Simple Dividend Strategy with Extraordinary Returns Kevin Matras goes over a winning, longer-term, dividend investment strategy: http://at.zacks.com/?id=2289. 3. ZACKS #1 RANK STOCKS The Zacks #1 Rank (Strong Buy) list is always limited to approximately 220 stocks. Four stocks that are currently included in this elite group are: BJ Services, Build-A-Bear Workshop, Tiffany & Co and Wabtec Corporation. BJ Services Co. (NYSE: BJS) just released its fiscal fourth quarter report. The earnings result was ahead of expectations by approximately 3% and surpassed the year prior total. The company stated that it expects activity to remain strong with continuing growth in its major markets. Analysts seem to also see strong prospects and growth as evidenced by their upward revisions of earnings estimates for the year ending September 2006. Current estimates of $1.88 per share are above one month ago levels by about 2%. Continue your research on BJS at: http://at.zacks.com/?id=2302. Build-A-Bear Workshop, Inc. (NYSE: BBW) recently reported third-quarter earnings of 26 cents per share, outperforming last year’s 19 cents and exceeding the consensus estimate by almost 24%. The company stated that based on its performance to date, it is comfortable with the mid to high-end earnings guidance of $1.24 to $1.30 per share for the year ending December 2005. Current Wall Street estimates for the year are $1.28, which is 6% above one month ago levels. BBW mentioned that its strong results this quarter highlight the strength and quality of the Build-A-Bear Workshop business model. Continue your research on BBW at: http://at.zacks.com/?id=2303.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Tiffany & Co. (NYSE: TIF) announced fiscal second-quarter earnings of 35 cents per share in late August. The result exceeded the consensus estimate of 24 cents and eclipsed last year's total. Net sales grew 11% year-over-year, while comparable store sales rose 6% in the U.S. The company believes it is positioned for a successful second half. Earnings estimates for the year ending January 2006 moved up 11 cents, or about 7%, from three months ago. Continue your research on TIF at: http://at.zacks.com/?id=2304. Wabtec Corporation (NYSE: WAB) recently posted third-quarter earnings of 32 cents per share, beating last year’s 20 cents and jumping ahead of the consensus estimate by about 14%. The company said it continues to benefit from strong demand in its end markets, which gives it the confidence to raise its earnings guidance for the second time this year. WAB currently expects full year 2005 earnings of approximately $1.15 per share. Analysts have also been increasing earnings estimates. Current Wall Street estimates for the year ending December 2005 are $1.17 per share, which is nearly 3% above one month ago levels. Continue your research on WAB at: http://at.zacks.com/?id=2305. To see the full list of Zacks #1 Rank stocks (approximately 220 stocks), go to http://at.zacks.com/?id=2297. 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 11.8% for S&P 500. To help you fully understand how the Zacks Rank works and, more importantly, how you can profit by using the Zacks Rank, we have created a free report - The Zacks Rank - Harnessing the Power of Earnings Estimate Revisions. This valuable information is available at: http://at.zacks.com/?id=2296. 4. 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 Joseph H. Ellis’s excellent book, Ahead of the Curve: A Commonsense Guide to Forecasting Business and Market Cycles, Ellis writes that there are four stages to an economic downturn. His insight is very relevant in light of the present circumstances. The first stage is the “peak” in an economic cycle. This is a time when corporate profits are showing superb gains, with the employment picture clearly appearing to be favorable. As Dennis Slothower looks back, he would place the peak in the fourth quarter of 2003. The Gross Domestic Product (GDP) was growing at 7% at that time. Ellis calls the second stage “a modest slowing” period. This is when the rate of growth in the economy begins to slow. He defines it as a time when things still look pretty good, but there is a gradual slowdown. Based on Slothower’s observations, we have been in this stage for the past year and a half. The third stage is called the “intensifying worry” stage, which Slothower would say we are in right now. The GDP has slowed over the last 20 months from 7% to 3%. By the way, the latest GDP number was issued before hurricanes Katrina and Wilma hit. Now, following these horrific storms, we are beginning to have some serious worries regarding the prospects of a recession developing. A vast majority of the sectors have fallen over 10%. It is at this stage, writes Ellis, which bear markets develop. The last stage of an economic downturn is called the “advent of recession.” This is when we begin to see an absolute decline in real GDP, with corporate profits falling sharply. Capital spending also weakens as we enter a period of unusually widespread pessimism. Not all four stages of a downturn need to take place. Sometimes, we may only see the first three stages, after which the Fed will come to the rescue and engineer a “soft landing” rather than a recession. One of the biggest dangers Ellis writes about is the possibility that many businesses and investors could wait until a recession is produced and see that as the primary measure of economic slowdown. By then it is often too late, as the market has begun to discount this possibility in stage three. Economic cycles are constantly ebbing and flowing in the market, and knowing where we stand is the key to investment success. Peerless Systems Corporation (NASDAQ: PRLS), together with its wholly owned subsidiary, Peerless Systems Imaging Products, Inc., provides imaging and networking technologies and components to the digital document markets. Peerless Systems provides software-based imaging and networking technology for controllers in embedded, attached, and stand-alone digital document products. It also integrates software into the printers, copiers, and multifunction products of original equipment manufacturers (OEMs). It has strategic partnerships with Adobe Systems, Novell, and IBM. The company was founded in 1982 and is headquartered in El Segundo, California. Home Solutions of America, Inc. (AMEX: HOM) provides residential services, including restoration and specialty interior services, mainly to residential properties in the United States. The company primarily operates in two segments, Restoration Services and Specialty Interior Services. The company was incorporated in 1998 and was formerly known as Nextgen Communications Corporation. It changed its name to Home Solutions of America, Inc., in 2002. Home Solutions of America is headquartered in Dallas, Texas. Express Scripts (NASDAQ: ESRX) is one of the largest pharmacy benefit management companies in North America. Through facilities in the states and Canada, the company serves thousands of client groups, including managed care organizations, insurance carriers, third-party administrators, employers and union-sponsored benefit plans. Lufkin Industries (NASDAQ: LUFK) designs, manufactures, sells, and services various types of oil field pumping units, power transmission products, foundry castings and highway trailers. Lufkin manufactures four basic types of pumping units: an air-balanced unit, a beam-balanced unit, a crank-balanced unit, and a Mark II Unitorque unit. Brown & Brown (NYSE: BRO) is a diversified insurance brokerage and agency that markets and sells primarily property and casualty insurance products and services to its clients. Because the company does not engage in underwriting activities, it does not assume underwriting risks. Instead, it acts in an agency capacity to provide its customers with targeted, customized risk management products. The company is compensated for its services by commissions paid by insurance companies and fees for administration and benefit consulting services. During my 25-year career as a money manager, I’ve tested hundreds of market indicators. I’ve fine-tuned my strategy using specific indicators that work together to predict the market with incredible accuracy and find stocks flying under the radar screen. Indicators are pointing to a strong bull market in 2005. I don’t want you to miss a single day of what I’m convinced will be a spectacular bull market. http://at.zacks.com/?id=2366. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - b) Inflation Talk Cools Market but Economy and Earnings Are Growing Don Dion, a mutual fund expert, says much of the market’s October weakness stemmed from hawkish comments made by several Fed officials. More... c) Bankruptcy Rumor Rattles World Markets Richard Rhodes explains that a rumored bankruptcy filing has created confusion in the world capital markets. More... 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=2296. Or view the full list of Zacks #1 Ranked stocks at: http://at.zacks.com/?id=2297. 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 Zacks Performance Rank performance is the total return of equal weighted simulated portfolios consisting of those stocks with the indicated Zacks Rank net of fees. Results reflect the reinvestment of dividends and other earnings. Simulated results do not represent actual trading and may not reflect the impact that economic and market factors might have had on decision-making if an adviser were actually managing a client's money. 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 05/21/2013
| Company Name | Symbol | %Change |
|---|---|---|
| RADIANT LOGI | RLGT | 4.26% |
| GREENLIGHT C | GLRE | 2.73% |
| SUMMER INFAN | SUMR | 2.41% |
| META FINANCI | CASH | 2.39% |
| OLD SECOND B | OSBC | 1.85% |
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