Thursday - November 17, 2005
 Want to view the archive of past issues? Go to: http://at.zacks.com/?id=2337. Manage Profit from the Pros subscription: 1. ZACKS EQUITY RESEARCH As we follow through on getting updated outlooks from our senior analysts covering energy and utilities, Michael Schrage, CFA was good enough to meet with us to discuss the coal market. He also offered his views on gold, copper and iron pricing, and how metals and mining companies are expected to perform going forward. How are coal stocks expected to perform in light of the cold winter months ahead? In the near-term, the coal stocks have reacted negatively to the lower prices of oil and gas, although this is probably unwarranted because the demand picture for coal remains positive. We are seeing, after perhaps twenty years, new coal-fired facilities coming on-line. A lot of this new development is dependent on Western coal. So even though oil and gas prices have been coming down, coal remains the best long-term value in energy stocks. It is also the only rational alternative fuel to oil and gas at this time. Coal stocks like CONSOL Energy (CNX) have come down in price, reacting somewhat negatively to the lower prices of competing fuels. However, what I find surprising is that oil and gas prices are actually similar or even higher than their pre-hurricane prices. Is low-sulfur coal seeing significantly higher demand? Clearly, Western coal – which has lower sulfur as well as lower BTU – is the main area of growth and demand. There is probably going to be 50 million tons of Western coal growth over the next five or six years. However, even though it’s low-sulfur coal, based on new regulations, any new coal-fired facilities need to have extensive and advanced pollution control requirements, such as scrubbers and mercury refinements. What are some of the other key features in the coal industry at this time? The main problem so far in 2005 that has impacted earnings negatively is the inability of the rail industry to handle the large surge in demand for Western coal. There have been some track problems, and the overall industry has been slow to respond to this increased demand. Railways are currently spending capital to beef up their unit train capabilities, but so far, the efforts have been disappointing. There are opportunities to export Eastern coal to Europe, but shortages in the rail industry are hindering these, as well. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Overall, things seem to be improving gradually as we approach the heating season. The utilities appear to be in good shape, and inventories are at about normal levels. What is your take on gold and copper prices lately? Gold has flattened over the past 30 days or so, and remains around the $465/oz area at this time. This is despite the moving up of the dollar and higher interest rates. The stabilization for gold at this $465 mark is a good level for the industry to make good rates of return, and a good level to justify future projects. Copper has remained high, in the $1.80 area, but some there has been some contraction in recent weeks related to higher interest rates. There are also continuing concerns about the water situation in South America, especially Chile, where a lot of copper is mined. They are thinking about restricting some copper production because of the tremendous intake of water in these copper mining projects, and there are concerns about the water tables in that country. What Buys and/or Sells would you recommend for us today? I’m still big on the interest-sensitive coal MLPs [master limited partnerships], which have done well but have also been somewhat sloppy in recent weeks. My favorites in this space are Natural Resource Partners (NRP) and Penn Virginia Resource Partners (PVR). The yields for these two have actually gone up as the stocks have flattened out, especially NRP, which has raised its dividend for 12 straight quarters. I think this will continue, as the company has a strong cash flow and is benefiting from higher coal prices. I also continue to recommend CVRD (RIO), the leading global player in iron ore. Iron prices have gone up a staggering 70% this year, and the demand situation for iron will allow further increases into next year. RIO is trading at 10x earnings, and it is in a very strong financial situation. This stock is one of my global favorites. As far as Sell recommendations, there’s nothing I’d care to specifically point out. But I will say that these gold stocks have high valuations, and are probably an area to stay away from. I am considering lowering some of these companies currently trading at 30-40x earnings to Sell at some point in the future. Through year-end ’05 and into ’06, what should investors be focused on regarding the metals and mining industry overall? Among the main concerns, pricing remains very important and so does global activity. Clearly, China is the swing country for steel production. However, with continually higher global interest rates, there is a good possibility of a global slowdown here. Earnings are up sharply in a lot of these industries, and multiples are up, as well. In my view, this is a time of caution. I wouldn’t advise chasing a lot of these stocks. Michael Schrage, CFA is a senior analyst covering the metals and mining industry for Zacks Independent Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - BULL OF THE DAY Bayer AG, ADR (BAY) - Improved Pricing Power. For full Zacks research report, click here. UIL Holdings (UIL) - Dividend Unsustainable? For full Zacks research report, click here. End in Sight Industry Rank for the Week of November 14
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… This Profit Track looks for stocks that are paying dividend yields of greater than 8% along with other attractive fundamental attributes. Although this screen is based on a long- term and lower risk approach to investing, it has consistently beaten the S&P 500 for with returns such as +19.5% in 2004 and +10.7% in 2005 (through 6/17/05). American Capital Strategies Ltd (NASDAQ: ACAS), which has a current yield of 8.02%, declared a fourth-quarter dividend of 79 cents per share in early November. The dividend amount marks an 8% increase over last year's fourth-quarter dividend. At the same time, the company reported third-quarter earnings of 82 cents per share. The result topped the consensus estimate by about 5% and outpaced the year prior total. To continue your research on ACAS, click here. Diana Shipping, Inc. (NYSE: DSX) meets the criteria of this profit track with a favorable yield of 12.32%. In late October, the global provider of shipping transportation services declared a dividend of $0.465 per share and announced third-quarter earnings per share that were almost 8% ahead of the consensus estimate. To continue your research on DSX, click here. Glimcher Realty Trust (NYSE: GRT), a self-administered and self-managed Maryland REIT, which is yielding 8.12%, declared a third-quarter dividend of $0.4808 per share in early September. In late October, the company posted third-quarter earnings of 23 cents per share. The result matched analysts’ expectations. GRT said the underlying operating fundamentals of its mall portfolio continue to improve, adding that it continues to remain optimistic regarding growth prospects for next year. To continue your research on GRT, click here. Valor Communications Group, Inc. (NYSE: VCG), which currently yields 11.54%, is one of the largest providers of telecommunications services in rural communities in the southwestern United States. VCG declared a dividend of 36 cents per share. The company announced third-quarter financial results in early November, stating that it continued to add high-value DSL subscribers and increased DSL penetration of total access lines to 9%. To continue your research on VCG, 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=2359 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Kevin Matras outlines a strategy for how to trade the Zacks Rank in a very practical manner for almost anyone's portfolio: http://at.zacks.com/?id=2360. 3. 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… Harris Corp. (HRS) Harris Corporation (HRS), based in Melbourne, FL, has evolved from a diversified electronics company to one that is focused on communications. In 1999, Harris spun off its Lanier office products division. It also sold its semiconductor division, which later became Intersil. The company is a global provider of communications equipment and services for government and commercial customers. Harris has strong market share positions in broadcast equipment, high-frequency and multi-band “man-pack” tactical radios, and ground-based military satellite communications terminals. Some of its important products include transmission equipment for microwave, satellite, and wireless communication; digital network broadcasting and management systems’ network test and management equipment and software; mobile radio networks; and air traffic control systems. Its four operating segments are Government Communications (which generated around 59% of fiscal 2004 revenue), RF Communications (17%), Microwave Communications (13%), and Broadcast Communications (11%). The commercial units serve a diverse clientele, including radio and television broadcasters, utilities, construction companies, and oil producers. By geography, 80% of 2004 sales were to U.S. customers with the remaining 20% coming from foreign sources. More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Harris has a strong market position in the government communications sector, with a broad product line and an enviable win rate on government contracts (over 60% historically and over 80% in recent quarters). The two defense electronics divisions (Government Communications and RF Communications) have seen a noticeable pickup over the past couple years as overall defense spending has increased dramatically and a major effort to upgrade the military’s communications infrastructure is underway. Notable successes include the company’s Falcon II radios, which are being widely used by U.S. Special Operations forces, the U.S. Army and various NATO and “Partnership for Peace” countries. The company has several big opportunities on the commercial side. For one, the Broadcast Communications business should get a boost from the U.S. Government’s mandate which will require all TV broadcasters in the U.S. to upgrade to digital technology by the end of 2006 or whenever digital television penetration reaches 85%. While most of the nation’s 1,700 commercial and public broadcasters have ordered some of the necessary equipment to make this conversion, activity should pickup as the deadlines approach. Another promising long-term opportunity is in the area of digital radio. In part spurred by competition from satellite radio, as well as broadcasters’ desire to find new revenue streams, we expect many radio stations to invest in digital technology over the next 1-2 years. Given its strong market position, Harris should be one of the major beneficiaries. Analysts have been significantly raising estimates after the company reported strong fiscal first quarter 2006 earnings and raised guidance. Strength in their RF Communications segment was a big contributor to earnings and recorded its seventeenth consecutive quarter of double digit sales growth. HRS is expanding its production capacity in the RF Communications segment going into the second half of Fiscal 2006.
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.
The S&P 500 has finally broken free from the jaws of the symmetrical triangle. On Thursday, the index rallied eleven points to decisively crack the downtrend line from the August 3rd 1245.86 high that had bound it for several weeks. On Friday, the index continued to advance in light, holiday trading. Despite volume being a subdued billion shares each on both the New York Stock Exchange and the Nasdaq, the S&P added nearly four points to finish the week at 1234.72. Dr. Melvin Pasternak continues to expect the S&P to test resistance at 1240 to 1245, but Dr. Pasternak also anticipates this resistance will not yield either quickly or easily. In the end, it was not the plethora of economic data released Thursday that sparked the rally. In fact, the market weakened early in the day on a worse-than-expected trade number and sold off further despite a better-than-anticipated consumer confidence report from the University of Michigan. The catalyst for the rally seemed to be the conclusion of the three-day Treasury auction, which ended with a successful sale of the 10-year note. Stock traders breathed a sign of relief when it was learned that foreign buyers had accounted for almost 56% of the bids rather than shunning the bonds as feared. The yield on the 10-year note dropped almost ten basis points from the previous close, and stocks subsequently took off. It also did not hurt that the price of crude oil continued its slide below $60 on Thursday. Crude has now broken below its 200-day moving average, which is near $58.50. A long-term trendline going back to when its sharp advance started in 2004 intersects the chart near $53, so don't write black gold off just yet. Crude has, however, lost approximately -20% of its value from when it peaked at over $70 a barrel in the aftermath of hurricane Katrina. Looking at the weekly chart of the S&P, the October 13th low of 1168.20 now appears to be the bottom for this period. Over the last three weeks, the S&P has created a highly bullish candle formation called three advancing white soldiers. Typically this candle pattern means higher prices are ahead. The index has rallied above both the 30-week moving average at 1205 and the 40-week at 1201. It has also surpassed the 10-week at 1213. Parabolic SAR, which had been on a sell signal since late August, has returned to a buy signal. The S&P is now within striking distance of its August 3rd 1245.86 peak and its secondary peak of 1243.13, which it formed on September 9th. The upper Bollinger band is at 1252 and Dr. Pasternak doesn't expect the index to trade much higher than this level before pulling back. The trendline off the October 13th 1168.20 bottom crosses the chart at 1188. As long as the S&P trades above that trendline, however, this rally will remain intact. There should also now be near-term support near 1220, which served as resistance for most of this past week. Autodesk (NASDAQ: ADSK) -- Dr. Pasternak first identified software maker AutoDesk as an interesting long trade in his October 12th newsletter when the shares were trading at $42.98. The stock then rallied and hit a peak of $48.27 before seeing profit taking. ADSK remains in a strong uptrend. The stock has developed support in the low to mid-$40s. H&R Block (NYSE: HRB) -- H&R Block prepares tax returns and markets financial products such as insurance and annuities. Dr. Pasternak spotted the stock at $24.56 in the October 31st newsletter. The stock skidded from near $30 in early July to a low near $23 in mid-October. HRB appears to be forming a rounding bottom Red Hat (NASDAQ: RHAT) -- Dr. Pasternak highlighted RHAT in his October 31st newsletter at $22.15. The stock then handily broke through resistance, testing round-number resistance at $25. RHAT continues to have excellent relative strength. In a strong market, RHAT should be able to trade into the high $20s. Brink’s (NYSE: BCO) -- Brinks operates armored cars and provides other security services worldwide. The company also operates foreign trucking services, including a German company called BAX that has been the subject of buyout rumors. Brinks is in a flag formation with resistance at $47.36, just above where it closed Friday. With just a few short-term trades each month, using a small portion of your portfolio, you can boost your total portfolio returns to levels not seen since the Internet craze. Discover how and receive the free five-part course, --“Swing Trading Done Right: The Secrets to Putting the Odds in Your Favor.” http://at.zacks.com/?id=2428. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - b) Insiders Love Microcap Oil Service Stock Jack Adamo highlights the largest provider of onshore seismic data acquisition services in the U.S. More... Ron Rowland sees more interest in the battered technology sector. Read about this mutual fund expert’s stake in the space. 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 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=2350. Or view the full list of Zacks #1 Ranked stocks at: http://at.zacks.com/?id=2351. 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 05/17/2013
| 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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