Friday - February 10, 2006
 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 When considering whether to diversify into (or out of) transportation stocks, now that several companies in the industry have reported quarterly earnings, which sectors look most promising at this time? We turned to senior analyst Ann H. Heffron, CFA to get her perspective. So United Airlines finally gets itself out of bankruptcy and the stock dips down. How much affect will UAL's emergence have on the company in the near term? UAL Corp., parent of United Airlines, emerged from bankruptcy on February 1, 2006 and began trading on the NASDAQ under its new ticker symbol “UAUA” on February 2, 2006. During its first day of trading, the stock fell about $4 from its opening price of $40.83, and has been declining ever since. UAUA closed yesterday at $32.99. The old shares, listed on the NYSE under the “UALAQ” ticker were cancelled and quit trading on February 1, 2006. While the company has attractive positions in many markets, has cut $7 billion in operating costs during its three-year stay in bankruptcy, and $3 billion in financing costs, competition remains brutal and oil costs above $50 per barrel threaten UAUA’s long-term profitability (oil prices are now trading at about $63 per barrel). Moreover, the Pension Benefit Guaranty Corporation (PBGC) obtained about 20% of UAUA stock when it took over United’s pension plans last year. Since the PBGC does not intend to be a long-term investor in UAUA, sales of UAUA stock by the PBGC could dampen price improvement. That said, there will be an attractive entry point into the shares; however, at current levels, this is not it. I do not expect United’s emergence from bankruptcy to have a significant impact on the industry as it has continued operating and flying all throughout its stay in bankruptcy. However, I would note that UAUA is now a much tougher competitor than it was prior to entering bankruptcy. Underweighting airline stocks has been the way to go for everyone but day-traders for quite some time. Do you see any signs of a cyclical turn-around on the horizon? Airline stocks have traditionally been a difficult market in which to invest. However, it can be attractive given the right entry points. For example, AMR Corp.’s (AMR) [parent of American Airlines] stock has more than doubled in the last year. On the other hand, regional carriers, such as ExpressJet Holdings (XJT) and Pinnacle Airlines (PNCL) have fallen 30-40% over the last year, primarily reflecting problems with their partners. These uncertainties are weighing on the stocks. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - In the case of XJT, in late December, Continental Airlines announced its intention to reduce by 69 the number of aircraft ExpressJet will operate for Continental under the companies' capacity purchase agreement. ExpressJet has about 6-7 months to decide whether to return the 69 aircraft to Continental. In addition, ExpressJet and Continental are still negotiating rates for 2006. In the case of PNCL, as a result of the bankruptcy filing of Northwest Airlines last fall, PNCL removed 15 aircraft (roughly 10% of its fleet) from service pursuant to a request from Northwest, which notified Pinnacle that effective December 1, 2005, it does not intend to pay Pinnacle any amounts associated with these 15 aircraft. Which sector of the overall transportation industry as a whole seems to show the most long-term promise, in your view? Well, my views haven’t changed much since last we spoke. From a fundamental perspective, I like the Air Freight, Railroads, and Transportation Services sectors. Air Freight includes such companies as FedEx Corporation (FDX) and United Parcel Service (UPS), while Railroads include the major rail providers in the U.S. and Canada, such as Burlington Northern Santa Fe (BNI) and CSX Corp (CSX). As to Transportation Services, this covers companies such as C.H. Robinson Worldwide, Inc. (CHRW) and Expeditors International of Washington, Inc. (EXPD), both of which provide non-asset-based logistics services. All of these companies have been benefiting from exceptionally strong revenue growth, in part reflecting fuel surcharges needed to recover higher fuel costs. In addition, revenues have been helped by robust volume growth and tight capacity, which has propelled rates upward. All of this is, of course, due to the strong economy, which we currently expect to continue into 2006. The energy industry relies heavily on transportation -- particularly railways -- to move its commodities like oil and coal. Might the strength in energy these days help bolster companies like UNP? Quite right. Coal has been a particularly strong driver of railroad industry earnings, with pricing particularly solid. This reflects, in part, fuel surcharges that the railroads charge customers to recover higher fuel costs. But, there are also strong pricing trends above and beyond that. This has helped offset some of the weather-related volume declines from such events as Hurricanes Rita and Wilma and other natural catastrophes. What would you recommend for us today in terms of your top Buys and Sells? No sells today. As to Buys, we still like CSX Corporation (CSX) and recently upgraded Arkansas Best Corporation (ABFS) to Buy from Hold due to valuation. As to ABFS, it is a diversified transportation company headquartered in Fort Smith, Arkansas that primarily provides less-than-truckload (LTL) trucking and intermodal services. LTL carriers pick up freight from different shippers and combine freight into a single truckload. Intermodal transportation is the movement of freight over a combination of road and rail. While ABFS’s projected earnings growth rate over the next five years is modestly below that for the industry, we believe that the company’s many strengths, including a virtually debt-free balance sheet, strong operating margins and profitability ratios, and industry-leading dividend yield, support a higher valuation than the stock is currently accorded. As to CSX, it is a Jacksonville, Florida-based company that provides rail freight and intermodal transportation through a rail network of 21,000 miles over which it provides haulage of coal, iron ore, chemicals, automotive products, forest products, agricultural products, metals, fertilizer, consumer products, and minerals in 23 states, the District of Columbia, and two Canadian provinces. An improving domestic economy coupled with increased imports is expected to propel freight volume growth in coal and other sectors, such as food and emerging markets. Moreover, improved pricing due to tight transportation supply and fuel surcharges combined with cost escalation clauses in multi-year customer contracts are driving revenue gains across the board, with the exception of domestic intermodal. Our Buy recommendation on CSX shares reflects its low valuation relative to peers and our expectation of sold, double-digit earnings growth over the next few years. Ann H. Heffron, CFA is a senior analyst covering the transportation industry for Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Analyst Blog - NEW! Get real-time market insights from the Zacks Equity Research Analysts.To see the latest posts, click here. GameStop Corp. (GME) - Video Game Up-Cycle. For full Zacks research report, click here. Evergreen Solar (ESLR) - Extremely High Valuation. For full Zacks research report, click here. Aerospace/Defense Set for Strong 2006 Earnings Scorecard - Midweek Update
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: PEG Ratio This strategy uses the PEG Ratio to find attractively priced stocks poised for price appreciation. The PEG Ratio is simply the P/E (Price divided by Earnings) of a stock divided by its five-year projected growth rate. Too often investors think of value investing being the antithesis of growth investing. The beauty of using PEG is that you can find value stocks even amongst hot growth stocks. If you like to use a company's PE ratio to determine its value, you'll love using the PEG ratio. Find out which companies offer the greatest value regardless of growth rate to enjoy stellar returns. Using this indicator in a stock screening strategy can produce stellar profits. Here are four stocks that make the grade for the Upgrades and Revisions Profit Track: Bronco Drilling Co., Inc. (BRNC), a contract oil and gas drilling company and a Zacks #1 Rank (Strong Buy) name, has a PEG ratio of .37. While the company recently announced select financial and operating results for the fourth quarter, the complete results will be released on Feb 21. BRNC reported third-quarter earnings in early November. The result was ahead of the consensus estimate by approximately 15%, and revenues were a record $18.6 million versus $11.7 million for the previous quarter and $5.4 million for the year-prior period. Continue your research on BRNC at: http://at.zacks.com/?id=2290. Ceradyne, Inc. (CRDN) develops, manufactures and markets advanced technical ceramic products and components for industrial, defense, consumer and microwave applications. The company will release fourth-quarter financial results on Feb 28. In late October, CRDN posted third-quarter earnings of 53 cents per share, outpacing the consensus estimate by 6% and exceeding the year-ago total. Ceradyne offers a PEG ratio of .52. Continue your research on CRDN at: http://at.zacks.com/?id=2291. True Religion Apparel Inc. (TRLG) meets the criteria of this Profit Tracks with an impressive PEG ratio of 0.28. For its third-quarter report, which was released in early November, the company announced earnings of 33 cents per share. The result topped analysts’ expectations by 10% and outperformed the previous year’s earnings. Net sales grew from $7.4 million to $35 million year-over-year. Continue your research on TRLG at: http://at.zacks.com/?id=2292.TETRA Technologies, Inc. (TTI) is an energy services company with an integrated chemicals operation that supplies chemical products to energy markets, as well as other markets. The company sports a PEG ratio of .27 and is another Zacks #1 Rank (Strong Buy) company. TTI recently announced a full year 2006 earnings forecast of $2.09 to $2.35 per share. This is in line with current analysts’ expectations of $2.26, which is 25% above the estimates of two months ago. Fourth-quarter financial results will be available on February 24. Continue your research on TTI at: http://at.zacks.com/?id=2293. 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. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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=2289. 3. ZACKS RANK BUY STOCKS Every day on Zacks.com we highlight four Zacks Rank Buy stocks. Each individual stock is chosen based on how well they match the criteria for the four main schools of investing: Aggressive Growth, Momentum, Growth & Income and Value. Aggressive Growth – Digital River, Inc. (DRIV) Growth & Income – J.B. Hunt Transport Services, Inc. (JBHT) More...
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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.
With interest rates backing up the last two weeks Kelley Wright wouldn’t blame any investor for thinking that we had seen the lows in interest rates and that we would see nothing but higher rates from here on out. While that view is widely held among the conventional wisdom set, Wright believes the action of the fortnight past has more to do with the changing of the guard from Sir Alan to Ben Bernanke at the Fed plus the bond markets’ inbred paranoia about change. Some additional insight might be found by looking at a chart of Citigroup (C), which suggests a bottom was put in last week right at the 200 day moving average. Wright knows the markets got all shook up last week because Citi didn’t meet some analysts’ expectations and took the stock down a peg or two, but Wright thinks the action of the Citigroup Board of Directors is more telling; they raised their dividend double digits again. Lastly, as an old trader Wright smells a move to shake out the weak longs. In short order the bond market will find that the world isn’t ending with Greenspan’s retirement. If Citigroup and some other big financials begin to move forward it is highly unlikely that interest rates will be moving in any direction that resembles north. From its headquarters in Ohio, LSI Industries (LYTS) serves as a leading provider of lighting systems to the petroleum and convenience store markets. Founded in 1976, the company has also diversified its operations into the commercial image business. Operations are currently divided among two segments known as Lighting and Graphics. The close of LSI’s second fiscal quarter brought disappointing news for shareholders. The company’s net income decreased 18% to $3.9 million from the $4.8 million realized last year. The decrease came mainly on declines from the Graphics segment, which saw sales decrease by 14%. LSI’s Graphics segment operations are struggling to replace business lost from projects completed over the last few months. The company expects to regain its momentum by the fourth quarter of 2006, and is currently seeking potential acquisition targets. With the fallout from shakeups, accounting fraud, and other investigations striking the insurance industry on a regular basis, there are a handful of companies that have so far evaded scandal. Old Republic International (ORI) stands out on this list, and is primarily a provider of commercial insurance policies. Operations are divided amongst a General Insurance Group, Mortgage Guaranty Group, and Title Insurance Group. The close of the fourth quarter brought news of staggering increase to Wall Street. Profit saw a gain of 42.5% on news of quarterly revenues of $1 billion, an 11.3% increase from the same period last year. Results were primarily attributable to increases in premiums and fees from products offered among the company’s three major segments. The board accordingly declared a stock dividend, which was issued in the form of a 5-for-4 stock split. ORI also paid a special year-end cash dividend of $0.80/share on its common stock. Investment Quality Trends is the #1 performing newsletter on a risk-adjusted basis for the past 15 years -- through 1/31/2001 according to industry watchdog, Mark Hulbert, who ranks the top performers in the investment newsletter industry. Find out why we’re #1. http://at.zacks.com/?id=2349. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - b) Murphy’s Law of Geopolitical Thermodynamics Gregory Spear believes the bull market in energy may periodically rest, but the ride is far from over. More... c) Stocks Could Become Volatile Mutual fund expert Don Dion explains that possible inflation in the future and rising oil prices are weighing on stocks. 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 05/17/2013
| 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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