Tuesday - February 14, 2006
 Want to view the archive of past issues? Go to: http://at.zacks.com/?id=2372. Manage Profit from the Pros subscription: 1. ZACKS EQUITY RESEARCH The results for earnings season are starting to firm. The ratio of earnings surprises to misses for companies within the Zacks Rank universe declined slightly to 2.3:1. The ratio of revenue surprises to misses also declined slightly, dropping to 1.4:1 from 1.5:1 last week. The trend in forecasts for 2006 earnings is rather disappointing. Analysts have raised forecasts on 850 companies and lowered estimates on 887 companies. The average revision was -0.17%. Nonetheless, the prospects for growth remain positive with companies expected to increase earnings by an average rate4 of 12.3%. The numbers, and the stories behind the numbers, continue to emphasize the importance of stock selection. Where there has been a combination of positive surprises and upwardly revised earnings forecasts, company-specific issues are playing a big role. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Consider the Transportation-Services industry group. Four companies within this group – CH Robinson (CHRW), Navigant (FLYR), Hub Group (HUBG) and Pacer International (PACR) - reported last week and all of them exceeded estimates. When Sabre Holdings (TSG) and Target Logistics (TARG) - two companies that reported at the very start of February – are added, the industry’s score improves to a perfect 6 for 6 in terms of positive surprises. More impressively, analysts have upwardly revised their forecasts on five of the six companies. (The lone analyst covering TARG, a $2.60 stock, has not revised his estimates.) The sustained economic expansion is certainly providing underlying strength for this group, but other than that, there is no specific industry factor that is driving the numbers. TSG enjoyed growth in its Travelocity and Sabre Travel networks. FLYR enjoyed a record number of corporate travel transactions. CHRW benefited from tight domestic trucking capacity and two acquisitions in its international freight forwarding business. HUBG generated double-digit growth in truckload brokerage revenues. Electronics-Connectors, one of this week’s best rated groups, is another example. There are two Zacks #1 Rank stocks in this group, Molex (MOLX) and Thomas & Betts (TNB), and both are experiencing positive momentum for different reasons. MOLX credited strength in the mobile phone and consumer electronics markets for contributing to its fiscal second-quarter surprise. TNB reported pricing power in its electrical segment, rising demand from utilities for its steel structures products and higher sales for its HVAC segment. Although industry-wide trends may provide interesting talking points, as the above examples demonstrate, they don’t always exist. Given that the current choppy market conditions are making it more difficult to generate alpha, investors need to place an even greater emphasis on stock selection. Read the complete Industry Outlook at: http://at.zacks.com/?id=2379. Charles Rotblut, CFA, is a senior market analyst for Zacks.com. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Analyst Blog - NEW! Get real-time market insights from Zacks Equity Research Analysts. To see their latest posts, click here. Taiwan Semiconductor (TSM) - Strong Top-Line Growth. For full Zacks research report, click here. iPass, Inc. (IPAS) - Falling Revenue Hampering Performance. For full Zacks research report, click here. Energy Costs Eat Into Restaurant Profits Energy now expected to post the highest growth of any sector in 2006
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... 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 continued to handedly beat the S&P 500. Celadon Group Inc. (CLDN) recently released its fiscal second-quarter results and announced that its Board of Directors declared a 3-for-2 stock split. Earnings per share totaled 48 cents, about 9% above the consensus estimate and ahead of the year prior result. The Zacks #1 Rank (Strong Buy) company noted that it produced record revenue, net income, and earnings per diluted share on strong operating results across nearly all measures. CLDN has low levels of debt as evidenced by its debt/equity level of 0.06. The stock also has appealing valuation based on its PEG ratio of 0.60 and price/sales multiple of 0.73. Continue your research on CLDN at: http://at.zacks.com/?id=2389. EZCORP, Inc. (EZPW) has a PEG ratio of 0.69 and a price/sales multiple of 0.95. The company also has no debt and a solid current ratio of 5.20. EZPW recently reported fiscal first-quarter earnings of 50 cents per share, outpacing last year’s 37 cents and surpassing the consensus estimate by almost 14%. The company mentioned that its quarterly results were outstanding with its signature loan business making the largest contribution to earnings growth. Continue your research on EZPW at: http://at.zacks.com/?id=2390. EMS Technologies, Inc. (ELMG) sports a PEG ratio of 0.81 and a price/sales multiple of 0.67. The company recently stated that it expects earnings from continuing operations of $1.05 to $1.15 per share for 2006. Analysts are in agreement as evidenced by current estimates of $1.11 per share, which is approximately 14% above the level of three months ago. In early November, the company posted third-quarter earnings from continuing operations of 29 cents per share, which was well ahead of the previous year’s result. Continue your research on ELMG at: http://at.zacks.com/?id=2391. Quanex Corp. (NX), an industry-leading manufacturer of value-added engineered materials and components for the vehicular products and building products markets, will announce fiscal first-quarter results on Feb 23. The company said it expects to report earnings per share from continuing operations in a range of $1.00 to $1.05. This guidance is in line with current analysts’ estimates of $1.04 per share, which is nearly 37% above one month ago. NX meets the criteria of this Profit Track with its current ratio of 1.60 and a debt/equity level of .20. Continue your research on NX at: http://at.zacks.com/?id=2392. To see the full list of stocks that currently pass this winning screen, go to: http://at.zacks.com/?id=2393. 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=2394 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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=2395. 3. 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. With the market beginning to show the first cracks in its armor since the October bottom, we wanted to take today and show you one of my favorite bearish filters – the High Open Interest Call filter. In this observation we’ll take a look at our methodology, this filter, and finally make our option pick. Before we can go any further, we want to talk briefly about our methodology here at Schaeffer's. We are contrarian-based investors, meaning that we want to see skepticism toward an outperformer as a sign that money is still on the sidelines. Conversely, we want to see optimism toward an underperformer. We view too much optimism as a potential sign that nearly everyone who wants to invest in a particular stock already has. Now, just because a stock sees substantial optimism doesn't mean that we will blindly short a particular security; we need to see some negative price action or a major catalyst for a downside move in order to pull the trigger in most cases. Other indicators that we tend to utilize in measuring overall sentiment include put/call ratios, short interest, magazine cover stories, media comments, and analyst ratings. So what exactly is the High Open Interest Call filter? First off, lets look at what a call is. Calls are simply a bet that the underlying stock is going to move higher. From our contrarian point of view, a large number of calls accumulated at a certain strike just above the stock's current level is a sign of potential options-related resistance. We won't get into too much detail on this, but the reasoning is based on how the market makers are hedged. The bottom line is this: large numbers of calls at a certain strike have the potential to serve as a solid level of resistance. One more very important item we must touch upon regarding this filter before we get started is that the majority of the stocks it suggests are likely to be the big names that have lots of activity, such as the Nasdaq 100-Trust (QQQQ) , the Spyders (SPY) , or Microsoft (MSFT) . These big names don't take away from the importance of this filter; they are just something to keep in mind. Turning to the list from Thursday, February 9, 2006 one name that sticks out is Cisco Systems (CSCO). This networking giant is a big name that is all over the list. It has a huge build up of bullish calls at the 20 strike for February, March, and April. In other words, with this huge buildup of calls and it’ll be very tough for CSCO to breakout above this critical level. Technically, on a longer-term chart, you can see where the $20 area has been very significant. In fact, the shares have had major trouble with this level since November 2004. Although the shares have recently hit good times, on a longer-term basis its still obvious that CSCO is a big time laggard. Let's turn to a few sentiment indicators that we like to use. Remember, we're looking for optimism in the face of under-performance as a sign that most of the money that wants to move in and buy, probably already has. Thus, more weakness is a high probability. One such indicator we like to use is the Schaeffer's put/call open interest ratio (SOIR) - which can be found at /research/options/index.php. This ratio shows how many bearish puts there are compared with bullish calls among near-term options. Currently, CSCO’s SOIR checks in at 0.46. That's all fine and dandy, but it only matters when you compare it to the other readings taken over the past year. Such comparison reveals that this number is lower than 65 percent of the readings taken during the past 12 months, suggesting short-term options players are pretty optimistic – exactly what we want to see. Shorting a stock means that you are selling it with the intention of buying it back later at a lower cost. In other words, you are betting that the shares will go down. We love to see a lack of short sellers betting against the shares, as this reduces the odds of a short-covering rally on any good news. Turning back to CSCO, we find that it would take less than a day for all of the shorts to cover and less than one percent of the float is sold short. These numbers show us that practically nobody is betting against CSCO. Another good way to get a gauge of sentiment is to look at what the analysts think. Given that the shares have greatly underperformed for the past two years, optimistic analysts leave the door open to some downgrades. According to Zacks, there are 18 "buys," seven "holds," and only one “sell”. Should the shares continue to underperform this will leave lots of room for downgrades from this group. With all of that said, now could be a good time to buy some puts on CSCO. Looking at the options, buying the April 22.50 put (CYQPX) could be the way to go. This way we have a little time if we're wrong initially. As of Thursday afternoon you could have bought this option for $2.75 a contract. Write this one down and watch how it does, but it looks like it could be a solid play. Please continue to use all of the filters on these pages for more money-making ideas and don't be afraid to make a few paper trades to see what strategy works best for you. Visit SchaeffersResearch.com for more detailed commentaries and enhanced filters to build your portfolio. Also be sure to visit Zacks.com's Option Center brought to you by Schaeffer Investment Research to follow up on this filter and more. But please remember that when it comes to options, the majority of your trades are going to be losers. Don't get discouraged, because that's the beauty of the leverage that options provide. It takes only a few winners out of every 10 trades to make you a very happy investor. Good luck! To learn more about the Unusually High Option Volume filter, click here. Discover all the tools and commentary available from the Zacks.com Options Center at: http://at.zacks.com/?id=2382. 4. 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 – Cymer, Inc. (CYMI) More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum – Intevac (IVAC) Despite a generally weak stock market last week, nine previously featured Momentum stocks posted new 52-week highs. Meanwhile, Intevac (IVAC), a previously featured stock in December, exploded to the upside. Read the full analysis on IVAC at: http://at.zacks.com/?id=2496. By topping analysts’ earnings estimates for 10 straight quarters, coupled with a record year in 2005, Nucor Corporation (NUE) was one of four Value Zacks Rank Buy Stocks featured last week. Read the full analysis on NUE at: http://at.zacks.com/?id=2497.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Zacks Rank #1 and #5 Additions Zacks #1 Rank List: 47 New Additions (alpha by ticker)
To see the full list of Zacks #1 Ranked stocks (approximately 220 stocks), then click here. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Zacks #5 Rank List: 64 New Additions (alpha by ticker)
To see the full list of Zacks #5 Ranked stocks (approximately 220 stocks), then click here. 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=2385. Or view the full list of Zacks #1 Ranked stocks at: http://at.zacks.com/?id=2383. 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=2386. 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 05/21/2013
| Company Name | Symbol | %Change |
|---|---|---|
| SCIENTIFIC L | SCIL | 8.00% |
| NATUS MEDICA | BABY | 6.11% |
| SUMMER INFAN | SUMR | 6.02% |
| RADIANT LOGI | RLGT | 5.32% |
| NEW ORIENTAL | EDU | 4.51% |
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At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1986 it has nearly tripled the S&P 500 with an average gain of +26% per year. These returns cover a period from 1986-2011 and were examined and attested by Baker Tilly, an independent accounting firm.
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