Tuesday - March 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 equity markets got past the employment numbers with a sigh of relief on Friday. February nonfarm payrolls rose more than expected, but hourly wages rose by a modest five cents, or 0.3%. The latter number, though overshadowed by the headline data (the change in nonfarm payrolls and the unemployment rate), is actually the more important piece of data. Wage growth can cause both inflation and tighter corporate operating margins. For a market obsessed with rising interest rates, Friday’s report was relieving, if even only temporarily. Bond yields did, however, rise in response to the data. Part of the rise reflects worries about further interest rate hikes. Bonds also reversed the inversion that occurred earlier in the week. (Inversion occurs when short-term yields are higher than long-term yields.). Both events serve to create a “wall of worry” for the equity markets. Rising yields suggest that bond traders expect inflation to pick up. Yield inversion has previously preceded recessions. Neither outcome is particularly great for the equity markets. However, if the economy can stay in its current sweet spot of sustained growth with modest inflation, corporate profits should continue to grow this year and next year. Nonetheless, fears about inflation are not likely to go away for quite some time. Historically, gold has been viewed as a hedge against inflation, but for equity investors, a different metal may have a brighter shine – copper. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Copper prices continue to trade near 52-week highs, despite recent weakness. On Friday, the May contracts were trading for about $220 per metric ton; a year ago, the price was nearly $90 less. These high prices help to explain why the Zacks Industry Rank for Mining-Non Ferrous is a very impressive 1.88. There are two companies with a material exposure to copper and a Zacks #1 Rank in this group: Southern Copper (PCU) and Falconbridge (FAL). Although I have previously discussed both companies, these stocks deserve another look because analysts continue to be optimistic on the prospects for growth. Full year (2006) estimates have soared by approximately 20% over the past 60 days. The current estimates are $10.58 per share and $3.30 per share, respectively. (Phelps Dodge (PD), which was cut to a Zacks #3 Rank this morning from a Zacks #1 Rank, is also worthy of mention. Full year forecasts for PD have jumped by more than 30% over the past 60 days to $16.77 per share.) Growth at a Reasonable Price (GARP) investors may also want to take notice of these stocks’ valuations. All three trade at less than 10x 2006 projected earnings. This means share prices could benefit from further estimate revisions and P/E expansion – a bullish scenario. First-quarter earnings season for investment banking firms starts on Tuesday morning with Goldman Sachs’ (GS) stepping up to the plate. In aggregate, as is evidenced by the industry group rank of 2.25, analysts expect these companies to perform better than USA Baseball did against Canada. Merger activity, a narrowing of spreads and underwriting volume are all contributing to an upbeat environment. Furthermore, merger activity and fixed income may very well be drivers for upbeat forecasts. Corporate balance sheets remain strong and the combination of a business-friendly regulatory environment and the relative ease of floating new debt provides a great backdrop for getting deals done. There are two Zacks #2 Rank investment banking firms reporting next week. Lehman Brothers (LEH) will release its results on Wednesday, before the open. LEH is projected to report profits of $3.16 per share. The current consensus estimate is 29 cents higher than the projection of two months ago and reflects revisions by five of the 12 covering analysts. Bear Stearns (BSC) will release results on Thursday, before the open. BSC is projected to report profits of $2.97 per share. As with Lehman, analysts have been upping their forecasts ahead of Bear Stearn’s report. The current consensus estimate is 16 cents above the forecast of two months ago. Six of the 10 covering analysts have revised their forecasts. Charles Rotblut, CFA is a senior market analyst for Zacks.com. Read the complete Industry Outlook at: http://at.zacks.com/?id=2379. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Analyst Blog - NEW! Get real-time market insights from Zacks Equity Research Analysts. To see their latest posts, click here. Tele Norte Leste (TNE) - A Play on Brazilian Economy. For full Zacks research report, click here. Albertson's, Inc. (ABS) - Possible Acquisition Risks. For full Zacks research report, click here. Consumer Staples a Safer Play Energy Estimate Revisions for 2006 Head South.
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: Low Price Stocks Many investors prefer stocks priced below $20 because the low prices allow them to accumulate more shares. Fortunately, lower prices do not necessarily mean lower quality. This strategy identifies stocks priced below $20 that are trading at discount valuations and have a Zacks Rank of #1 ("Strong Buy") or #2 ("Buy"). The stocks identified by this search strategy trade at price-to-sales (P/S) multiples of 1.0 or below. The strong Zacks Rank is indicative of positive revisions in earnings estimates. Combining these characteristics can result in high-dollar returns. In 2005, this strategy generated a stellar +51.9% return. AK Steel Holding Corp. (AKS) reported results for the fourth quarter in late January. The Zacks #1 Rank (Strong Buy) company stated that it achieved outstanding operating and sales performances in 2005. AKS shares are trading around $13.00 per share, with a price-to-sales ratio of 0.26. Continue your research on AKS at: http://at.zacks.com/?id=2389. Cabela's Inc. (CAB), the World's Foremost Outfitter® of hunting, fishing and outdoor gear, recently posted fourth-quarter earnings of 64 cents per share, outperforming the previous year’s 58 cents and surpassing the consensus estimate by almost 7%. The company said that the positive momentum it experienced during the holiday season gives it a heightened degree of confidence as it heads into 2006. CAB has earned $1.10 per share over the past 12 months and it offers a price-to-sales ratio of 0.71. Continue your research on CAB at : http://at.zacks.com/?id=2390. I2 Technologies, Inc. (ITWO) is also a Zacks #1 Rank (Strong Buy) name. In early February, the company announced fourth-quarter earnings per share from continuing operations, excluding an item, of 46 cents. The result was ahead of analysts’ expectations by about 70%. ITWO is trading around the $16.75 range and has realized earnings of $1.54 per share over the past 12 months. Continue your research on ITWO at: http://at.zacks.com/?id=2391. Rush Enterprises Inc. (RUSHA) operates the largest network of heavy-duty and medium-duty truck dealerships in North America and a John Deere construction equipment dealership in Houston. The company satisfies the criteria for this Profit Track with a price-to-sales ratio of 0.17 and earnings per share profitability of $1.79 over the past 12 months. In mid-February, RUSHA released fourth-quarter earnings of 50 cents per share, eclipsing analysts’ expectations by nearly 22% and outpacing the year-ago total. Continue your research on RUSHA 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 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Screening for Stocks to Pick the Right Options Kevin Matras shows how a good stock screener can be your best tool for picking options: 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. This week we want to take a look back at some of our older picks using the different filters that we’ve talked about in the past. The purpose of this exercise is to show that when used properly, the filters on these pages can find some potentially nice plays. Here we go. We'll look at every pick we've made from early December until the middle of January – that is four picks in all. You might wonder why there are only four picks over seven weeks with this being a weekly blurb. The reason is some weeks we’ll just take another look at an earlier pick – so there’s no new pick. Remember we're not just cherry picking the winner trades - the key to success is planning on our winners outweighing our losers via profit! Back on Dec 5, 2005 we looked at the High Open Interest Put filter and determined playing a XLF March 30 call (XLF CD) for $2.70 a contract looked like a good deal. If you would have sold the option on Feb 22, you would have banked a 15% profit - better than the interest your savings account would have made on that money! If you continued to hold the option, as of Thursday afternoon - Mar 9, you could have sold it for $2.50 – a very small loss. This option was meant to be a long play. However, due to the increased volatility this close to expiration, it may be best to NOW close with a small loss and lick your wounds. Our next pick was on Dec 19, 2005 when we recommended playing an Exxon Mobil (XOM) April 60 put (XOM PL) for $3.40 a contract. This pick came from the High Open Interest Call filter. Immediately after this pick XOM fell and on Dec 27 you could have taken some small profits on some of your position. But energy had a nice rally to start the year and currently the option is worth $2.00 – for a loss of 41 percent. Again, not great, but a manageable loss and one that would allow you to exit today and have enough capital left to find the next winning trade. Then on Jan 9, 2006 we recommended playing the small cap rally and suggested playing the iShares Russell 2000 Index Fund (IWM) May 69 call (DIW EQ) for $3.70 a contract. This one came from the Unusually High Option Volume filter and was a nice winner. IWM had a nice rally from our entry price and currently the option is worth $4.20 a contract – for a slight gain. But no one ever holds an option until the last possible day – we trade for profits. In fact, on March 1 you could have sold this option for nearly $6.00 – a very nice gain. But with a May option and the position technically looking good, taking some small profits and holding the rest is the way to play this one. If you would have closed a portion of your option, say HALF, you could have paid for the entire option play, pocketed a small profit, and then let the remainder of your trade ride to larger profits; basically for FREE ...and as some would say; "play with the House's Money." Finally, on Jan 17, 2006 we looked at the Unusually High Option Volume filter for calls and determined that playing a Johnson & Johnson April 65 put (JNJ PM) for $3.80 a contract was the way to go. This one has been the HUGE winner, as you could have sold that option for over $8 on Feb 7 and as of Thursday you could have sold for $6.60 a contract - still nice money. So there you have it, four real picks that we've made using the filters. Sure they all didn’t go straight up and have massive returns, but with proper money management it shows that these filters can indeed find BIG winners if used properly. Remember, options are highly leveraged vehicles, and the odds favor that most of your trades are going to be losers. But, thanks to this high leverage, all it takes are a few winners here and there to be more than profitable. Next week we'll take a look at yet another filter. In the mean time, please continue to use all of the filters on the Zacks.com/Options pages and try to find out which ones work best for you. You can visit SchaeffersResearch.com for still more information about options and review the detailed market commentaries. Don't be afraid to paper trade and practice what we preach, as this is a great way to learn. Keep on using the filters and good luck! To learn more about the High Open Interest 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 – Entravision Communications Corporation (EVC) More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum – Thomas & Betts (TNB) It’s been awhile since Thomas & Betts (TNB) was featured as a Momentum Stock of the Day way back on Dec 28, 2005. Since that time, the stock has returned more than 18% and more importantly, the chart still looks attractive. With Friday’s close of $49.95, the stock is less than a dollar away from its 52-week highs, and the stock remains strongly above its 200-day moving average. Read the full analysis on TNB at: http://at.zacks.com/?id=2496. By beating the Street on a regular basis, coupled with a price-to-book multiple of 2.8 and a PEG ratio of 0.59, PortalPlayer, Inc. (PLAY) was one of four Value Zacks Rank Buy Stocks featured last week. Read the full analysis on PLAY at: http://at.zacks.com/?id=2497.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Zacks Rank #1 and #5 Additions Zacks #1 Rank List: 41 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: 53 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 05/23/2013
| Company Name | Symbol | %Change |
|---|---|---|
| ALLIANCE FIB | AFOP | 5.21% |
| CYNOSURE INC | CYNO | 4.42% |
| DAWSON GEOPH | DWSN | 4.33% |
| MARRIOTT VAC | VAC | 3.27% |
| BLOOMIN' | BLMN | 2.93% |
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