Friday - March 24, 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 As we have taken to focus more closely on sectors within our analysts’ coverages lately, we asked senior semiconductors analyst Ken Nagy what would be a good sub-sector to hone in on. When he mentioned that power semiconductors was an interesting group, we asked him a few questions about it. What exactly do these power semiconductors do? Utilities transport electrical energy using an alternating current (AC) scheme, which minimizes energy loss. Semiconductor ICs require direct current (DC) power sources in order to operate, thus the AC power must be converted or transformed into DC. Power semiconductors’ product lines of ICs control, condition or convert electrical energy into a form that can be used to power various devices. The ICs are then utilized by other OEMs in alternating current (AC) to direct current (DC) converters, and, more recently, in DC-to-DC converters. Power Integrations (POWI) was a pioneer in the development of a cost effective high-voltage integrated switcher product line that replaced the legacy discrete switchers in the 1990’s. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Companies such as POWI are meeting customer demand for more fully integrated power supplies. This company’s patented integrated structure and cheaper manufacturing process combine low-voltage and high-voltage circuits on the same silicon chip. This lowers the overall power conversion cost of the end product and shrinks the footprint, or size. What is the catalyst for power semiconductors at this time? With worldwide energy standards becoming more stringent, we are optimistic about power technology. In particular, several new government standards are being enacted that will force new products to adopt newer technologies, displacing the inefficient legacy linear transformers. The standards imposed by the California Energy Commission (CEC) will become mandatory for all external power supplies by January 2007. This is a critical event given that California is the seventh largest economy in the world and usually the pioneer in leading edge legislation that many other states usually adopt later. For instance, in January of 2005, the CEC standards were adopted by the U.S. EPA for the Energy Star program. The voluntary Energy Star program is attempting to modify consumer behavior, and is hopefully encouraging consumers to economically support energy efficient products. Qualifying products must comply with the program standards in order to earn an Energy Star. Washington State and Arizona have both since adopted the same California standard. China recently announced a new voluntary program similar to the Energy Star program, and has also adopted the California standards. The European Commission has set European standards for energy-efficient external AC/DC power supplies that are even more stringent than the CEC standards, although it is initially on a voluntary basis. Australia not only adopted the CEC standards, but made compliance mandatory by April 2006. The current worldwide energy situation has created greater sensitivity to the burgeoning problem. POWI’s integrated power products conform to these new standards. As customers begin to design-in integrated power ICs that are in conformance with these new energy efficiency standards, POWI should be able to capitalize on the conversion. Are there any specific developments worth citing? Well, the California Energy Commission recently pushed out an industry mandate that would have created an earnings catalyst. The CEC conducted a hearing the first week of February as OEMs requested a delay in the implementation of the external power supply standard. On Wednesday, February 15, the CEC delayed the mandate until January 1st 2007. This is a little disappointing for investors, but it just means earnings (say $0.03-0.05 in POWI's case) will be pushed off for about six months. Also, there is some question whether or not other states follow California's lead in delaying this standard. At this point, it still remains to be seen. How do you see the power semiconductor segment performing in 2006? Before the mandate I just mentioned was pushed back, I felt the power semiconductor segment would outperform the semiconductor universe in 2006. Now that this highly symbolic mandate is effective January 1st of 2007, I feel 2007 will be the year “Power Semi” outperforms. My outlook for 2006 is in-line with the broad semiconductor universe. Which, if you look at the Zacks industry outlook, is positive for 2006. Keep in mind that these chips are not simply used in electronic gadgets, but in white goods such as washing machines and refrigerators. With the cost of power rising anywhere from 5-15% in the last year, any product that reduces energy needs is a natural to outperform. As far as advice I’d give investors on how to play this group, I would say the best policy would be to continue gathering knowledge on this technology. Also, they should be on the lookout to see if other states, countries and corporations are continuing to adopt these standards. Ken Nagy is a senior Zacks analyst covering the semiconductor sector of the information technology industry. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Analyst Blog - NEW! Get real-time market insights from Zacks Equity Research Analysts. To see the latest posts, click here. Eli Lilly (LLY) - Excellent Pipeline. For full Zacks research report, click here. Tele Centro Oeste (TRO) - Weak Fourth Quarter. For full Zacks research report, click here. Zacks Industry Rank for the Week of Mar 20 Estimate Revisions Positive for both 2006 and 2007
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: 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. Here are four stocks that make the grade for the Discounted Fundamental Strength Profit Track: Avnet, Inc. (AVT) is one of the world's largest industrial distributors of electronic components and computer products and a Zacks #1 Rank (Strong Buy) company. AVT reported fiscal second-quarter earnings of 50 cents per share, excluding charges, in late January. The result surpassed the consensus estimate by nearly 22% and topped the previous year’s performance. Avnet, Inc. offers a debt/equity level of 0.39 and a PEG Ratio of 0.90. Continue your research on AVT at: http://at.zacks.com/?id=2290. Celadon Group, Inc. (CLDN) released fiscal second-quarter financial results in mid-January. The company stated 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 company’s shares offer a PEG ratio of 0.61 and price/sales multiple of 0.75. Continue your research on CLDN at: http://at.zacks.com/?id=2291. Quanex Corp. (NX) is an industry-leading manufacturer of value-added engineered materials and components for the vehicular products and building products markets. In late February, the company announced fiscal first-quarter earnings that outperformed analysts’ expectations. NX noted that overall housing and remodeling activity was seasonally strong during the quarter, in part, due to mild weather conditions across the Midwest and Northeast. NX sports current ratio of 1.66 and a debt/equity level of 0.20. Continue your research on NX at: http://at.zacks.com/?id=2292.P.A.M. Transportation Services, Inc. (PTSI) is an irregular route, common and contract motor carrier authorized to transport general commodities and another Zacks #1 Rank (Strong Buy) name. In early February, PTSI reported fourth-quarter earnings of 41 cents per share, improving on last year’s 16 cents and jumping ahead of the consensus estimate by almost 52%. PTSI, meets the criteria of this Profit Track with its current ratio of 2.29 and a debt/equity level of 0.24. Continue your research on PTSI 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. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - A Strategy for a Return on Your Investment Kevin Matras shows how a good stock screener can be your best tool for picking options: 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 – WESCO International, Inc. (WCC) Growth & Income – UBS AG (UBS) 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.
Tuesday’s trading session reminded Richard Rhodes and his of the very old game where a mole raises its head out of one of a number of holes and you must use a mallet to knock it back down before it comes up once again in another hole. After the S&P 500 and Russell 2000 poked “their heads” out to new highs above resistance at 1310 and 748 respectively, they were emphatically rejected and were “whacked down” in a very material manner to 1297 and 736. The key tell for Rhodes and his team during the probe to new highs were the fact that prices rallied off their early morning lows with advance/decline breadth figures skewed towards the negative. This rally was destined to fail from the outset, which has been the character of this entire rally off the early-March lows. From a technical perspective, this “failure” has led to Rhodes and his team’s favorite reversal pattern – the “outside reversal day” or “key reversal”. In essence, the move to new highs “failed” and closed below the previous day’s low, which increases the probability a tradable high has formed, and lower prices are forthcoming. Moreover, volume picked up on the decline, thereby confirming its validity. Therefore, further downside movement is expected, which over the next several days fits in perfectly with the post-March expiration weakness before month-end strength is seen. Time will tell, but Rhodes and his team’s “gut” tells them we won’t see these highs again for quite some time in the future. Normally Rhodes and his team don’t see a “bell.” Holdings in the “Paid-to-Play” Portfolio include: Kohl's (KSS) operates family oriented, specialty department stores primarily in the Midwest, Mid-Atlantic and Northeast areas of the United States that feature quality, national brand merchandise priced to provide exceptional value to customers. The company's stores sell moderately priced apparel, shoes, accessories and home products targeted to middle-income customers shopping for their families and homes. Kohl's stores feature easily accessible locations, well laid out stores, central checkout and good in-stock. Hershey's (HSY) is a leading snack food company and the largest North American manufacturer of quality chocolate and non-chocolate confectionery products. Hershey markets such well-known brands as Hershey's, Reese's, Hershey's Kisses, Kit Kat, Almond Joy, Mounds, York, Jolly Rancher, Twizzlers, and Ice Breakers as well as innovative new products such as Swoops and Hershey's S'mores. Hershey also offers a variety of snack products to consumers, including Hershey's Cookies, Mauna Loa macadamia nuts, and Hershey's Snack Barz. CNS Inc. (CNXS) develops and markets consumer health care products, including the Breathe Right nasal strip. The Breathe Right nasal strip improves breathing by reducing nasal airflow resistance. It can be effective in providing temporary relief for nasal congestion, reducing snoring and reducing breathing difficulties due to a deviated nasal septum. The company is exploring possibilities for acquiring new consumer health care products or companies that have established consumer brands. They are also considering opportunities for licensing new products and technologies. Zebra Technologies (ZBRA) and its wholly-owned subsidiaries design, manufacture and support a broad range of direct thermal and thermal transfer bar code label printers, receipt printers, instant-issuance plastic card printers and secure identification printing systems, related accessories, and support software. The company markets its products worldwide principally to manufacturing and service organizations for use in automatic identification, data collection, and personal identification systems. Georgia Gulf (GGC) is a leading North American manufacturer and international marketer of two highly integrated product lines, chlorovinyls and aromatics. The manufacturing processes also generate caustic soda and acetone. The primary products the company sells externally include PVC resins, PVC compounds and caustic soda in the chlorovinyls business and phenol and acetone in the aromatics business. The Rhodes Report offers unique and insightful daily perspectives into the US capital markets. At times, our assertions and recommendations are bold and out of consensus – which is very different from today’s brokerage house research. In fact, many of our clients don’t necessarily agree with everything in our reports, but they find the services stimulating as a source of ideas and useful as a confirmation or critique of their own viewpoints. http://at.zacks.com/?id=2330. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Nadine Wong explains that Genzyme has been beaten up, despite its positioning for long-term growth. More... David Fried provides two buy recommendations. Learn about an insurer and an energy holding company. 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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