Friday - April 21, 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 Senior South American analyst Claudio Freitas, CFA has been covering a wide range of industries in the region for Zacks Equity Research. How might these various groups respond to political uncertainties at various spots around the continent? We sat down with Claudio to find out. We've been hearing about a hotly contested election season in Brazil. Can you give us a little background on this? The political climate in Brazil is indeed very difficult. The current government has been facing many corruption scandals, and its opposition is putting a lot of pressure on them before presidential elections later this year. Up till now, this difficult climate did not have any important affect on the stock market, and it is likely that this will continue this way for the short term. However, I am concerned over the medium-term, after the elections. If the opposition candidate wins, conditions should remain OK; I believe Mr. Geraldo Alckmin would be able to put together a considerable support in Congress and move ahead with a reform agenda. However, if Lula is reelected, he will run a weak government without notable support in the Congress. I am afraid that a second Lula term would mark a period of instability for Brazil. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Do you expect much volatility in Brazilian stocks ahead of the election due to the political anxiety? As I mentioned, I believe that short-term volatility will not be that high. It is possible that we can face some difficult moments from now to the election in October, but I still believe that the real problem will be next year. Of course, it will all depend on the outcome of the election and the political arrangement that the new government will be able to put together in Congress. I notice you recently upgraded Telemig Celular to a Buy. Is this company fairly immune to the political situation, in your view? If so, how? The wireless business in Brazil is a difficult sector. All companies are facing a tough business environment due to fierce competition, and I really do not believe this situation will get much better in the very short term. However, some companies are doing much better than the average, and this is the case of Telemig Celular (TMB). The company is small, well managed and has been posting good results, despite the challenging business environment. In the beginning of 2006, most of the Brazilian wireless stocks went up really high. This performance was expected in some good names like TMB and Tim Participacoes (TSU), but it was unexpected for Embratel (EMT) or Telesp Celular (TSP), since those companies have been posting weak results. In fact, there were some factors behind this great performance, such as the corporate restructuring of TCP, the positive outlook for Brazil and the issue of some new products for EMT. However, in my view, the market exaggerated. The correction started at the end of February, and I believe the valuation for TMB became highly attractive once more at that point. Regarding the political climate, again, I do not believe it will influence TMB in the short term. What other Latin American issues are there currently? The political climate in Latin America is very difficult. The populism is definitely back in countries like Argentina, Venezuela, Bolivia and Peru. This is not good news at all for investors in Latin America, as I see it. But I believe the real turning point will be in the Brazilian and Mexican elections at the end of this year. Those are the most important countries in the region, and will lead the way in the following years. Also, I believe it is important to follow the situation of the recently elected government in Bolivia that is already facing some domestic problems, including riots and strikes. Soon some Latin American governments are likely to find out the hard way that they cannot behave like Hugo Chavez without the oil money. Do you think that strong growth will eventually win out versus political turbulence, for the most part? What is your outlook for the next couple quarters? In the short term I would say yes to your question. My short-term outlook remains promising for countries like Brazil, Argentina and Mexico. Chile is a different situation – the country is completely away from this populist political problem. In fact, Chile is an island of stability and strong and enduring prosperity in Latin America. In the medium term, the other countries in the region will have to decide if they want to go back to an unsuccessful past, or to move ahead in the same way Chile has been doing. Claudio Freitas, CFA is a senior analyst covering various industries in Latin America for Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - BULL OF THE DAY Johnsol Controls (JCI) - Gaining a Leading Position. For full Zacks research report, click here. King Pharmaceuticals (KG) - Competition Increasing. For full Zacks research report, click here. Steel Leads the Industry Rank Earnings Season off to Strong Start
2. PROFIT TRACKS Zacks.com is proud to share with you some of the best trading
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we highlight... Profit Tracks: Return on Equity This Profit Track strategy uses Return on Equity (ROE) to discover solid stocks. ROE is one of the quickest ways to gauge whether a company is creating assets or gobbling up investors' cash. This fast moving Profit Track returned an impressive +19.1% in 2005. Here are four stocks that make the grade for the Return on Equity Profit Track: Andersons, Inc. (ANDE) has an appealing valuation as indicated by its price to sales ratio of 0.54. The company’s ROE is 17.80. In early February, Andersons, Inc. reported fourth-quarter earnings of $1.98 per share. The result was ahead of the consensus estimate by about 29% and outperformed the previous year’s $1.09. ANDE is a diversified company with interests in the grain, ethanol and plant nutrient sectors of U.S. agriculture, as well as in railcar marketing, industrial products formulation, turf products production, and general merchandise retailing. Continue your research on ANDE at: http://at.zacks.com/?id=2290. Granite Construction, Inc. (GVA) a diversified heavy civil contractor and construction materials producer, will announce financial results for the first quarter on April 26, 2006. In mid-February, the company released fourth-quarter earnings of 86 cents per share. The result beat the consensus estimate by approximately 50% and improved on last year's 47 cents. GVA offers a ROE of 14.49 and a price to sales ratio of 0.80. Continue your research on GVA at: http://at.zacks.com/?id=2291. Lamson & Sessions Co. (LMS), which has a ROE of 42.44 and a price to sales ratio of 0.88, recently raised its earnings estimate for the first quarter. The company now expects earnings per share to be between 53 cents and 56 cents compared to its previous guidance of 41 cents to 44 cents. Analysts are in agreement as evidenced by current estimates of 54 cents per share. One month ago, analysts were projecting 41 cents. First-quarter results will be available on April 28, 2006. Continue your research on LMS at: http://at.zacks.com/?id=2292. Standard Parking Corp. (STAN) continues to maintain the highest ROE, which is 58.74, currently listed under this Profit Track. STAN’s price to sales ratio is 0.48. In early March, the company posted fourth-quarter earnings per share that were about 40% ahead of analysts’ expectations. Standard Parking Corp., one of the nation's largest providers of parking management services, will release its results for the first quarter on May 3, 2006. Continue your research on STAN 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. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - The Difference Between Good Stocks and Great Stocks Kevin Matras goes over two Screening Strategies that go beyond your ordinary Earnings screens: http://at.zacks.com/?id=2289. 3. ZACKS RANK BUY STOCKS Every day on Zacks.com we highlight four Zacks Rank Buy
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match the criteria for the four main schools of investing:
Aggressive Growth, Momentum, Growth & Income and Value.
Aggressive Growth – Cutera, Inc. (CUTR) Growth & Income – Jefferies Group, Inc. (JEF) 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.
Jim Oberweis and his team are a little scared. Not amusement park “Boog-a-dah” scared. It’s more like that queasy feeling in the stomach that some encounter on their fortieth birthday, when the realization hits that the second half of life might not be as much fun as the first, and that an imminent demise awaits at the end. It’s not Oberweis and his team’s personality to dwell on unhappy forebodings; on the contrary, they consider themselves optimistic by nature. It’s just that the long-term data keeps bugging them. Examples are few and far between (actually, Oberweis and his team can’t think of any) of countries that continually spent more than they earned without paying the price — eventually. In some cases, it makes sense for a country to spend lots of dough during the investment and growth stage of its lifecycle. However, it does not apply to the U.S. – we are a mature country. Although the U.S. may fall among the upper half of developed nations if ranked by economic growth, there are many examples of emerging countries with GDP growth higher than us. Rather than being the diligent entrepreneur spending wisely in youth to prosper later in life, the United States is more like a rich kid who maxes out every credit card in his pocket. It works for awhile, but the duration of amusement is finite indeed. And that makes Oberweis and his team mad. Mad because we deserve better. We should be able to spend lavishly. We are entitled to make twice as much as the rest of the world and not work as hard. Nobody should take our jobs. Right. That’s the American modus operandi. And unfortunately enough people believe such nonsense that we might just see the realization of policies and laws which make absolutely no economic sense whatsoever but sound good to the masses. Protectionism is detrimental to our wealth and economy, but in the short-term wins votes. Politicians react to show that we can “fight back” against countries making goods better and cheaper. Unfortunately, it doesn’t work (and for that matter hurts us by teaching American companies that they don’t need to compete to survive). History is clear. Protectionism is bad for our economy, yet our politicians are continuing to slide down Tariff Trail. You would never guess there’s anything to worry about by watching the markets. The Russell 2000 is trading near its all time high and the S&P 500 is only slightly below its high. How could this be? On occasion, investors tend to be short-sighted, both on the upside and downside. The latest quarterly earnings report, latest comment from the Fed, or the latest piece of economic data moves the market. The cycle can be accentuated, as optimism begets further optimism, while pessimism ignites more pessimism. CNBC tends to focus on the “economy of the day.” Barron’s highlights the economy of the quarter. But it’s billionaires like George Soros that seem to have a knack for seeing the economy of the decade. It is that “economy of the decade” that really makes the difference between those who retire wealthy and those that do not. So next time you read the paper and get excited about a quarter, pause and think again. Look further out. Adjust your strategy for the decade, as that is what will most heavily influence your long term investment success or failure. It is that vision that led Oberweis and his team to open an office in Hong Kong. It’s paying off already, and you can expect to see their international team grow. You will see an increasing emphasis on international investments from Oberweis — and not just in China. One last note. Even though Oberweis and his team may be worried about the long-term picture for the U.S. economy, they still think there’s plenty of money to be made here. The U.S. is not a ship heading for an iceberg, but it may have a leak that needs tending. Fortunately, Oberweis and his team’s investment ideas do not seek to ride a macro wave. They have been able to make more money from finding good undiscovered companies than from forecasting macroeconomic growth cycles. Small-caps have the luxury of being able to buck the macroeconomic trend. In the 1970s, for example, the broader market delivered lackluster results overall, while small-caps delivered annual average returns north of twenty percent for much of the second half of the decade. Over the 30 years of publication of this report, Oberweis and his team can think of plenty of names – from TCBY in the eighties to Lone Star Steakhouse in the nineties to Central European Distribution more recently – whose fantastic success was far more company specific than macroeconomic-growth driven. Innovators at tiny companies can make a fortune for their owners no matter what the overall economy does. Peter Drucker said it well: “Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth.” Bodisen Biotech, Inc. (BBC) is engaged in the manufacture and marketing of environmentally friendly organic fertilizers and pesticides used by farmers in China. Earlier this year the Chinese government eliminated a 15.5% agricultural tax that has been levied on Chinese farmers since 1958. According to Mrs. Karen Qiong Wang, Chairman & CEO of Bodisen: “Elimination of the agricultural tax will significantly increase farmers’ income across China. As China’s rapidly growing economy continues to rely heavily on imported grains, farmers now have more incentives to purchase high quality, higher crop yield environmentally friendly fertilizers from Bodisen.” Revenues for 2005 were approximately $31 million versus $16.2 million in 2004. Net income for 2005 was approximately $7.4 million versus $5 million for the previous year. FalconStor Software, Inc. (FALC) is a premiere developer of technology that empowers IT administrators and end users to recover data easily to any point in time in the event of hardware failure, data corruption, deletion, or catastrophic site-level disasters. Products include IPStor software, which includes continuous data protection solutions and disaster recovery solutions; VirtualTape library, a backup/ recovery solution that simulates a range of physical tape libraries; and DiskSafe and FileSafe, which are host-resident software tools that safeguard DAS-based applications servers and end user desktops or laptops, as well as servers using third-party storage networks. PrimeVault by FalconStor Software provides an offsite online data protection service that replicates data to an additional site for a supplementary layer of redundancy. The company sells its software through original equipment manufacturers, resellers, and distributors worldwide. Revenues in the most recent quarter increased approximately 37% to $13 million versus $9.5 million in the same period one year ago. FalconStor Software reported earnings per share of $.03 in the latest reported fourth quarter versus $.01 in the same quarter of last year. The Oberweis Report is a proprietary investment advisory letter specializing in stocks of extraordinarily rapidly growing companies. Each issue contains new stock recommendations along with a review of those previously recommended stocks that have yet to be sold. http://at.zacks.com/?id=2449. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - b) The Fed’s Upbeat Commentary Joseph Parnes says carnage in the bond market may be ending. Learn why and receive an update on three stocks. More... Mutual Fund expert Ron Rowland says at some point, perhaps soon, Chinese authorities will need to put on the brakes. 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 05/22/2013
| Company Name | Symbol | %Change |
|---|---|---|
| ALLIANCE FIB | AFOP | 9.43% |
| TRI TECH HOL | TRIT | 6.62% |
| SONIC FOUNDR | SOFO | 5.14% |
| A M R CP | AAMRQ | 4.33% |
| FLOWERS FOOD | FLO | 4.31% |
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