Monday - April 24, 2006
 Want to view the archive of past issues? Go to: http://at.zacks.com/?id=2314. Manage Profit from the Pros subscription: 1. ZACKS EQUITY RESEARCH While tech continues to try and break out ahead of the market, we thought we’d focus on a particular sector that senior tech analyst Larry Orlowski, CFA feels is among the fastest growing: computer services. As this encompasses a wide range of IT companies, we got into a little more detail about the group. What are some of the major developments these days in computer services? Right now, I think there are two very interesting areas of growth that I’m looking at in computer services. One that I think may be the most important has to do with government IT services. There is a whole market where you have a number of public computer service companies that focus on the federal government information technology market. Many of these specialize in serving the Department of Defense (DoD), the Department of Homeland Security (DoHS) and the intelligence community. Given geopolitical concerns – be it Iran’s nuclear program, the threat of terrorism, North Korea, what have you – strong growth should continue in this sector. Would this fall under the heading of security services? Yes, this has to do with security, definitely fueled by the DoHS and the intelligence community. Since threats have risen post-9/11, these types of services have been budgeted by the federal government. There will probably be good growth overall in the federal IT budget. Also, there’s a trend for these public companies – some of which are in my coverage – to take over from privately owned firms, which would obviously benefit these public companies. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - The fact is, we expect 10-15% organic growth in this sector for the next year. National security is clearly a priority, so the government is going to fund this. Also, for some of the companies I look at, government IT services companies are shifting away from the low-cost contracts to higher-margin, fixed-price contracts, which will help profitability. There are two attractive companies in this space that I cover: CACI International (CAI) and ManTech (MANT). But as I have a Hold recommendation on ManTech right now, I’d like to focus instead on CACI, which I have a Buy on. CACI benefits from strong trans-national security expenditures. In fact, 94% of its revenue comes from serving the U.S. government. The company’s main concentration is Homeland Security, Defense and intelligence; it provides systems to improve decision-making to work faster, smarter and so forth. On a macro basis, the current political environment bodes well for large defense expenditures. CACI benefits as the DoD continues to depend on contractors to provide special services. The company is in an attractive high-end market of IT system integration, and their intelligence expertise is critical. That’s the area CACI is concentrated in, where there is a need for skilled professionals, security clearances and sharing critical information among intelligence agencies. All these are areas of strong growth. Aren’t there some risks to CACI? Weren’t they somehow involved in the Abu Ghraib scandal? To tell the truth, you raise a very good point. CACI was at Abu Ghraib, and they were involved – somehow – in the interrogation, or at least the training of people to gather information from certain individuals. But the company sold that business, getting out of it due to the bad press and political embarrassment it caused. Besides, that wasn’t their main concentration, and it was only a small part of their business anyway. What CACI does is basically improve communication and information for data collection analysis on a high and highly secretive level. Also, the company has more than $2 billion worth of proposals submitted to the federal government currently under review, and it has submitted $5 billion worth of additional business. As of the end of 2005, the company has a qualified pipeline of roughly $14 billion. This type of growth should continue, not just in the defense sector, but the high-end of it, the crown jewel. Do you consider CACI a good candidate to be bought out by a larger IT firm? Sure I do. Big companies like IBM (IBM), Computer Sciences Corp. (CSC) or Electronic Data Systems (EDS) – these behemoths all might want to buy a company like CACI, which is much smaller than any of them. It’s too speculative to talk about when this might happen and with whom, but yes, this is a good candidate for some of the larger IT players. Read the complete Analyst Interview by clicking: http://at.zacks.com/?id=2723 Larry Orlowski, CFA is a senior analyst covering the information technology industry for Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Analyst Blog - NEW! Get real-time market insights from Zacks Equity Research Analysts. To see their latest posts, click here. Linear Technology (LLTC) - Above Average Potential. For full Zacks research report, click here. Merck (MRK) - Limited Upside. 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
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. Cabela's Inc. (CAB), the World's Foremost Outfitter® of hunting, fishing and outdoor gear, posted fourth-quarter earnings of 64 cents per share in late February, outperforming the previous year’s 58 cents and surpassing the consensus estimate by almost 7%. CAB has earned $1.10 per share over the past 12 months and it offers a price-to-sales ratio of 0.72. The company will announce financial results for the first quarter on May 4, 2006. Continue your research on CAB at : http://at.zacks.com/?id=2254. Central Parking Corp. (CPC)announced fiscal first-quarter earnings from continuing operations of 51 cents per share in early February. The result surpassed the consensus estimate by almost 132% and eclipsed the year-ago total. The company noted that earnings from continuing operations for the first quarter of fiscal 2006 exceeded its expectations. CPC is trading around the $14.75 range and has realized earnings of $1.34 per share over the past 12 months. Continue your research on CPC at: http://at.zacks.com/?id=2255. Hooker Furniture Corp. (HOFT) recently reported results for the first quarter. Earnings per share were ahead of analysts’ expectations by nearly 11% and outperformed the year-prior result. Net sales increased 6% year-over-year, which HOFT attributed to an increase in incoming orders for imported wood and metal furniture throughout the quarter, coupled with better import product availability. The company has seen earnings of $1.32 per share over the past 12 months and sports a price-to-sales ratio of 0.81. Continue your research on HOFT at: http://at.zacks.com/?id=2256. Russell Corp. (RML) satisfies the criteria for this Profit Track with a price-to-sales ratio of 0.31 and earnings per share profitability of $1.17 over the past 12 months. In mid-February, the company released fourth-quarter earnings of 36 cents per share, beating analysts’ expectations by nearly 57%. Russell Corporation is an international branded apparel company specializing in activewear, casualwear and athletic uniforms. Continue your research on RML at: http://at.zacks.com/?id=2257. To see the full list of stocks that currently pass this winning screen, go to: http://at.zacks.com/?id=2258. 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=2307 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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=2259. 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 – Retalix (RTLX) Retalix (RTLX) has met or exceeded earnings estimates in six out of the past seven quarters. Two different analysts have raised their numbers for 2006. Over the past 60 days, this year's estimates have increased 12% to $1.21 per share. RTLX sports a return on equity of 10%, above the industry average of 9%. Read the full analysis on RTLX at: http://at.zacks.com/?id=2510. Growth & Income – Alcoa, Inc. (AA) Alcoa, Inc. (AA) reported the highest quarterly profits and revenues in the company’s history on Apr 10, 2006. Analysts’ earnings estimates have been climbing higher for AA. The company is currently yielding 1.7% and has a five-year average dividend yield of 2.0%. This Zacks #1 Rank stock continues to implement its growth strategy by expanding into China and beyond. Read the full analysis on AA at: http://at.zacks.com/?id=2511. More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum – Bucyrus International (BUCY) Bucyrus International (BUCY) is accelerating its rate of gains. Anyone paying close attention to the stock market these days knows that all forms of mining stocks are doing well. Thus it should come as no surprise that suppliers to the mining industry should also do well. Bucyrus, a Zacks #1 Rank stock, is expected to report earnings on May 3. Analysts expect that the company will report earnings of 41 cents per share for the quarter ended Mar 2006, compared with 29.3 cents in the same quarter of the previous year. Since BUCY has delivered a positive earnings surprise in the last two quarters, and only disappointed once in the last six quarters, there is some expectation that BUCY may deliver a positive earnings surprise next month. Read the full analysis on BUCY at: http://at.zacks.com/?id=2512. Value – Viad Corp. (VVI) Viad Corp. (VVI), a Zacks #1 Rank stock, topped analysts’ earnings expectations in 14 out of the past 15 quarters. The company raised its full-year 2006 earnings per share guidance in early February. VVI’s strong cash balance enabled it to authorize a share repurchase and puts it in a position to possibly make a strategic acquisition. The company has a price-to-book (P/B) multiple of 1.9. Read the full analysis on VVI at: http://at.zacks.com/?id=2513. Zacks Rank Resources
4. FEATURED EXPERTS Here we cast the spotlight on a timely Featured Expert commentary that recently appeared on Zacks.com. 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. 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=2309. Or view the full list of Zacks #1 Ranked stocks at: http://at.zacks.com/?id=2266. 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=2310 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 05/17/2013
| 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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