Tuesday - May 9, 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 More than half of the companies within the Zacks Rank universe have reported earnings. The numbers are running roughly inline with the fourth-quarter results. For the first-quarter, the ratio of earnings surprises to misses is 2:1. The ratio of sales surprises to misses is 1.6:1. The trend in earnings estimates following earnings reports is flat to slightly negative. Analysts have revised forecasts upward on just one more company than they have lowered forecasts on. The average change in full-year earnings estimates is -0.76%. Nonetheless, analysts are projecting a 21% rise in profits. With reports from over 2600 companies within the Zacks Rank universe, some trends can be derived from the first-quarter results. Corporations continue to be effective at managing expectations. Economic growth combined with the ability of many companies to pass through higher raw material costs is aiding profits. Stock selection, however, continues to be of key importance. Only a third of all industry groups have a positive-to-negative estimate revisions ratio6 above 1.0. This means that despite the bullish headlines, several traps continue to exist for investors who are not selective above their stock choices. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Oil-related groups, in particular, are laden with bull traps. Yes, Texas tea prices were above $70 per barrel last week and gasoline prices are obnoxiously high, but forecasts are not being raised on all oil companies. For instance, analysts have lowered their forecasts on 11 of the 15 companies within the Oil & Gas Exploration & Production group so far. Notable names with negative revisions include Apache (APA) and Anadarko Petroleum (APC). Both companies missed first-quarter estimates and reported a year-over-year decline in production volumes. Conversely, analysts are raising their forecasts on oilfield companies. Baker-Hughes (BHI), Grant Prideco (GRP), Core Labs (CLB) and BJ Services (BJS) are all Zacks #1 Rank stocks. One of the primary differences between these two groups is that disruptions, such as hurricane related damage, which adversely impacted APA’s production volume, create opportunities for oilfield companies. In addition, increased spending on maintenance and rising demand for rigs also benefits oilfield companies. Other industry groups that standout this earnings season from an estimate revision perspective include Machinery-General Industrial, Mining-Non Ferrous, Steel Producers and Finance-Investment Brokers. The Machinery-General Industrial group contains six Zacks #1 Rank stocks, all which have a market capitalization of $3.5 billion or less. Full-year estimates for DXP Enterprises (DXPE), Gardner Denver (GDI), and Gorman Rupp (GRC) have been raised by 20% or more within the past two weeks. These companies provide various industrial products, including pumps, valves, motors and controls. Mining-Non Ferrous includes both copper stocks, such as Southern Copper (PCU) and Falconbridge (FAL), and aluminum stocks, such as Aloca (AA) and Alcan (AL). Steel-Producers contains five Zacks #1 Rank stocks including United States Steel (X), Steel Dynamics (STLD) and Ipsco (IPS). The story here is simple – metal prices across the board are rising. Although, gold has continuously been making the headlines, the trend in estimates has been more favorable for stocks tied to other metals. Some of the major investment banking firms reported strong first-quarter results in March due to strong merger activity, narrow yield spreads and the ability to float secondary offerings. In late April, firms such as Knight Capital (NITE), Greenhill & Co. (GHL) and Jefferies Group (JEF) extended the winning streak. NITE benefited from “deeper account penetration” and an increase in trading volume. JEF generated higher trading revenue and growth in its asset management group. GHL saw stronger demand for its advisory and merchant banking units. Goldman Sachs (GS), Lehman Brothers (LEH) and Bear Stearns (BSC) will likely report profits for the current quarter in mid-June. (The three firms do not operate on a calendar year basis). Charles Rotblut, CFA is a senior market analyst for Zacks.com. He can be reached at crotblut@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. EOG Resources (EOG) - Steady Production Growth. For full Zacks research report, click here. TIM Participações, ADR (TSU) - Unprofitable Incorporation. For full Zacks research report, click here. Transportation Sees Positive Surprises In the Home Stretch
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: Upgrades and Revisions This strategy focuses primarily on Positive EPS Estimate Revisions and Brokerage Rating Upgrades. Over the last 20 years Zacks Investment Research has proven that "earnings estimate revisions are the most powerful force driving stock prices." Studies have also shown that stocks receiving upward EPS revisions tend to receive additional upward revisions in the future. Then consider that stocks receiving these upward revisions generally have brokers upgrading their Ratings, which is also a proven mover of stock prices. There are other parameters to this strategy, but the Rating Upgrades and positive EPS Revisions are the two powerful active ingredients. This screen focuses on EPS Revisions, along with Broker Ratings and Rating Changes. According to Zacks Investment Research "earnings estimate revisions are the most powerful force impacting stock prices". Couple that with the proven benefits of upgrades in ratings from brokerage firms and you have a strategy that delivered a +27% return in 2005. American Physicians Capital, Inc. (ACAP), a regional provider of medical professional liability insurance focused primarily in the Midwest markets, recently announced first-quarter earnings of $1.05 per share. The result topped the consensus estimate by about 19% and outperformed the year-ago total. The company has experienced healthy earnings growth of approximately 266% during the past five years. Continue your research on ACAP at: http://at.zacks.com/?id=2389. Andersons, Inc. (ANDE) is a Zacks #1 Rank (Strong Buy) company that has seen earnings growth of more than 25% during the past five years. ANDE recently reported first-quarter earnings of 49 cents per share, jumping ahead of the consensus estimate by about 172% and eclipsing the previous year’s result. Revenues totaled $281 million, an improvement over the $259 million that was reported for the year-prior quarter. Continue your research on ANDE at: http://at.zacks.com/?id=2390. CSX Corp. (CSX), another Zacks #1 Rank (Strong Buy) name, is one of the leading transportation companies, providing rail, intermodal and rail-to-truck transload services. CSX posted first-quarter earnings of $1.06 per share in mid-April. The result topped the consensus estimate by nearly 22%. The company satisfies the criteria for this Profit Track as evidenced by its earnings per share growth of 19% over the past five years. Continue your research on CSX at: http://at.zacks.com/?id=2391. Joy Global Inc. (JOYG) will release fiscal second-quarter financial results on May 25, 2006. With a five-year earnings per share growth rate of 421%, JOYG's growth track record is the highest currently listed under this Profit Track. The company announced fiscal first-quarter earnings of 47 cents per share in early March. The result beat the year-ago total of 18 cents and surpassed the consensus estimate by almost 21%. Continue your research on JOYG 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 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Diversification and Portfolio Weighting Kevin Matras talks about diversification and the importance of an equally dollar weighted 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. Free Online Options Research at: http://at.zacks.com/?id=2664. Zacks/Schaeffer’s Options Trading service at: http://at.zacks.com/?id=2665. Last week we looked at the Unusually High Option Volume filter for calls and determined that playing a put on Amerada Hess (AHC) looked like a nice play. This week we want to look at the other side of this filter - the Unusually High Option Volume filter for puts - and see if we can find a nice bullish play. Before we go any further, we want to talk briefly about our Expectational Analysis ® methodology here at Schaeffer's. We are contrarian-based investors, meaning that we seek 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 has done so already. 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 Unusually High Option Volume for puts filter? First off, let's look at what a put is. Puts are simply a bet that the underlying stock is going to move lower. From our contrarian point of view, we like to see a lot of bearish puts trade on a stock that is outperforming. This shows us that even though the shares are leading, there's still skepticism left. Thus there could still be a good amount of cash still on the sidelines. 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 S&P Depositary Receipts (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. Looking at the list from Thursday, air freight leader FedEx (FDX) made the cut as 9,890 puts traded, nearly five times its average daily put volume. One look at the chart of FDX and its hard not to get excited. The shares are up over 15% year-to-date and another 36% the past year. Technically, what we like about this picture is the shares recently found support from their 50-day moving average – exactly what you want to see. So the bottom line is we have a stock in a huge bull market that is making new highs and seeing a large amount of bearish puts trade on it. So far this looks like a nice play. Let’s look at some more info before we make a decision. Another thing that we like about FDX is it hails from one of the strongest sectors – transports. We find it’s much easier to find winning trades if the entire sector is strong. With that said we have the Dow Transportation up over 30% since late October and another 40% the past year – pretty strong. What about the quantitative sentiment, you ask? Well, to us it looks like there's a lot of pessimism - exactly what we want to see. One indicator that we like to use to measure sentiment is the Schaeffer's put/call open interest ratio (SOIR). This ratio shows how many puts there are compared to calls for the front three months of options. Currently, FDX’s SOIR checks in at 0.75. That number by itself doesn’t tell us much, so we need to examine it over the past year to get a better feel for what short-term option players are thinking. Remember, we want to go opposite the crowd, and examining the number reveals that this reading is higher than 78% of those taken during the past 52 weeks, suggesting that short-term option players are bearish. Short selling is one stock-trading strategy that basically involves selling a stock with the intention of buying it back later at a lower cost. In other words, you are betting that the shares will go down. For a bullish play, we love to see a lot of shorts, as this increases the odds of a short-covering rally on any good news. This is the only problem that I can see with FDX, as there aren’t that many shorts betting against the shares – reducing the chances of a short covering rally on any good news. In fact, it would take just over two days for all of the shorts to cover their bearish bets, not a very high number. Finally, according to Zacks, analysts have plenty of room for upgrades, suggesting that there could be an influx of upgrades should the shares continue to gain. Turning to the numbers there are eight "buys," seven "holds," on FDX. Again, given the strong returns, this leaves the door wide open for some deserved upgrades. So other than a lack of shorts betting against the shares, this one looks very nice. In fact, how often will everything line up perfectly? Here at Schaeffer’s, we’ve noticed that when something looks too perfect, it probably is. With that said we like FDX for a nice intermediate term trade option trade. As of Friday afternoon, it was trading at $119.50, write it down and let’s see how we do. We'll be back next week to take a look at the another filter. In the mean time, please continue to use all of the filters on these pages and try to find out which ones work best for you. Remember; don't be afraid to paper trade a few here and there, as this is a great way to learn. Finally, 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. Keep on using the filters here at Zacks.com and the commentaries from SchaeffersResearch.com and finally, good luck in your trading! To learn more about the Unusually High Option Volume filter, click here: http://at.zacks.com/?id=657. Discover all the tools and commentary available from the Zacks.com Options Center at: http://at.zacks.com/?id=2382. Leverage the timeliness of Zacks #1 Ranked stocks with options trades that maximize profits and minimize risks. Learn more about our new Options Trading service at: http://at.zacks.com/?id=2666. 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 – Tetra Technologies (TTI) More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum – Garmin(GRMN) Back in March we pointed out that Garmin(GRMN) had not delivered a disappointing earnings report in the last 16 quarters. Now amend that statement to read 17 quarters. GRMN reported on May 3 earnings for the Mar 2006 quarter at 80 cents per share, 56% higher than a year ago and a positive 21% earnings surprise. Dales grew 22% and income grew 18%. Since being featured as a Zacks Momentum Stock of the Day, GRMN is up over 20%, and shows no sign of letting up. Read the full analysis on GRMN at : http://at.zacks.com/?id=2496. Since we featured Assurant Inc. (AIZ) back on Feb 1, 2006, the stock's price is up 10%. On May 4, 2006, AIZ beat the Street's first-quarter 2006 estimate by an impressive 34.8% when it posted earnings of $1.24 per share. The company's strong first-quarter performance was the best in its history. The company seems to be heading in the right direction. Read the full analysis on AIZ at : http://at.zacks.com/?id=2497.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Zacks Rank #1 and #5 Additions Zacks #1 Rank List: 89 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: 76 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 06/18/2013
| Company Name | Symbol | %Change |
|---|---|---|
| STAAR SURGIC | STAA | 10.98% |
| LUMOS NETWOR | LMOS | 5.70% |
| INSTEEL IND | IIIN | 5.28% |
| ERICKSON AIR | EAC | 5.10% |
| ASSURED GUAR | AGO | 4.98% |
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