Thursday - June 8, 2006
 Want to view the archive of past issues? Go to: http://at.zacks.com/?id=2337. Manage Profit from the Pros subscription: 1. ZACKS EQUITY RESEARCH We had a chance to catch up with our senior telecom analyst David Weissman, CFA to find out what was hot at the Globalcomm Convention, the largest conference for the telecom equipment industry. David returned yesterday from the trade show, and shared his impressions with us. What has been your top-level industry view of telecom equipment spending this year, and has that changed following your review of the Globalcomm trade show? As I mentioned in previous discussions, the overall market opportunity for telecom equipment remains neutral. I did not get any significant indicators that things are going to change much following the Globalcomm show. If anything, it was relatively slower than I expected. However, as I always believed, there continue to be select investment areas and companies that still could benefit, regardless of a neutral sector outlook. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Any statistics on what may be expected in terms of capital spending by telecom and cable companies? There is a range of different analyses of what may be expected. In general, the capital expenditure trend has been slightly upward over the past year, as compared to the fall-off that occurred three or four years ago. Telecom carriers in the U.S., for instance, spent approximately $165.7 billion in 2005 on network and software equipment, according to the TIA (Telecommunication Industry Association). This represents approximately 5% growth from the previous year. The growth was primarily attributed to wireless network expenditures, which grew at nearly 23%. Worldwide, the story is somewhat different. We are seeing stronger growth for infrastructure investments and spending in Asia, Eastern Europe, India and Latin America. Although you have a neutral industry position for telecom equipment right now, you mentioned that there are certain areas of opportunity. Can you identify some of those niches? Sure. It should be no surprise by now that carriers are promoting network convergence based on IP (Internet Protocol). What is meant by that is carriers are intending to add value by bundling services – such as wireless, Internet, landline voice and video – and developing other avenues of revenue with video content. For instance, when a wireless user is at home, several options are now available so that the cellular phone conversations can be transported over more economical home landlines as opposed to using wireless minutes. This is being enabled not only by the converged IP networks, but also by improved customer telephone customer premise capabilities. At the show, we also received supportive indicators that IPTV remains a dominating theme among carriers as they intend to roll out their own video services, competing against cable companies. What was quite interesting is that the equipment companies are adding capabilities to advance the features beyond traditional offerings supported by the cable companies. Fiber in the access portion of the network was also widely publicized. We continue to recognize a variety of architectures, whether it is fiber all the way to the premise, as is intended with Verizon's (NYSE: VZ) FiOS or fiber-to-a-neighborhood demarcation as implemented by Bell South/AT&T (NYSE: T). Several equipment providers are expected to benefit from fiber access initiatives, including companies we cover – Tellabs (Nasdaq: TLAB) and ADC Telecom (Nasdaq: ADCT). We also noted emerging approaches to improve wireless data transport, whether it was from the cellular networking perspective or from extended implementations of Wi-Fi, called WiMAX. Companies including Harris (NYSE: HRS), NEC and Ceragon Networks (Nasdaq: CRNT) are marketing improved backhaul solutions to connect cellular or WiMAX base stations by microwave radios at data rates well above 100 Mbps. In years past, wireless backhaul required less bandwidth as it was primarily voice-centric, but the emergence of content-rich wireless data over cellular and Wi-Fi networks has created the ongoing potential for backhaul bottlenecks. In fact, the theme of Globalcomm's keynote speech, presented by Research In Motion’s (Nasdaq: RIMM) President and co-CEO Mike Lazaridis cautioned the wireless industry to prepare itself for bandwidth limits as frequency resources remain scarce and will impact the amount of use that is forecasted. This is surely going to also impact the backhaul that connects the wireless links. To read the complete Analysts Interview, click: http://at.zacks.com/?id=2693 David Weissman, CFA is a senior analyst covering the telecommunications industry for Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Analyst Blog - NEW! Get real-time market insights from Zacks Equity Research Analysts. See their latest posts, click here. Acusphere, Inc. (ACUS) - Excellent Entry Point. For full Zacks research report, click here. ProQuest Company (PQE) - Accounting Concerns. For full Zacks research report, click here. Earnings Still Strong Zacks Industry Rank for the Week of Jun 5
2. Zacks Challenge: Top Player Interview Zacks.com features a free investment simulator where our customers can prove their stock picking skills to the rest of the world. In these articles we will share with you the insights and recommendations from Top Simulator Players. Learn more about the current Zacks Challenge at: http://at.zacks.com/?id=2514. Arturo Garcia de Paredes’ Simulator stock portfolio has resided in top 20 category for quite some time. This savvy investor, who hails from Panama, has an overall portfolio return of approximately 25%. He recently shared his market insights with Zacks. Arturo discovered the Simulator competition through the Zacks Profit from the Pros newsletter, which he reads every day. The Stock Challenge contender explained that trading in Panama can be a more cumbersome process than in the U.S. especially since online trading, and the low commissions that go along with it, are not available in the Central American country. Thus, Arturo saw the Simulator as an opportunity to practice various strategies with little restriction and all the convenience that online trading has to offer. A sneak peek into his portfolio reveals holdings such as Emrise Corporation (AMEX: ERI), HearUSA, Inc. (AMEX: EAR), Merriman Curhan Ford & Co. (AMEX: MEM), Pemstar Inc. (Nasdaq: PMTR) and Insignia Systems, Inc. (Nasdaq: ISIG). Click here to check out this player’s current portfolio: http://at.zacks.com/?id=2515. How does he do it? Arturo looks for profitable stocks that have a solid return on equity (ROE) and increasing cash flow. He finds such securities by reading BusinessWeek, Barron’s Online, Investor’s Business Daily and Yahoo Finance. The market enthusiast also likes to browse Yahoo message boards to find out what others are saying about stocks. Arturo will then cross reference message board information with the latest SEC filings. Zacks.com plays an important part of this trader’s research process. He is particularly a fan of the Zacks Equity Research and Industry Outlook sections. How does this market watcher make his picks? Arturo leaves no stone unturned. He said that the first thing he does is check to see if insiders have been buying. Then he studies the fundamentals, which enables him to figure out why insider buying is occurring. “I would stay away from stocks that have little or no revenues even if insiders have been buying. Then I look at the technicals to see if an upward trend is developing,” added Arturo. How does he know when to sell? The Simulator competitor has a pretty strict criteria for the sell side of a trade as well. He will unload a stock if it had a disappointing quarter, technicals have been deteriorating, shares decline 18% from the purchase price or the share price will get ahead of itself and therefore may be at risk of correcting. Any favorites? Arturo named of a few front-runners and explained why he likes them. He mentioned that InterNAP Network Services Corporation’s (AMEX: IIP) fundamentals have been improving. The stock picker also favors Emrise Corporation (AMEX: ERI) because it is a “micro cap company unnoticed by most investors,” it is profitable with an increasing backlog, and there has been insider buying activity recently. Arturo rounded of his list with Claude Resources (AMEX: CGR). He likes this gold and oil play because it has a Zacks Rank of #2 and was mentioned in the Zacks Industry Rank for the Week of May 22. Outlook and advice? This market player sees a lot of volatility going forward and predicts a slight decrease by the end of the year. For those who are just starting out, Arturo suggests investors familiarize themselves with company fundamentals as well as a stock’s technical attributes. He recommends taking advantage of the wealth of information available at various financial website and touted Zacks Industry Outlook for conducting sector research. The Simulator top player concluded by stating that it is wise to wait for a pullback before executing a buy on a position that recently experienced an upward surge. It’s free. Its fun. It's the place to show your investing prowess. The best stock pickers will be rewarded with thousands of dollars in prizes. Learn more at: http://at.zacks.com/?id=2671. Trade Options? Then sign up for the Zacks Options Challenge at: http://at.zacks.com/?id=2672. 3. 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: High Rank Value Two of the most commonly accepted measures of a value stock are a price-to-earnings (P/E) multiple of 15.0 and a price-to-book (P/B) multiple of 3.0. Although many studies have shown performance advantages to investing in value stocks, not all value stocks are actually bargains. A value a stock is only a good buy if earnings are expected to improve in the future. High Rank Value is a strategy designed to find the true bargains among value stocks. By requiring a Zacks Rank of #1 ("Strong Buy") or #2 ("Buy"), this strategy restricts the pool of value stocks to only those with positive revisions in earnings estimates. In other words, profits are expected to improve in the future at a faster pace than originally anticipated. By requiring a high Zacks Rank in addition to a low valuation, this strategy finds the true bargains - bargains that generated returns of +13.7% in 2005. Here are four stocks that make the grade for the High Rank Value Profit Track: AEGON NV (AEG) is an international insurance group which writes life and health insurance and offers related pension, savings and investment products in Europe, North America and the Caribbean. The company released its report for the first quarter in early May, stating that it experienced a good quarter with promising sales growth across the company while at the same time making progress in expanding sales and distribution within its developing markets. AEG offers an attractive valuation as evidenced by its price-to-earnings (P/E) multiple of 8.64 and a price-to-book (P/B) multiple of 1.14. Continue your research on AEG at: http://at.zacks.com/?id=2354. FelCor Lodging Trust Inc. (FCH), a Zacks #1 Rank (Strong Buy) company, is one of the nation's largest hotel real estate investment trusts (REITs). In early May, FCH announced first-quarter results, noting that its renewed focus on asset management, its portfolio repositioning program and capital improvements are showing up in strong operating results. FelCor’s price-to-earnings (P/E) multiple is 12.85 and its price-to-book (P/B) multiple is 2.28. Continue your research on FCH at: http://at.zacks.com/?id=2355. More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - MDU Resources Group, Inc. (MDU) satisfies the criteria for this Profit Track with a price-to-earnings (P/E) multiple of 14.63 and price-to-book (P/B) multiple of 2.21. In late April, the diversified natural resources company posted first-quarter record earnings of 44 cents per share, improving on the previous year’s 29 cents and exceeding the consensus estimate by almost 5%. Continue your research on MDU at: http://at.zacks.com/?id=2356. Mission West Properties, Inc. (MSW) has a price-to-earnings (P/E) multiple of 12.44 and a price-to-book (P/B) multiple of 1.73. The company reported first-quarter Funds From Operations ("FFO") of 33 cents per share in early May. The result was ahead of last year’s 19 cents and topped the consensus estimate of 21 cents. MSW operates as a self-managed, self-administered and fully integrated REIT engaged in the management, leasing, marketing, development and acquisition of commercial R&D properties, primarily located in the Silicon Valley portion of the San Francisco Bay Area. Continue your research on MSW at: http://at.zacks.com/?id=2357. To see the full list of stocks that currently pass this winning screen, go to: http://at.zacks.com/?id=2358. 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=2359. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Pulling Profits and Cutting Losses Kevin Matras looks at how to use Price and Volume for locking in profits, cutting losses and spotting potential trend changes: http://at.zacks.com/?id=2360. 4. ZacksAdvisor.com TIMELY BUY of the WEEK Here you'll discover a Zacks #1 Rank stock hand selected by Ben Zacks to outperform the market over the next 30 to 90 days. This week's Timely Buy is...
AstraZeneca PLC (AZN) is one of the largest pharmaceutical companies in the world. AstraZeneca was formed on April 6, 1999 through the merger of Astra AB of Sweden and Zeneca Group PLC of the U.K. In fiscal year 2005, the Gastrointestinal (26% of total revenue), Cardiovascular (22%), Oncology (16%), Respiratory (12%), Neuroscience (17%), and Infection & Other (6%) therapeutic categories generated revenue of $23.95 billion. AZN should continue to benefit from growth in key cardiovascular products such as Crestor and Atacand. Crestor, a cholesterol-lowering drug (statin) launched in the third quarter of 2003, has captured roughly 8.6% market share in the global statin market. The drug is approved in over 70 countries around the world. Crestor offers a strong efficacy profile, perhaps the strongest in the statin group. The total cardiovascular franchise remains strong, with potential upside to come if the company pipeline comes through. AstraZeneca is in phase III trials with AZD-6140, an oral reversible ADP receptor antagonist for arterial thrombosis aimed to compete with Plavix. Recent phase IIb data presented at the 55th annual American College of Cardiology meeting directly compared AZD-6140 to Plavix. Although the trial was small (n=89), AZD-6140 demonstrated superior efficacy to Plavix in patients with non-ST elevation acute coronary syndrome (ACS) in platelet inhibitory effect in both a pre and post-Plavix treated population. Plavix is the world’s second largest selling drug, so AZN-6140 has enormous opportunity to take market share upon approval. Similarly to the cardiovascular franchise, the oncology franchise is posting solid growth as well. Sales in the category are led by Casodex and Arimidex. Casodex (prostate cancer) and Arimidex (breast cancer) are both billion dollar drugs. The company received approval in both the U.S. and U.K. to expand Arimidex use into adjuvant treatment for post-menopausal women with hormone receptor positive early invasive breast cancer. Management reported 1% share gains on 29% prescription growth in the first quarter. The approval also allows the launch in many E.U. countries such as Germany, Spain, and Italy. AstraZeneca is one of the stronger fundamental players in the drug group. The company offers a four-year CAGR of 11%, superior to the peer-group average by 3-4%. European-based pharmaceuticals such as Novartis, Sanofi-Aventis, and GlaxoSmithKline offers comparably better growth than their U.S. brethren. Earnings estimates have been trending higher for AZN. Over the past 60 days, 2006 estimates have increased 13.3% to $3.66 per share. This is impressive for a company as large as AZN. The stock should be a solid performer with the drug group showing signs of stability.
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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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