Monday - June 19, 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 Setting aside our focus on particular industries for a moment, today we wanted to get some perspective from Charles Rotblut, CFA, senior market analyst for Zacks.com. How would he advise to guide investors through the current market turbulence? The market slide over the past few weeks seems, in a way, to reflect a lack of trust or understanding investors have with the new Fed Chair. Is there anything to this, in your opinion? Aside from the Maria Bartiromo incident, Ben Bernanke has done a fairly decent job stepping into what are very large shoes. The Fed chairmanship is a tricky job because we want economists to fill it, but expect them to talk like politicians. Although Bernanke still has a learning curve in front of him, he is easing into the position. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - This said, May 10 - the date of the last FOMC meeting - stands out on most charts. Ahead of the meeting, there was a great deal of speculation, especially in commodities and emerging markets, combined with the expectation that the FOMC was near the end of tightening cycle. Following the meeting, the committee issued a statement saying that it wanted to see more data before making its next move. This created an environment of uncertainty, and the last thing any trader wants is uncertainty. As profits began to be locked in, prices fell, starting the current cycle of volatility. As opposed to early May, no one is sure how many rate hikes are forthcoming. My guess is that we will see an increase in two weeks and another one in August. The May core-CPI number was above the comfort level of many Fed governors, and there will only be one more CPI report before the August meeting. But despite the volatility, the U.S. equity markets have mostly just given back profits. As of Tuesday's close, the Dow was off just fractionally for the year; the S&P 500 was down a modest 2%. Considering that earnings estimates have not moved, the economy is expected to continue to expand into 2007, and it is reasonable to expect the major indexes to end 2006 in positive territory. Central to these difficulties is the uneasy balance between interest rate hikes and inflation concerns. Where do things stand right now? The yield curve has become inverted a couple of times this year, which has raised some eyebrows. An inverted yield curve means that short-term interest rates are above long-term rates. Such a phenomena is associated with recessions, because it suggests that interest rates should fall in the future. I don't see any risk of a recession over next 12 months. The FOMC is fighting to keep inflation at pretty low levels. Although there is always the risk of tightening too much, another 50 basis points of hikes is not going to derail the economy. The data does not suggest a risk of a recession either. The economy has enough room to slow and still expand. Earnings estimates are not being revised downward. Companies are continuing to add new employees. Many corporations have also been able to push through pricing increases. Finally, the commodity markets are still pricing-in strong demand for metals throughout the remainder of the year. Is the sell-off overdone at this point? When should investors feel comfortable overweighting the market? Some people are trying to identify the bottom, which is never easy to do. My expectation is for sustained volatility until the August meeting. I don't think we will get a clear signal from the FOMC at its July meeting and the focus will turn to August and September. Even though second-quarter earnings should be good, the obsession with the Fed could very well overshadow what will otherwise be bullish news. To read the complete Analysts Interview, click: http://at.zacks.com/?id=2723. Charles Rotblut, CFA is a senior market analyst for Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Analyst Blog - NEW! Get real-time market insights from Zacks Equity Research Analysts. To see their latest posts, click here. GlaxoSmithKline (GSK) - Strong Late-Stage Pipeline. For full Zacks research report, click here. Enersis S.A. (ENI) - Struggling Latin Market. For full Zacks research report, click here. Still Shopping Earnings Still in Good Shape
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 Track: PEG Ratio This strategy uses the PEG Ratio to find attractively priced stocks poised for price appreciation. The PEG Ratio is simply the P/E (Price divided by Earnings) of a stock divided by its 5-year projected growth rate. Too often investors think of value investing being the antithesis of growth investing. The beauty of using PEG is that you can find value stocks even amongst hot growth stocks. Let's take a closer look. A company with a P/E Ratio of 20 and a Growth Rate of 10% will have a PEG Ratio of 2.0 (20 / 10 = 2.0). While a company with a P/E Ratio of 40 and a Growth Rate of 50% will have a PEG Ratio of only 0.8 ( 40 / 50 = 0.8) The stock with the P/E of 40 is actually the better bargain since its PEG Ratio is lower (0.8) implying it's undervalued with more upside potential. In general, a PEG value of less than 1 is considered undervalued while greater than 1 is thought to be fully valued to overvalued. The lower the PEG, the better the value, because the investor would be paying less for each unit of earnings growth. Using this indicator in a stock screening strategy can produce stellar profits, such as a +38.9% return in 2004 and 16.3% in 2005. Aspreva Pharmaceuticals Corporation (ASPV), an emerging pharmaceutical company focused on increasing the pool of evidence-based medicines for patients with less common diseases, announced its first-quarter earnings of $1.25 per share in late April. The result surpassed the consensus estimate of 59 cents and reversed last year’s loss of 46 cents. ASPV offers a PEG ratio of 0.52. Continue your research on ASPV at: http://at.zacks.com/?id=2254. Eagle Materials, Inc. (EXP) reported fiscal fourth-quarter earnings of 86 cents per share in early May. The result outpaced the previous year’s 49 cents and eclipsed the consensus estimate by nearly 18%. The company noted that it remains well positioned to continue to achieve outstanding financial results given its low cost operations which supply building materials to a strong construction industry. EXP boasts a PEG ratio of 0.26. Continue your research on EXP at: http://at.zacks.com/?id=2255. Grey Wolf, Inc. (GW), which has a PEG ratio of 0.36, is a leading provider of contract oil and gas land drilling services in the United States serving both major and independent oil and gas companies with a premium fleet of 117 rigs. In early May, the company released its first-quarter report, stating that on the heels of the best year in the its history, Grey Wolf produced record quarterly results for revenue, net income, and EBITDA, spurred by both daywork and turnkey operations. Continue your research on GW at: http://at.zacks.com/?id=2256. H&E Equipment Services, Inc. (HEES) satisfies the criteria of this Profit Track with a PEG ratio of 0.32. In early May, the company posted first-quarter earnings of 29 cents per share, which exceeded analysts’ expectations by almost 53%. HEES mentioned that every segment of its business performed strongly during the first quarter. Continue your research on HEES 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 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Minimizing Market Risk and Volatility with ‘Beta’ Kevin Matras looks at how to minimize your portfolio's market risk and volatility by using the ‘beta’ measure: 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 – Weatherford International, Ltd. (WFT) Analysts are continuing to raise their earnings forecasts on Weatherford International, Ltd. (WFT). Over the past few months, the already bullish consensus estimates for 2006 and 2007 have been revised upward by 9.6% and 15.9%, respectively. This positive momentum has resulted in a strong relative return for shareholders. Read the full analysis on WFT at: http://at.zacks.com/?id=2510. Growth & Income – Brookfield Asset Management Inc. (BAM) Brookfield Asset Management Inc. (BAM) recently topped the Street’s quarterly earnings estimate when it posted first-quarter profits of 43 cents per share. Earnings per share are projected to grow 13.0% over the next 3-5 years. Strong cash flows from operating activities have led to a current dividend yield of 2.4% and a five-year average dividend yield of 3.1%. Analysts have become increasingly optimistic about this Zacks #1 Rank stock—upping their estimates for both this year and next. Read the full analysis on BAM at: http://at.zacks.com/?id=2511. More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum – Florida Rock (FRK) Florida Rock (FRK) is the potential bad news reflected in the price? Business is booming at FRK. When the company last reported earnings on Apr 25, EPS of 86 cents was 38.7% higher than analysts’ expectations. That was also an eye-popping 75.5% increase from the previous year’s EPS of 49 cents. Sales grew 16.1% to $364.1 million and income rose 25.3% to $57.5 million. Read the full analysis on FRK at: http://at.zacks.com/?id=2512. Value – National Telephone Company of Venezuela (VNT) National Telephone Company of Venezuela (VNT), a Zacks #1 Rank stock, reported solid revenue and subscriber growth for the first quarter of 2006. Based on its stellar results, the company raised its full-year 2006 earnings guidance along with its expectation for year-end subscriber numbers. Analysts’ earnings estimates have been on the rise for this quarter as well as for this year. The company has a price-to-book ratio of 1.0 and a PEG ratio of 0.13. Read the full analysis on VNT 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. The Internet isn't the only advertising channel that is growing rapidly at the moment. In fact, one of the oldest forms of advertising in the world is currently in the midst of a renaissance. Of course, Paul Tracy is speaking of the so-called "outdoor advertising" industry -- more familiar to most consumers as billboard advertising. In 2005 alone, advertisers spent more than $6.3 billion on outdoor advertising. Outdoor ad spending has been growing steadily over the past 35 years. Although that $6.3 billion is barely one-tenth the amount spent annually on TV advertising, the outdoor ad business is growing at a much faster clip. According to the Outdoor Advertising Association of America, spending on billboard advertisements jumped more than +8% in 2005. Meanwhile, spending on network TV ads actually fell, and newspaper ads grew barely 1% year-over-year. That's a dramatic outperformance. Why on earth is outdoor advertising growing so much faster than other traditional media? Several important factors are underpinning this exceptional growth . . . First, outdoor advertising is tough to ignore. Although you can skip a TV commercial by simply walking to the kitchen to grab a beverage or by using a DVR, drivers must look at signs posted on the side of the road. As such, advertisers can be sure that their billboards will be seen by a large group of awake, alert drivers each and every day. Secondly, there's cost. TV advertising is expensive, even in non-prime-time slots. In addition, advertisers often purchase large blocks of TV slots as a package. This makes such advertising affordable only to the nation's largest customers. While not exactly cheap, billboard advertising costs only a tiny fraction of your average TV commercial. As a result, even smaller companies can afford to buy billboard space. And even at the pricey end of the spectrum, a month's worth of advertising on a Times Square billboard runs only $300,000 to $500,000, which compares favorably to a cost of $2.5 million for a 30-second Superbowl ad. Thirdly, there's a supply issue. Thanks to a complex web of government regulations, the number of billboards that can be erected in the U.S. in a given area is limited. This keeps new entrants out of the market and benefits the established players. The controlled supply of advertising space also makes existing billboards even more valuable. But far and away the most important factor supporting growth in the outdoor advertising industry is the digital electronic billboard. Digital billboards can offer more sophisticated graphics and moving pictures -- features that can attract consumers' attention more effectively than traditional static boards. In addition, electronic billboards can be connected to the Internet, enabling advertising companies to instantaneously change a particular billboard's message with the click of a button. There is no longer a need to hire workers to climb the board and spend hours changing vinyl panels. Moreover, the ability to change a billboard quickly and with no cost means that a particular advertiser can choose to rent a billboard in the morning, yet a different advertiser might pay for ad space on that very same billboard in the afternoon. What's more, individual advertisers can change their message frequently to help capture readers' interest. Although electronic billboards are costlier to install than traditional boards, over the long run those costs are more than outweighed by a variety of benefits. First, advertising companies are able to reduce their labor costs because they no longer need to manually change boards. And even more importantly, advertisers usually pay higher rates to rent out electronic billboards as compared to traditional vinyl boards. With all of these factors in mind, the outdoor advertising market has been red hot in recent months, and a number of well-placed ad companies have seen their share prices move sharply higher. But if you're worried that you've already "missed the boat" on the booming outdoor ad market -- don't be. The trend toward electronic billboards is still in its infancy, and a number of ad companies are just beginning to shift their focus to this new electronic format. As a result, outdoor advertising stocks should continue to handily outperform the S&P. Although hundreds of firms have a presence in outdoor advertising, Tracy and his staff managed to uncover what they believe are the three best-positioned publicly-traded companies in this growing market. All of their favorite firms are nicely leveraged to strong growth in billboard advertising, and all three stocks are well positioned to outperform the broader market in the coming months and years. One of these firms is profiled below. One of Tracy’s favorite outdoor advertising firms: Clear Channel Outdoor (CCO) Business Overview Clear Channel Outdoor is the world's largest outdoor advertising firm with a total of nearly 900,000 displays located in more than 50 countries. The company has operations in Asia, Europe, the Americas and even Africa. The firm was spun out of the largest radio advertiser in the United States, Clear Channel Communications, late last year; the former parent still owns around 90% of all outstanding CCO shares. Growth Drivers CCO will continue to grow by rolling out additional electronic billboards over the next few years. In fact, CCO already operates some of the most advanced digital billboards in the world. These include special billboards in New York's Time Square that consumers can interact with using their cell phones. And more recently, the company announced plans for the UK's first network of digital billboards located in and around London. The firm's highly advanced network of billboards tends to attract higher advertising rates. CCO will also likely benefit from faster growth overseas. In 2005, Clear Channel's international division accounted for roughly 60% of the company's overall revenue pie. The firm's international division is also growing at a much faster rate than its domestic operations. The StreetAuthority Market Advisor is an invaluable resource for self-directed investors. With a keen focus on fundamental analysis and an eye for undervalued stocks, editor Paul Tracy sorts through thousands of investing opportunities each week and brings you only those with the greatest potential for both near- and long-term gains. Rather than the news, the Market Advisor delivers profitable investment guidance that you can act on today to improve your own portfolio. http://at.zacks.com/?id=2413. 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. | |||||||||
- Latest News
- Most Popular
- Roundtable Top Picks of the Week
- The Mega-Rally Rolls On
- RTI: Prediction Contest: S&P 500 on Dec. 31st
- Industry Rank Analysis: Shifting Into Overdrive
- Biotechnology ETF Investing 101
- 3 Dividend Stocks at Reasonable Prices
- RTI: Are You Doing the Elon Musk Trade?
- Buy These ETFs to Profit from "Sector Rotation"
- Options Strategies & the Zacks Rank
- PFP 5/21: Below the Surface
- AWS 5/20: The Fed In Focus This Week
Recent Quotes
| No Recent Quote currently available |
My Portfolio
|
My Portfolio Tracker One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts. Set yours up today. |
Zacks #1 Stocks on the Move 05/20/2013
| Company Name | Symbol | %Change |
|---|---|---|
| ORBOTECH LTD | ORBK | 10.86% |
| SONIC FOUNDR | SOFO | 9.45% |
| VIPSHOP HOLD | VIPS | 9.20% |
| RENEWABLE EN | REGI | 8.98% |
| EAGLE BULK S | EGLE | 7.84% |
Quick Links
Resources
Client Support
Zacks Research is Reported On:
Zacks Investment Research
is an A+ Rated BBB
Accredited Business.
Copyright 2013 Zacks Investment Research
At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1986 it has nearly tripled the S&P 500 with an average gain of +26% per year. These returns cover a period from 1986-2011 and were examined and attested by Baker Tilly, an independent accounting firm.
Visit performance for information about the performance numbers displayed above.
NYSE and AMEX data is at least 20 minutes delayed. NASDAQ data is at least 15 minutes delayed.