Thursday - June 29, 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 As the Fed meeting continues into its second day, we felt it would be an opportune time to sit down with Zacks’ Director of Equity Research, Dirk van Dijk, CFA, for his outlook on what can be expected in the markets going forward. What do you expect the Fed to do today and into the future? Do you see any clouds on the horizon? I think its pretty much certain that the Fed will bump rates by a quarter point today, its 17th straight increase. The odds also appear to favor at least one more after that in August, although I that is more a forecast of what I think they will do, not what they should do. If you had to press me about my number one worry about the intermediate term health of the economy, it would have to be the housing situation. This is due to both its direct and indirect effects. Those concerns were slightly alleviated when the new housing starts numbers came in at an annualized pace of 1.957 million in the month of May, up 5.0% from April’s pace. This reversed three straight months of declines, with April down 5.5% [although not as bad as first reported], March down 7.5% and February down 5.9%. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - I’m afraid that some of this rebound may be transitory, since building permits, which are a leading indicator of housing starts, fell 2.1% in May. However, housing starts are different from new house sales, and this latest uptick might simply be adding to inventories, which would be decidedly unhelpful in the current situation. Another straw in the wind is the National Association of Home Builders housing index, which fell to its lowest level since early 1995 on Monday. By some estimates, as many as one quarter of all new jobs generated in this recovery have been tied to the housing sector. That does not count the indirect effects of people pulling money out of their homes to continue spending even as incomes for the vast majority of Americans have remained stagnant. So are you projecting a dire future for the housing market? Housing is a market that tends to move in slow motion; you will not see a big one-day crash in housing the way you can in the stock market. What tends to happen is that sellers get stubborn, and do not immediately react to the new conditions of the market. They have it in their mind that if the neighbor down the street was able to sell his house six months ago for $X, then they should certainly be able to get 1.05 times X for their house. When buyers don’t show up, they just sit on the house for awhile. Thus transaction volumes slow, even as the median price of houses in a given market continues to rise – albeit at a much slower pace. The inventory of houses starts to swell, and days supply [the inventory/sales ratio, if you will] increases dramatically. Excess housing supply seems to be one of the major issues. Is this how you see it? Nationwide, it would take 5.5 months to clear the existing supply of new houses on the market at the May sales pace. The supply of existing homes on the market is even greater, representing 6.5 months supply at May’s pace, the highest level in nine years. This process is well underway in many of the formerly most overheated markets. And what are the implications if the bottom does fall out here? While a fall in the market – or at least most of the major markets – seems inevitable, the slower it happens, the better. This will give the economy more time to adjust. A full-scale implosion could devastate the overall economy. Instead, you first see transaction volumes dry up, even as prices continue to climb. In many markets – and housing is the most local of markets – that process seems to be well underway. The markets most at risk are the formerly super-hot markets of California, Arizona, Florida and the Northeast. Read the complete Analyst Interview by clicking: http://at.zacks.com/?id=2693. Dirk van Dijk, CFA is the Director of Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Analyst Blog - NEW! Get real-time market insights from Zacks Equity Research Analysts. See their latest posts, click here. Logitech Int'l (LOGI) - Improving Product Lines. For full Zacks research report, click here. King Pharmaceuticals (KG) - Increasing Generic Threat. For full Zacks research report, click here. Early Profit Reports Are Extremely Positive Zacks Industry Rank for the Week of Jun 26
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. Zacks recently tracked down Nick Dillard (aka: NotoriousNick). This Simulator player joined the Second Quarter Zacks Stock Challenge a couple months late, but wasted no time putting together a portfolio that now resides among the top twenty with an overall return that is approaching 50%. This market enthusiast researches investments by reading anything and everything he can get his hands on. Some of his regular resources include CNNMoney.com, Forbes.com, Morningstar.com, Bloomberg.com and Zacks.com. As a self-proclaimed chartist, Nick sets a goal and does his best to stick with it. “I map out a high and low range of each stock that I am willing to look at and then pull the trigger according to the momentum of a particular stock, whether it is on its way up or down,” the disciplined trader stated. Nick’s Simulator portfolio holdings reveal that he has recently pulled the trigger on names such as Genelabs Technologies, Inc. (GNLB), O2Diesel (OTD), DUSA Pharmaceuticals, Inc. (DUSA), Peru Copper (CUP) and Neurocrine Biosciences (NBIX). Click here to check out this player’s current portfolio: http://at.zacks.com/?id=2515. Nick explained that he liked GNLB’s prospects due to recent approval of a migraine headache medication. He sees OTD as a great alternative energy play. DUSA was a momentum trade for this chart-plotting investor. Nick has been watching this one closely and has followed its drop in price from the $4.70 level down to about $4.30. Believing that volume is on its way up, this savvy investor is convinced that the pharmaceutical stock will climb back to $4.70 or higher. In fact, Nick mentioned that he is a fan of the pharmaceutical space in general, especially shares that are priced between $1.00 and $7.00. He anticipates a great deal of volume spikes in this field. So what does this Stock Challenge contender look for in a security? In addition to momentum, Nick pays attention to the fundamentals. He commented, “I always look at fundamentals to make sure there is not a huge amount of debt, and the return on equity is a major influence when picking a stock. Insider buying is a tremendous plus, and meeting Wall Street’s expectations is also a consideration. The overall track record of a company and a strong management team is essential.” How about selling? “The time to sell a stock is when it reaches the range I set out in my strategy planning stage when doing my homework. This is the time to stick to your strategy and be disciplined by not getting greedy,” said Nick. The astute trader added that if the momentum looks good after a target price is reached, then one can put a percentage of the profits back to work and “watch it closely until the close of the market.” Any favorites? What was the big winner? This Simulator competitor spent time working in the energy industry and knows the sector well. He is a fan of just about anything dealing with oil and gas, production, exploration and equipment manufactures. It was a player from this arena that won big for Nick. He noted, “there were several stocks that were winners, but O2 Diesel (OTD) was the first big winner for me. It took some time for it to take off so the big jump was not expected but was welcomed!” What kind of advice and outlook did this market watcher provide? His key advice is “do your homework.” He said, “for each stock in your sight survey, question, read, write, review and then assimilate all the information to help you plan your investment strategy.” Overall, Nick believes the economy is strong, but is looking for the Fed to pause the rate hikes as he believes this would bring back more consumer confidence and less volatility in the market. Its 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: 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. Here are four stocks that make the grade for the Low Price Stocks Profit Track: AEGON NV (AEG) offers a price-to-sales ratio of 0.59. The company has earned $1.87 per share during the past 12 months. AEG scheduled the release of financial results for the second quarter on August 10, 2006. In early May, the company reported first-quarter results, 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. Continue your research on AEG at: http://at.zacks.com/?id=2354. Cantel Medical Corp. (CMN) reported the most profitable annual and fourth quarter results in company history. The results were issued in late February and included earnings per share that topped the consensus estimate by about 7%. The company noted that its record results are attributable to record diesel crack spreads, wide light/heavy crude oil differentials and improved gasoline crack spreads. FTO meets the criteria of this Profit Track with a PEG ratio of 0.62 and a price/sales multiple of 0.78. Continue your research on FTO at: http://at.zacks.com/?id=2355. More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Park-Ohio Holdings Corp. (PKOH) has a current ratio of 2.18 and a debt/equity level of 0.25. The company announced fourth-quarter earnings of $1.17 per share, excluding items, in mid-February. The result eclipsed the consensus estimate by nearly 2% and outpaced the previous year's earnings. The company mentioned that it generated solid sales growth across all of its divisions for the fourth quarter and the year. Continue your research on GTRC at: http://at.zacks.com/?id=2356. Res-Care, Inc. (RSCR) announced first-quarter earnings of 29 cents per share in early May. The result exceeded the consensus estimate by 16% and outperformed the year-ago total. Revenues increased 25% year-over-year. Value investors may find RSCR to be appealing based on its price-to-sales ratio of 0.47. The company has seen earnings per share of $1.02 over the past 12 months. Continue your research on RSCR 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. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Kevin Matras explains why stocks with new analyst coverage are stocks you want to have: 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...
Goldman Sachs (GS) and its subsidiaries provide investment banking, securities, and investment management services worldwide. The company operates in three segments: Investment Banking, Trading and Principal Investments and Asset Management and Securities Services. Investment Banking segment provides financial advisory services, which include advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense activities, restructurings and spin-offs; and underwriting services that include public offerings and private placements of equity, equity-related and debt instruments. The company reported exceptionally strong fiscal second-quarter results in mid-June. The company earned $5.08 per share, topping analysts' estimates by a margin of 52%. On a year-over-year basis, earnings rose by more than 70%. Revenues more than doubled to $10.1 billion. The firm's investment banking unit recorded its best quarterly performance in six years by generating net revenues of $1.53 billion. Fixed Income, Currency and Commodities and Securities Services both produced record quarterly net revenues. Favorable market conditions and tight credit spreads helped Goldman Sachs. On a valuation basis, GS remains very attractive. The stock is trading at 8.7x fiscal 2006 projected earnings. Based on the firm's $54.36 estimate of tangible book value per share, the stock is trading at less than 3x book. Earnings estimates continue to rise for GS. Over the past 90 days, this year's estimates have increased 11.1% to $16.87 per share, which is quite impressive for a company of Goldman's size. The company has posted an earnings surprise for four consecutive quarters.
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 Rank (Strong Buy) List has produced the following results for investors:
And just as importantly, our #5 Ranked stocks (Strong Sells) have alerted investors as to which stocks to dump from their portfolios to avoid unnecessary losses.
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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% |
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