Friday - July 21, 2006
 Want to view the archive of past issues? Go to: http://at.zacks.com/?id=2283. Manage Profit from the Pros subscription: 1. ZACKS EQUITY RESEARCH As valuations for semiconductor companies have begun to grow more attractive, we felt we should find out a little bit more about this group. Senior analyst Ken Nagy was on hand to assist us in what we should know about the semiconductor group going forward. How are your companies performing this earnings season? The numbers are in for May. According to the Semiconductor Industry Association (SIA), worldwide sales of semiconductors of $19.7 billion in May grew by 9.4 percent over May 2005 sales of $18.1 billion. Sales rose by 0.7 percent from April 2006, when sales were $19.6 billion. In June, the SIA raised its forecast for 2006 worldwide sales growth from 7.9 percent to 9.8 percent. They expect to see global semiconductor sales running 9 to 10 percent ahead of last year’s pace for the next several months. End-market demand, inventory levels and capacity utilization all indicate generally favorable conditions for the industry. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Semiconductors appear to be getting a second look from investors. What are some of the reasons for this? From May 1 to June 16th, 2006, the Semiconductor Sector Index (SOXX) lost approximately 11.5% of its value. This was mainly due to investor worries about higher inflation and interest rates, and their effect on financial securities. There was another factor at play here in certain stocks: the worries over backdating of options. While this is a concern and directly speaks to the character of management, several of these scandals happened five years ago, and many of the culprits have moved on. In the case where the fundamentals of the companies remain the same, this represents a buying opportunity. With P/Es continually coming down in the IT industry, do you find yourself upgrading more companies in your coverage? Zoran Corporation (ZRAN) has been hit relatively hard by the stock option scandal. The stock has gone from a high of 29.85 to the $21.00 range, even though an internal investigation found no backdating issues from 1995 through 2004. Zoran develops and markets integrated circuits (ICs), integrated circuit cores and embedded software used by original equipment manufacturers (OEMs) in digital video and audio products for commercial and consumer markets. Zoran has done an excellent job of broadening its product portfolio recently through acquisitions. We feel as though the company’s difficulties in DVD are behind it, and investors who are patient will be rewarded with a well-diversified company with exposure to high growth technology products. Hence, we rate Zoran a Buy with a price target of $30.00. Are there still major risks associated with tech, or have most of them been priced out? As I have talked about in the past, we are witnessing the switch in what (or who) is driving semiconductor sales, from computer IT departments to personal electronic devices. As energy prices go up, this will affect buying patterns, especially on the consumer side. The SIA estimates that gasoline prices at current levels will take approximately $138 billion from American households’ discretionary income this year. Despite recent rapid increases in gas prices, consumer confidence remains strong. If pump prices continue to increase significantly, there will be further erosion of discretionary income, and that could affect consumer confidence and consumer spending. What is your forecast looking out toward the end of 2006? Driven by significant investments in the memory sectors, worldwide semiconductor capital equipment spending is on pace to increase 24.8 percent in 2006, but the market should prepare for slower sales in 2007, according to the latest estimates by Gartner, Inc. Worldwide semiconductor capital equipment spending is projected to reach $42.3 billion in 2006, but the market is projected to decline 4.5 percent in 2007 to $40.4 billion. Gartner analysts said spending cuts will occur in response to a slowing of device production growth. The equipment market decline will start in the second quarter of 2007, and will be relatively short, with the market returning to positive growth in 2008. Ken Nagy is a senior Zacks analyst covering the semiconductor sector of the IT industry. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Analyst Blog Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include MoneyGram (MGI), CDW Corp. (CDWC), HDFC Bank (HDB) and Motorola (MOT). To see their latest posts, click here. Find out which stocks have been recently upgraded by Zacks Equity Research: click here. Read the reports on all of the stocks on the Zacks Equity Research Buy List: click here. CEMEX S.A., ADR (CX) - Encouraging Developments. For full Zacks research report, click here. Duke Realty (DRE) - No Improvements Expected. For full Zacks research report, click here. The Week of Jul 17 Early Reports Still Looking Good
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: Earnings and Margins This Profit Track goes to the heart of fundamental investing by finding companies with healthy earnings. The main ingredients are the search for Earnings Growth and Net Profit Margins. Then for good measure we make sure earnings estimates are moving higher which is a strong indicator of future performance and that brokerage firms are positively rating the stock. Earnings are the single most important metric for a company. Combine that with a healthy Net Profit Margin and you find a screen that has generated a cumulative return of +425% since January 2001. During 2005, this screen continued its winning ways with a +22.3% return. Here are four stocks that make the grade for the Earnings and Margins Profit Track: AAR Corp. (AIR) delivered annual profits last year that were 73% higher than the year-prior. The company recently announced fiscal fourth-quarter earnings of 31 cents per share. The result eclipsed the consensus estimate by almost 7% and exceeded the previous year’s 17 cents. AIR noted that during the fiscal year it launched several significant new programs, raised $150 million in capital to fund future growth and reported solid financial results, including the record net income achieved in the fourth quarter. Continue your research on AIR at: http://at.zacks.com/?id=2290. Interline Brands, Inc. (IBI) has scheduled the release of second quarter results for August 7, 2006. In early May, the company posted first-quarter GAAP earnings of 26 cents per share, which matched analysts’ expectations and outperformed the year-prior result. Interline Brands mentioned that business conditions remained favorable in its key customer markets in most regions of the country. IBI’s yearly earnings grew 223% compared to the previous year. Continue your research on IBI at: http://at.zacks.com/?id=2291. Lamson & Sessions Co. (LMS), a Zacks #1 Rank (Strong Buy) company, issued a new earnings guidance in mid-June. The company raised its forecast for the second quarter as well as the full year and now expects 80 cents to 83 cents per share and $2.25 to $2.30 per share respectively. The quarterly and year 2006 expectations are in line Wall Street estimates. Second-quarter results will be announced on July 27, 2006. LMS meets the requirements for this Profit Track with annual earnings that were up 250% year-over-year. Continue your research on LMS at: http://at.zacks.com/?id=2292. AMERCO (UHAL), parent of U-Haul International, Inc., reported fourth quarter and fiscal 2006 financial results in mid-June. The company said it had many developments which it believes will positively affect performance in fiscal 2007 and beyond. UHAL’s first-quarter report will be available on August 14, 2006. Earnings per share for AMERCO grew 163% last year versus the year-prior. Continue your research on UHAL at: http://at.zacks.com/?id=2293. To see the full list of stocks that currently pass this winning screen, go to http://at.zacks.com/?id=2294. 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=2295. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Kevin Matras goes over his ‘Big Money’ screening strategy, which has trounced the market year after year: http://at.zacks.com/?id=2289. 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 – Kerzner International Limited (KZL) Kerzner International Limited (KZL) has exceeded estimates in five out of the past six quarters, with two companies raising their numbers for this year. Earnings estimates for 2006 have increased seven cents to $2.66 over the past 90 days. Second-quarter estimates have jumped over 10% in the past week to 99 cents per share. KZL is trading at 23.8x next year's earnings estimates, slightly above the long-term growth rate of 20%, giving the stock a PEG ratio of 1.19. Read the full analysis on KZL at : http://at.zacks.com/?id=2505. Analysts’ earnings expectations have been on the rise for Marathon Oil Corporation (MRO). The company recently announced a potential joint venture with The Andersons, Inc. (ANDE) in which the two firms would work together to develop ethanol plants. The Board of Directors increased its quarterly dividend by 21% in late-April. MRO’s return on equity tops that of the industry average—33% compared to 27%. Read the full analysis on MRO at: http://at.zacks.com/?id=2506. More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum – AMB Property Corporation (AMB) A recent rise in full-year expectations has poised AMB Property Corporation (AMB) to potentially break through an important resistance level. The stock is in a position to post a close above $53 for the first time since March. Read the full analysis on AMB at: http://at.zacks.com/?id=2507. Comtech Telecommunications Corp. (CMTL), a Zacks #1 Rank stock, exceeded analysts’ earnings expectations in 13 consecutive quarters by an average margin of 28.2%. In early-June, the company upped its fiscal 2006 revenue and profit guidance. Consensus estimates have been on the rise for CMTL. The company has a price-to-book ratio of 2.6, compared to 3.8 for the market. Read the full analysis on CMTL at: http://at.zacks.com/?id=2508.
4. FEATURED EXPERTS Here we cast the spotlight on timely Featured Expert commentaries that recently appeared on Zacks.com.
Joseph Parnes says this earnings season could see its 13th straight quarter with double digit growth. http://at.zacks.com/?id=2483.
Paul Tracy highlights a pair stocks from his Aggressive Growth Portfolio, which could grow at a faster clip than the overall market in coming years. http://at.zacks.com/?id=2413.
Walter Frank is expecting single-digit profit growth. Read his outlook and check out a mutual fund. http://at.zacks.com/?id=2463. 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=2296. Or view the full list of Zacks #1 Ranked stocks at: http://at.zacks.com/?id=2297. 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 to help take definitive action to improve your portfolio's performance. Did we mention it's free? Get started now! 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 Zacks Performance Rank performance is the total return of equal weighted simulated portfolios consisting of those stocks with the indicated Zacks Rank net of fees. Results reflect the reinvestment of dividends and other earnings. Simulated results do not represent actual trading and may not reflect the impact that economic and market factors might have had on decision-making if an adviser were actually managing a client's money. 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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