Wednesday - August 2, 2006
 Want to view the archive of past issues? Go to: http://at.zacks.com/?id=2319. Manage Profit from the Pros subscription: 1. ZACKS EQUITY RESEARCH When we spoke most recently with senior telecom analyst David Weissman, CFA, we were interested in finding out his views on one or more of his Buy-rated telecom stocks. In the process, we found that this somewhat unfavorable group has plenty of safe, value-oriented investment opportunities. You recently conducted an interview based on your Buy recommendation of Sprint Nextel. What’s the main reason you like the stock at this time? There are several of reasons I like Sprint Nextel (S). In addition to their cash generating ability, the overall telecom market has been out of favor for some time. It is my view that investors will tend to consider more stable, well recognized companies (often large cap) when market conditions are not necessarily showing positive momentum. Sprint has solid financials, solid market brand name and can grow even during turbulent market conditions. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - The company has repositioned to focus on higher growth wireless and Internet segments, while divesting legacy local services, where growth rates were becoming stale. Sprint Nextel recently sold-off their local telephone business, Embarq (EQ), a lower-growth business. The divestiture of Embarq brings a cash influx that addresses their debt and leverage The company continues to generate cash on a quarter-to-quarter basis and has a positive earnings trend. What else has been going on with the company? The net wireless subscriber count has been growing nicely. Last quarter they added approximately 1.3 million. They also completed an acquisition of Nextel Partners (NXTP). Nextel Partners was primarily a rural, non-metropolitan area carrier and the acquisition is going to add network coverage and add additional subscribers to the Sprint total. Also, the introduction of high data rate services and, eventually mobile video, will have a material improvement on the trend for ARPU (average rate per user) as it continues to grow. The customer churn rate remains quite low, which is also attractive. What are the risks with investing in Sprint? There's integration risk with the combination of Nextel's network and Sprint's previous CDMA-based network. There's also competitive risk with the AT&T (T) wireless unit. The telecom market has remained out of favor for quite some time. Any continuation with the sentiment would result in the stock lagging in terms of performance. The last thing is the global risk, the geopolitical events that may impact our rating.David Weissman, CFA is a senior analyst covering the telecommunications industry for Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Analyst Blog Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include FedEx Corporation (FDX), Tellabs (TLAB), The Hartford Financial Services Group (HIG) and Volcom, Inc. (VLCM). To see their latest posts, click here. Alliance Resource Partners (ARLP) - Good Yield & Growth. For full Zacks research report, click here. Overstock.com (OSTK) - Expecting Further Weakness. For full Zacks research report, click here. The Week of Jul 31 Analysts Raising Earnings Forecasts for 2006 and 2007 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.
2. SCREEN OF THE WEEK Zacks.com offers three unique weekly commentaries that all
further our mission to help you Profit from the Pros. Today is
the latest installment of Screen of the Week from Kevin Matras.
Each week, Kevin shares with you another winning screen he has
discovered using the Research Wizard software from Zacks
Investment Research. Learn more about the Research Wizard at: http://at.zacks.com/?id=2335. ”EPS Growth -- Past and Present” This week, I’ll focus on another winning screening strategy that is both easy to build and easy to use with our Research Wizard program. This one focuses primarily on long-term and short-term Historical Earnings Growth as well as Upward Estimate Revisions for the current period. Parameters:
Results: I ran a series of tests using a four-week rebalancing period over each of the last five years (2001 through 2005). (Each run was rebalanced over a different set of four-week periods to eliminate coincidence and verify robustness.) In 2001, the average annualized gross return was up 31.8%. In 2002, average annualized gross returns were up 47.5%. In 2003, average annualized gross returns were up 89.9%. 2004’s average annualized gross returns were up 29.1%. And 2005’s average annualized gross returns were up 22.1%. So far in 2006 (YTD -- through 7/21/06), it’s off to a slow start, but is still showing an average compounded gross return of 4.7% in comparison to the S&P 500’s loss of 0.3%. This week (7/31/06), there are 12 companies that made it through this screen. Here are three of them that look great;
Sign up now for your two-week free trial to the Research Wizard and start adding these values to your own screening strategies. Or start following this or other backtested strategies in your own portfolio and start making better decisions today. http://at.zacks.com/?id=2335 And remember, the key to successful stock picking is in discovering those screens that have produced profitable results in the past. And the key to better option selections, is in knowing what to expect from your stocks (and when). And how will you know? By backtesting! Click here to find out more about our free trial to the Research Wizard stock picking and backtesting program. http://at.zacks.com/?id=2335. Discover all the Free Screening Tools on Zacks.com at: http://at.zacks.com/?id=2336. Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. 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 – Trex Company, Inc. (TWP) Trex Company, Inc. (TWP) has exceeded earnings estimates in 11 out of the past 12 quarters, with several of those surprises coming by double-digit percentages. This year's earnings estimates have risen 16% to $1.01 per share over the past 30 days. The stock is quite cheap given its growth prospects. TWP is currently trading at 15x next year's estimates of $1.85 per share, well below the long-term growth rate of 38.65%, giving the stock a PEG ratio of 0.39. Read the full analysis on TWP at: http://at.zacks.com/?id=2498. Growth & Income – Lockheed Martin Corporation (LMT) Lockheed Martin Corporation (LMT), which was first highlighted as a Growth and Income pick on Feb 2, 2006, continues to impress. The company exceeded analysts’ earnings expectations in nine out of the past 10 quarters. Furthermore, LMT recently raised its full-year earnings per share guidance. The company is currently yielding 1.5%, with a five-year average dividend yield of 1.3%. Read the full analysis on LMT at: http://at.zacks.com/?id=2499. More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum – Nu Horizons Electronics (NUHC) Nu Horizons Electronics (NUHC) delivered its fourth consecutive positive surprise on Jul 6 with EPS of 17 cents, up from last year’s 3 cents and marking a positive 31% surprise. Sales grew strongly at $188 million, up 46% and income rose 297% to $3.18 million. Read the analysis of NUHC at: http://at.zacks.com/?id=2500. Value – Regions Financial Corporation (RF) Regions Financial Corporation (RF) recently reported a strong quarter with earnings per share that topped the Street’s estimate by 17.2%. As a result, consensus estimates have been trending higher for this Zacks #1 Rank stock. In late May, RF announced that it will acquire AmSouth Bancorp (ASO), creating the nation's 10th largest bank. The company has a price-to-book ratio of only 1.6, compared to 3.9 for the market. Read the full analysis on RF at: http://at.zacks.com/?id=2501.
4. ZACKS WEALTH MANAGEMENT Every week, Zacks Wealth Management provides informative articles on how to build and protect wealth. Today’s topic is:
There is a very common quote financial planners share with their clients that no one’s tombstone ever read “I wish I spent more time at the office”. Although apparently self evident, it is remarkable how profound this statement can be when we contemplate its true meaning and review the value systems that drive the utilization of our financial resources in earnest. Why use it? In planning for the ultimate disposition of our assets both now and after we are gone, Uncle Sam (in a rare gesture of legislative generosity) has written a number of provisions into the tax code that allow for the fulfillment of charitable intent, a tax favored source of income and still allow for the tax efficient transfer of wealth to heirs. In nearly any other context, the thought of achieving all three of these objectives would truly seem too good to be true. However, the practice of gifting property to charity in exchange for an annual income payment is a well established and accepted means of simultaneously providing for a social good and financial security to the donor under the current legal system. Specifically we are referring to the use of a Charitable Remainder Trust. How it works Under the provisions of the trust, the owner of valuable property (investments, real estate, collectables, etc.) gifts the property to the trust and names a charity as the ultimate beneficiary of the property. In exchange for the gift, the charity will promise a guaranteed income payment to the grantor for as long as he or she lives. Or, in the case of a married couple, for as long as either one of them may be alive. Like other strategies for transferring property in exchange for an income, the payment stream is determined by the life expectancy of the grantor(s) and the prevailing interest rate set by the IRS. The advantage of this particular technique over other forms of property transfer is that the present value of the future interest in the gift is deductible against the income that is received in exchange. The beauty of the transaction is that, similar to an installment sale or private annuity, the full value of the gift is used to determine the payment received in exchange rather than the net, after tax value of the proceeds of an outright sale. In the case of low basis assets or property with significant amounts of depreciation built in, the difference in available income can be quite noticeable. The income payments are backed by proceeds from the sale of the original asset, which can then be invested in a diversified portfolio, whereas to produce a similar income stream from the net proceeds of an outright sale in a taxable investment account could expose the donor to the very real risk of outliving their assets. Tax Treatment The tax deduction available to the donor will depend on the nature of the institution named as the remainder beneficiary of the trust AND by the income promised to the donor. Under current law, anywhere from 20% to 50% of the present value of the gift can be deducted against income in the year it is made. Again, the value of the gift ultimately subject to the percentage limits is the present value of the charity’s future interest in the gift. Hence, the higher the income retained by the donor, the lower the present value of the gift and the ultimate deduction available. In the case of a sizable donation in which the grantor is unable to utilize the entire deduction available in the year the gift is made, the remaining deduction available can be carried forward for five years into the future. Transferring Assets to Heirs At this point you may remember that we mentioned something about transferring assets to heirs. This step is accomplished through the purchase of a life insurance policy on the life of the owner(s) of the property that is gifted to the trust. A portion of the income received in exchange for the gift is used to pay the premiums on the life insurance policy and when the original owner eventually passes on, the policy death benefit is passed on to the beneficiaries of the policy (if structured properly) estate, income and capital gains tax free. Whatever the owner’s motivation for initially setting up the trust, Take note, however, that in order to achieve maximum tax efficiency that the policy must be owned by another trust set up for this purpose known as an Irrevocable Life Insurance Trust. As with the drafting of any legal document, it is extremely important that the trust instrument is drafted and that the life insurance policy itself is structured appropriately. We will cover the details of this segment of the strategy in next week’s article to ensure that these points are covered thoroughly. This article is provided for informational purposes only and does not constitute legal or tax advice. Zacks Investment Management, Inc. is not engaged in rendering legal, tax, accounting or other professional services. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. CFP Board, a nonprofit regulatory organization, fosters professional standards in personal financial planning so that the public values, has access to and benefits from competent and ethical financial planning. CFP Board owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP (with flame logo), which it awards to individuals who successfully complete initial and ongoing certification requirements. CFP Board currently authorizes more than 50,000 individuals to use these marks in the United States. For more about CFP Board, visit HYPERLINK "http://www.cfp.net/"www.CFP.net. David Metzger is Director of Financial Planning with Zacks Wealth Management. Zacks Wealth Management provides independent, unbiased financial plans for its clients. David specializes in implementing unique financial planning strategies to help clients meet their financial goals. Learn more about Zacks Wealth Management at: http://at.zacks.com/?id=2994. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - MITCH ZACKS ON THE MARKETS Periods of weak sentiment typically precede a rally in growth stocks: http://at.zacks.com/?id=2995. 5. FEATURED EXPERTS Here we cast the spotlight on a timely Featured Expert commentaries that recently appeared on Zacks.com. Gregory Spear sees bullish connotations in the market. Benefit from his commentary and read his pro profile. http://at.zacks.com/?id=2968. Mutual Fund expert Dennis Slothower recommends remaining largely defensive. Read his analysis of today’s market. http://at.zacks.com/?id=2478. 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 (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=2332. Or view the full list of Zacks #1 Ranked stocks at: http://at.zacks.com/?id=2279. 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 05/23/2013
| Company Name | Symbol | %Change |
|---|---|---|
| WESTELL TECH | WSTL | 5.69% |
| STEIN MART I | SMRT | 2.56% |
| ALLIANCE FIB | AFOP | 2.47% |
| MAXWELL TECH | MXWL | 2.42% |
| SYNAPTICS IN | SYNA | 2.23% |
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