Tuesday - August 8, 2006
 Want to view the archive of past issues? Go to: http://at.zacks.com/?id=2372. Manage Profit from the Pros subscription: 1. ZACKS EQUITY RESEARCH The July employment numbers renewed calls for the Federal Open Market Committee to not raise rates tomorrow. The argument against another rate hike is that growth is slowing and further tightening could push the economy into a recession. Although economic growth did moderate in the second-quarter, the earnings data suggests the FOMC still has the flexibility to continue raising rates. Based on reports from more than half of the companies within the Zacks Rank universe, positive earnings surprises have outnumbered negative surprises by a margin of 2.3:1. Revisions to full-year forecasts are basically unchanged in response to earnings reports. The average change is -0.06%; the median is 0.00%. Full-year growth for companies that have reported is projected to top 20%. If a recession were around the corner, we would be seeing a far less bullish forecast. A different sign of the economy’s strength is the types of industries that are providing bullish reports. For example, both Containers-Paper/Plastic and Transportation-Trucking appear near the top of the Zacks Industry Rank List. These are two groups that are economically-sensitive and rely on overall expansion to achieve earnings growth. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Containers-Paper/Plastic contains four Zacks #1 Rank stocks, including Packaging Corporation of America (PKG) and Pactiv Corporation (PTV). Packaging Corporation of America earned 31 cents per share in the second quarter, eight cents more than analysts were expecting. Pricing power and stronger demand both contributed to the profit increase. Corrugated products shipments per workday rose 2.1% and containerboard production rose 1%. The company expects earnings to total 42 cents per share in the third quarter as the impact of price increases on corrugated products is fully realized. Analysts responded to the bullish report and guidance by raising their forecasts for the remainder of the year. Pactiv Corporation generated second-quarter profits of 49 cents per share, 12 cents above expectations. Revenues and gross margins both improved. Sales of Hefty Consumer Products rose 10% (demand for food bags was particularly good). The company upped its guidance for full-year profits to between $1.42 and $1.52 per share from $1.25 to $1.40 per share. Transportation-Trucking contains seven Zacks #1 Rank stocks, including Old Dominion Freight Line (ODFL) and Celadon Group (CLDN). Old Dominion Freight Line beat expectations by seven cents with second-quarter profits of 58 cents. Tonnage, a measure of shipments, increased 17.6%. Pricing power and improved margins also helped the bottom line. The company raised its guidance to between $1.94 to $1.97 per share from $1.76 to $1.84. Celadon Group generated fiscal fourth-quarter profits of 27 cents per share, three cents above expectations. Freight revenue, which excludes the impact of fuel surcharges, rose 2.3%. Following the release of the report, all four covering analysts raised their expectations for full-year earnings. The new fiscal 2007 consensus estimate of $1.10 per share is seven cents above the forecast of a month ago. Read the complete INDUSTRY RANK at: http://at.zacks.com/?id=2379. Charles Rotblut, CFA is a senior market analyst for Zacks.com. He can be reached at crotblut@zacks.com. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Real-time market insights from Zacks Equity Research Analysts Stocks featured recently include Cerus (CERS), Radware (RDWR), VNUS Medical Technologies (VNUS) and ARAMARK (RMK). To smee their latest posts, click here. Southern Copper Corp. (PCU) - Production Expanding. For full Zacks research report, click here. MannKind Corp. (MNKD) - Products Years Away. For full Zacks research report, click here. Oil Pipeline Shutdown Creates Shockwaves Earnings Data: No Recession Soon 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. 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: Return on Equity This Profit Track strategy uses Return on Equity (ROE) to discover solid stocks. ROE is one of the quickest ways to gauge whether a company is creating assets or gobbling up investors' cash. This fast moving Profit Track returned an impressive +19.1% in 2005. Anixter International Inc. (AXE), which has a ROE of 18.69 and a price to sales ratio of 0.50, recently announced second-quarter earnings of $1.15 per share. The result topped the consensus estimate by about 40% and outpaced last year’s 61 cents. The company noted that growth was particularly strong in the electrical and electronic wire & cable market due to strong end-market customer demand, global expansion of the markets served and higher copper prices. Continue your research on AXE at: http://at.zacks.com/?id=2389. Charlotte Russe Holding Inc. (CHIC) satisfies the criteria for this Profit Tracks with a ROE of 13.72 and a price to sales ratio of 0.80. The company recently reported fiscal third-quarter earnings of 36 cents per share, more than doubling the previous year’s 15 cents and exceeding the consensus estimate by 44%. CHIC mentioned that improved sales at the Charlotte Russe stores were led by building strength in fashionable and trend-right apparel, combined with the company’s leading accessories and footwear assortments. Continue your research on CHIC at : http://at.zacks.com/?id=2390. Goodrich Corp. (GR) offers a ROE of 16.48 and a price to sales ratio of 0.88. The company recently released its report for the second quarter, stating that it continued to experience excellent sales growth which was primarily a result of ongoing strong demand for its products that serve the commercial airplane original equipment and aftermarket marketplace. Earnings per share totaled 64 cents versus 51 cents in the year-prior quarter. Analysts were expecting 61 cents for the second quarter. Continue your research on GR at: http://at.zacks.com/?id=2391. Granite Construction Inc. (GVA) recently posted second-quarter earnings of 80 cents per share, surpassing the consensus estimate by approximately 48% and eclipsing the year-ago total of 36 cents. The company said its second quarter results are a product of a tremendous performance turned in by its Branch Division. GVA’s ROE is 17.18 and its price to sales ratio stands at 0.67. Continue your research on GVA at: http://at.zacks.com/?id=2392. To see the full list of stocks that currently pass this winning screen, go to: http://at.zacks.com/?id=2393. 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=2394 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - EPS Growth -- Past and Present Kevin Matras combines short-term and long-term Historical Earnings Growth with Earnings Estimate Revisions for a winning stock picking strategy: http://at.zacks.com/?id=2395. 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 – Tetra Technologies Inc. (TTI) More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum – Garmin Ltd (GRMN) Garmin Ltd (GRMN) continues to be one of our favorite stocks because it seems to have investor’s best interest at heart. On Friday, the company proposed to buy back up to 1.5 million of its own shares. GRMN is up over 11% since it was the Momentum featured stock of the day back in March. Read the full analysis on GRMN at: http://at.zacks.com/?id=2496. Since we first featured Albemarle Corporation (ALB) as a Value pick on Mar 30, the stock is up 19%. The company blew away analysts' second-quarter earnings estimates on Jul 24 by 29%. ALB is a Zacks #1 Rank stock (strong buy). Read the full analysis on ALB at: http://at.zacks.com/?id=2497.
4. OPTIONS CENTER Zacks has partnered with the leading options experts, Schaeffer's Investment Research, to provide you the best options commentary, research, and trading tools on the market today. Free Online Options Research at: http://at.zacks.com/?id=2664. Zacks/Schaeffer’s Options Trading service at: http://at.zacks.com/?id=2665. TWhat can you say about this market except it’s been very tough for traders over the past five weeks, as we’ve seen some of the more volatile moves in several years. But the end result is the SPX is right near where it was two months ago! These wild movements definitely can be trying for even the most experienced traders. Survival in this difficult market is the perfect reason to use the filters. In a bull market anyone can make money, but when the market churns you need all the help you can get. Here’s a great example. Back on June 16, we used the High Open Interest Call filter and determined that Cisco Systems (CSCO) looked like it was ready to roll-over and go lower. Well, in just five weeks, the stock has lost about 13%, falling to new lows along the way. In this current trading environment, this is the type of move that is going to get you some tremendous gains when leveraged with put options. So, today we want to take another look at this same filter and see if lightening can strike twice. Before we go any further, we want to talk briefly about our methodology here at Schaeffer's. We are contrarian-based investors, meaning that we want to see skepticism toward an outperformer as a sign that money is still on the sidelines. Conversely, we want to see optimism toward an underperformer. We view too much optimism as a potential sign that nearly everyone who wants to invest in a particular stock already has. Now, just because a stock sees substantial optimism doesn't mean that we will blindly short a particular security; we need to see some negative price action or a major catalyst for a downside move in order to pull the trigger in most cases. Other indicators that we tend to utilize in measuring overall sentiment include put/call ratios, short interest, magazine cover stories, media comments, and analyst ratings. So, what exactly is the Open Interest Call Filter? First off, let’s look at what a call is. Calls are simply a bet that the underlying stock is going to move higher. From our contrarian point of view, a large number of calls accumulated at a certain strike just above the stock's current level is a sign of potential options-related resistance. I won't get into too much detail on this, but the reasoning is based on how the market makers are hedged. The bottom line is this: large numbers of calls at a certain strike have the potential to serve as a solid level of resistance. Looking at the list from Thursday, August 3rd, one name that sticks out is HMO UnitedHealth Group (UNH). Year-to-date the shares are down over 23% and look pretty weak. This is one name that we played bearishly throughout the first half of the year with great success, now after a little bounce it looks like the shares could be ripe for further losses – here’s why. UNH made the Open Interest Call list thanks to a huge build up of bullish calls at the September 50 strike. Remember, with UNH trading around $48 these calls could act as strong resistance so it’ll take some serious work for UNH to get above that level. Also, technically, the shares recently found resistance from their 80-week moving average – this longer-term trendline should continue to provide resistance. Then on a longer-term timeframe, the firm’s 10 and 20-month moving averages are nearing a bearish cross – again putting downward pressure on the shares. Add it up and this technical picture is bearish. Technicals are only part of the puzzle, we need to look at the sentiment as well. Remember, we like to see optimism towards an underperformer as a sign of further weakness. Well, when it comes to UNH the bottom line is the majority of the overall sentiment continues to be bullish – leaving the door open to more weakness in the coming months. One such indicator we like to use is the Schaeffer's put/call open interest ratio (SOIR). This ratio shows how many bearish puts there are compared with bullish calls among near-term options. Currently, UNH’s SOIR checks in at 0.45. That doesn’t mean much unless you compare it to the other readings over the past year. Doing so shows the current reading is higher than 44% of the readings over this timeframe. Unfortunately, this is a pretty neutral reading and doesn’t tell us much. But one indicator we also use at Schaeffer's that does help to support our cause is Schaeffer's Equity Scorecard. Placing UNH into the Scorecard, we receive a ranking of three out of 10 and tells us that the stock is very bearish and we can decipher that it is ripe for further loses. (Note: Schaeffer's Equity Scorecard can be found for FREE at SchaeffersResearch.com.) Short selling is a stock-trading strategy in which an investor borrows and sells a stock with the intention of buying it back later at a lower cost. In other words, this strategy is a bet that the shares will go down. We love to see a lack of short sellers betting against the shares, as this reduces the odds of a short-covering rally on any good news. Turning back to UNH, we find that it would take just over a day for short sellers to buy back their positions, while less than 1% of UNH’s float is sold short. These low readings are a tip-off that very few in the short selling community are betting against the shares. Another good way to get a gauge of sentiment is to look at what analysts think. Given that the shares have been lagging recently, optimistic analysts leave the door open to some downgrades. According to Zacks, there are 15 "buys," three "holds," and not a single "sell." Should the shares continue to underperform, this will leave lots of room for potential downgrades from this group. So there you go, with all of our research, we see no reason to think UNH will do much except go lower over the coming months. With all that said, buying some intermediate-term puts could be a nice way to profit from any weakness. These time consuming efforts are bound to be worth while, but if it seems like too much to do each and every time, consider a real-time alert service from Schaeffer's Investment Research where we do ALL the work for you. As a bonus: Schaeffer's and Zacks have the Option Trader Service that combines the best of both industry leaders into one complete service. Contact Zacks or Schaeffer's directly to learn more. Please continue to use all of the filters on these pages for more money-making ideas and don't be afraid to make a few paper trades to see what strategy works best for you. But please remember that when it comes to options, it takes only a few winners out of every 10 trades to make you a very happy investor, which is the beauty of the leverage that options provide. Good luck! To learn more about the High Open Interest filter, click here. Discover all the tools and commentary available from the Zacks.com Options Center at: http://at.zacks.com/?id=2382. Leverage the timeliness of Zacks #1 Ranked stocks with options trades that maximize profits and minimize risks. Learn more about our new Options Trading service at: http://at.zacks.com/?id=2666. 5. FEATURED EXPERTS Here we cast the spotlight on a timely Featured Expert commentaries that recently appeared on Zacks.com. Dr. Pasternak expects the market to hold near current levels through August. Read his technical analysis and stock updates. http://at.zacks.com/?id=1487. Vivian Lewis explains that GlaxoSmithKline is a buy because it has a vaccine against the deadly bird flu. http://at.zacks.com/?id=385. 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=2385. Or view the full list of Zacks #1 Ranked stocks at: http://at.zacks.com/?id=2383. 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=2386. 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. | |||||||||
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Zacks #1 Stocks on the Move 06/19/2013
| Company Name | Symbol | %Change |
|---|---|---|
| SONIC FOUNDR | SOFO | 4.40% |
| OLD SECOND B | OSBC | 4.22% |
| SUMITOMO MIT | SMFG | 3.65% |
| E HOUSECHINA | EJ | 3.29% |
| VANTIV INC | VNTV | 3.28% |
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