Thursday - September 21, 2006
 Want to view the archive of past issues? Click here. Manage Profit from the Pros subscription: 1. ZACKS RANK BUY STOCKS Zacks #1 Ranked stocks average a 32.4% annual return. Every day on Zacks.com we highlight four new 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 – AK Steel (AKS) AK Steel (AKS) has exceeded earnings estimates in 10 out of the past 12 quarters. One analyst has raised his numbers over the past 60 days for both this year and next year. Consensus earnings estimates have also risen over the past two months. The company is now expected to earn 99 cents per share this year, up from 92 cents 60 days ago. Similarly, AKS is slated to earn $1.10 per share next year, up from 93 cents. Read the full analysis on AKS now! OMI Corporation (OMM) beat the Street’s earnings estimate in seven out of the past eight quarters by an average margin of 8.8%. On Sep 11, the Board of Directors approved an increase in the company’s quarterly dividend and boosted its share repurchase program by $70 million. This Zacks #1 Rank stock has a current dividend yield of 1.9% and a five-year average dividend yield of 0.79%. Read the full analysis on OMM now! More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum – World Acceptance Corp. (WRLD) World Acceptance Corp. (WRLD) needs to deliver another positive earnings surprise in order to keep the current momentum going forward. On Jul 25, the company announced its third straight positive earnings surprise for the June 2006 quarter, reporting EPS at 53 cents versus 38 cents in the previous year. The result also marked a 23% surprise above analysts’ estimates. Sales grew 12.6% to $63.84 million while income rose 35% to $9.99 million. Read the full analysis on WRLD now! Grey Wolf, Inc. (GW), which is a Zacks #1 Rank stock, met or exceeded analysts’ earnings expectations for the past nine quarters. Earnings per share are projected to grow 31.0% over the next 3-5 years. A number of analysts upped their profit forecasts after GW’s solid second quarter. The company has a price-to-book ratio of 2.9, compared to 5.3 for the market. Its PEG ratio currently sits at 0.23. Read the full analysis on GW now!
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. serenity Nicole Barone’s (aka: serenity) Simulator portfolio recently soared toward the top of the Zacks 3rd Quarter Stock Challenge and continues to shine with a current overall return of roughly 25%. Nicole claims that she can not take all the credit for her Simulator success. She explained that at the beginning she devoted little attention to the contest. However, with her husband as her mentor, this stock market enthusiast became more committed and it has reflected in her trades. Some of her current Simulator holdings include Powerwave Technologies Inc. (PWAV), Amkor Technology Inc. (AMKR), Sun Microsystems Inc. (SUNW) and TriQuint Semiconductor Inc. (TQNT). Click here to check out this player’s current portfolio. What is her approach? It is all about protection for this trader, who describes herself as very aggressive but conscious. “Every investor or trader has to have a protection plan. We all have a different interpretation of our own style, but in the long run it all spells out protection,” said Nicole, “As I mentioned earlier, my husband has been my inspiration. He has been involved with the markets for the past 14 years. I know many people who trade and invest, and I have yet to find anyone who can keep amazing you day in and day out.” What does this Simulator contender like? This husband and wife team got a lot of mileage out companies like Atmel Corp. (ATML) and Brocade Communications Systems Inc. (BRCD). “I purchased them both when the were very cheap, and no one wanted them. My husband has followed these companies for many years,” noted Nicole. The astute investor added that she and her husband believe that shares of Brocade Communications will make a run toward the $10.00 to $12.00 level by year end. For Atmel Corp., the duo are predicting about $9.00. What does she look for? “My husband has taught me to focus on a good company with negative sentiment, along with weak stochastics & a bottoming of the MACD. Most of the time we just feel it, once the stochastics get above 80, and the MACD is topping out with a pick up in volume, it usually is a sign that the big guys are switching to the short side. You really have to get a feel for it,” commented Nicole. The Simulator participant also mentioned that she refers to Zacks’ Profit from the Pros newsletter and the Put/Call Ratio Options Filter for guidance. What does the future hold? By March, this stock picker and her market-savvy husband are expecting the Dow to hit 13,000. They see the Nasdaq climbing to 3,500 by then and are looking for the S&P 500 to reach 1,500. Any advice? Nicole replied, “the most important advice we could give would be not to get frustrated, it takes years of experience to learn and get comfortable with your own strategy. Make sure you protect your portfolio & don't be greedy or arrogant.” The “serene” market player emphasized the importance of remaining level headed and maintain flexible by pointing that the biggest problem people have is that they invest with insanity. They make the same mistake over and over again expecting a different result. It’s 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. Trade Options? Then sign up for the Zacks Options Challenge. 3. ZACKS EQUITY RESEARCH Ahead of third quarter earnings for the information technology (IT) industry, we spoke with senior IT analyst Steve Biggs, CFA to discuss how things look from his perspective. We also talked about what investors can do to make the best of their tech investments going forward. With Q3 earnings on the horizon, what are you focused on these days? Well, the big news this week was Yahoo! (YHOO) announcing that its revenue will be on the low end of previous guidance. The reason being cited is the company is seeing falling ad revenue from automakers and mortgage lenders. This may be one of the first signs of a slowing economy affecting the advertising industry, which is pretty cyclical historically. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Obviously, though, automakers and mortgage lenders are two groups that have been struggling most lately, so it’s possible the drop-off will be limited to these industries. I don’t know if it’s indicative that these things will spread to other areas. Do you think other Internet companies will be feeling the same pressure? Not so much, actually. The falling ad revenue I’m referring to is in the traditional advertising space, some Internet advertiser peers like Google (GOOG) might not be affected quite as much. Google’s advertising revenue is more closely tied to things like paid search, which caters more to smaller companies. In fact, one reason we like Yahoo! is because it has the additional exposure to traditional advertising markets. Clearly, we’re seeing the downside of this now, however. We still have a Buy recommendation on Yahoo!. At this point, I don’t think the economy is slowing enough to impact a wider range of advertisers. My concerns would be if this weakness expands to advertising from other areas. We do expect YHOO revenues to grow, but we would advise investors look out for potential cyclality. Do you find yourself bringing down estimates among companies in your coverage in general? Well, I am more cautious, anyway. I have brought down a few estimates, but the slowing is not widespread enough to make any kind of blanket statement about the group as a whole. Overall, I would say the group is a little more mixed right now. It’s a ‘stock-picker’s market,’ if you want to use a cliché. What would be your top Buy recommendation at this time? I would have to say Opsware (OPSW) is my favorite Buy at the moment. This is a company that does data center automation software; in fact, although they compete against other companies, Opsware is the only real integrated solutions provider. We see the software category passing an inflection point, and Opsware is the fastest grower in the space, so we look for growth really accelerating going into next year. Right now, my target price on OPSW is $10. To read the complete Analysts Interview, click here. Steve Biggs, CFA is a senior analyst covering the IT industry for Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Analyst Blog Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include Lexicon Genetics (LEXG), Halliburton (HAL), GlaxoSmithKline, Plc (GSK) and CACI Int’l (CAI). To see their latest posts, click here. Slow Growth Through Remainder of the Year CACI International (CAI) - Strong Defensive Play. For full Zacks research report, click here. Alnylam Pharmaceuticals (ALNY) - Far Too Early. For full Zacks research report, click here. Estimate Cuts Outnumber Upward Revisions Broker Earnings; Forecasting Crocs Craze 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.
4. 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 16.3% return in 2005. BJ Services Co. (BJS), a Zacks #1 Rank (Strong Buy) company, reported fiscal third-quarter earnings of 67 cents per share in late July. The result soared past last year’s 35 cents and surpassed the consensus estimate by nearly 16%. The company is forecasting 73 cents to 75 cents for the fourth quarter. Analysts are in agreement as evidenced the current earnings estimates of 74 cents, which is up from the two months-ago levels of 67 cents. BJS has a PEG ratio of 0.52. Continue your research on BJS now! Bronco Drilling Co. Inc. (BRNC) satisfies the criteria for this Profit Track as evidenced by its PEG ratio of 0.13. The company announced financial results for the second quarter in early August. Earnings per share totaled 59 cents, which was ahead of analysts’ expectations by almost 4%. Revenues increased from the previous year’s second quarter result of $11.7 million to $67.1 million for this quarter. Continue your research on BRNC now! H&E Equipment Services, Inc. (HEES) can be an attractive value investment as its PEG ratio currently stands at 0.25. The company posted second-quarter earnings of 52 cents per share, exceeding Wall Street estimates of 37 cents. HEES stated that every major component of its business delivered solid increases in revenue and gross profit, which resulted in record quarterly net income and EBITDA for the company. Continue your research on HEES now! Superior Energy Services Inc. (SPN) offers a PEG ratio of 0.36. In late July, the company announced second-quarter adjusted earnings per share of 58 cents. The result eclipsed the consensus estimate by approximately 5% and topped the year-ago total. The company noted that its record results reflect its ability to capture improvements in demand across all of its product and service segments as well as expand its operational footprint into new domestic and international market areas. Continue your research on SPN now! To see the full list of stocks that currently pass this winning screen, click here. 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”. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - A Relative Price Strength Screen Kevin Matras goes over a Relative Price Strength strategy for finding winning stocks in both up markets and down: Click here. 5. 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...
AT&T, Inc. (T), through its subsidiaries, provides telecommunication services in the United States and internationally. It provides Internet protocol (IP)-based communications services for businesses, including a portfolio of virtual private network, voice over IP, and other offerings. T said in late July that its profit climbed 81 percent in the second quarter, citing progress in integrating the operations of the former AT&T with SBC Communications and increased contributions from its Cingular Wireless joint venture. The company said it earned $1.81 billion, or 58 cents per share, in the three months ended June 30 compared to $1 billion, or 30 cents per share, a year earlier. Analysts expected 53 cents per share. Revenue surged 53 percent to $15.81 billion, compared to $10.32 billion a year earlier. The year-ago results do not include the operations of the former AT&T. Cingular Wireless is the company's growth engine that has the most potential going forward. It is the largest U.S. wireless carrier, with the deepest-spectrum portfolio of any carrier in the country's largest markets, giving it the resources to roll out new services quickly. Cingular should be able to strengthen its market position as it integrates the merger with AT&T Wireless. Cingular has the financial muscle to survive and thrive in the wireless industry, and recent consolidation should improve profitability in the industry. A big part of AT&T's strategy centers around the business services market, in which it hopes the integration of SBC's local networks and the old AT&T will differentiate it against its competitors. T is upgrading the local phone network and offer new services to consumers to combat competition from cable companies. Cost-cutting is also important as competition pressures prices and revenue declines. The company is also making a push to be a leader in rural communities. T recently announced a series of initiatives to introduce broadband Internet and video services to low-income and rural communities throughout the company's 13-state local-service market. Many of these areas are not served by a landline broadband service provider today. T has great advantage in its strong balance sheet. The combined firms collectively have generated $6.3 billion in free cash flow, excluding a $2.6 billion dividend from Cingular, and the firms repaid more than $5 billion of debt last year. This financial strength will allow T to withstand the turbulence of their market. More evidence of the company's financial strength can be found via credit ratings agency Standard & Poor's. It said it will affirm ratings for AT&T Inc., Cingular Wireless and BellSouth Corp., if AT&T's pending $67 billion acquisition of BellSouth goes through under the proposed terms. Confirmation of the ratings include the companies' respective 'A' long-term credit ratings, and the A-1 short term credit ratings of AT&T and BellSouth. Ratings for all three entities remain on CreditWatch with negative implications, pending the closing of the deal, the agency said. Over the past 60 days, earnings estimates for 2006 have increased 6.2% to $2.22 per share. The company has met or exceeded earnings estimates in each of the past 11 quarters. Gone are the days when this company was a serial disappointer.
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Zacks #1 Stocks on the Move 05/23/2013
| Company Name | Symbol | %Change |
|---|---|---|
| WESTELL TECH | WSTL | 7.18% |
| STEIN MART I | SMRT | 5.29% |
| ALLIANCE FIB | AFOP | 5.26% |
| DAWSON GEOPH | DWSN | 4.23% |
| MAXWELL TECH | MXWL | 3.18% |
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