Thursday - September 28, 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 – Cameron International (CAM) Cameron International (CAM) has exceeded earnings estimates in six consecutive quarters, with year-to-year growth exceeding 43% in each of those periods. Seven analysts raised their estimates for this year, while five bumped up their numbers for next year. Over the past 90 days, this year's estimates have increased 12.6% to $2.69 per share, while next year's numbers have jumped 11.8%. Read the full analysis on CAM now! Herman Miller, Inc. (MLHR), a Zacks #1 Rank stock, produced only one negative earnings surprise over the past 16 quarters. In the first quarter of fiscal 2007, orders exceeded $500 million for the first time in more than five years. Earnings per share are projected to grow 16% over the next 3-5 years. Consensus estimates have been trending higher. MLHR has a current dividend yield of 0.95% and a five-year average dividend yield of 0.80%. Read the full analysis on MLHR now! More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum – AMVESCAP (AVZ) Things are suddenly looking good for investment managers like AMVESCAP (AVZ). After enduring five sub par years with the stock falling most of the time, AVZ is delivering better results. On Jul 27, the company delivered a 26% positive earnings surprise over analysts’ estimates. The company reported second-quarter EPS of 29 cents per share, up 71% from the same quarter in 2005. The June quarter represented the second consecutive positive earnings surprise for AVZ. Read the full analysis on AVZ now! Phelps Dodge Corporation (PD), a Zacks #1 Rank stock, topped the Street’s earnings estimate in six out of the past eight quarters, most recently by 27.3%. Consensus estimates have been on the rise for both 2006 and 2007. The company has a price-to-book ratio of 3.0, compared to 5.2 for the market. PD’s PEG ratio sits at 0.65 and the company has a current dividend yield of 0.98%. Read the full analysis on PD 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. dreyerd Don Dreyer is a technical investor, who relies on fundamentals for the big picture. The Simulator player said, “All of my decisions to trade are based on technical analysis. Fundamentals do come into play for the universe of stocks I research.” Dreyer relies on Investors Business Daily for his fundamental analysis, relying on their system as opposed to digging into the details himself. After identifying potential candidates, this trader applies technical analysis to find current opportunities. “Relative strength/weakness of stocks and sectors is one of the first things I look for in stocks”, explains Dreyer. “The current trend and pattern of the stock is another key. I also want to be in harmony with the overall market- go long when market is strong or strengthening and go short when the market is weak or weakening.” Don’s Zacks 3rd Quarter Stock Challenge portfolio is competing among the top players with a current overall return of about 20%. His current Simulator holdings include Apple Computer Inc. (AAPL) and Harris Corp. (HRS). Click here to check out this player’s current portfolio: Click here to check out this player’s current portfolio. What does he like? This stock picker is a fan of Parallel Petroleum Corp. (PLLL) as a short. “When the energy sector started to weaken, many stocks came up as good shorts. PLLL had the best risk to reward set up of the bunch, so I shorted it and it is down 15% to date,” explained Don. As a general rule, the charts and graphs enthusiast looks for good technical indicators and carefully considers volume. “My favorite pattern is a flag consolidation after a breakout,” Don noted. What’s his strategy? Well, it is technical in nature and centers around moving averages. The Simulator competitor commented, “Most of my technical analysis centers around moving averages. They act as great indicators of not only support and resistance, but more importantly, money management. For example, with PLLL, the 50-day moving average provided a tight stop exit for my short. If it made its way back up through the 50-day after I entered the trade I would have stopped out the trade for a small loss (3-5%). The failure of the 50-day moving average and weakness in the sector showed the potential for a much bigger reward on the downside. The reverse is true for long entries. A stock powering through and holding just above the 50/200-day moving average provides a good long entry with a tight stop. The most important indicator of whether or not it is a good idea to be long or short is the Investors Business Daily follow through which confirms a rally. A rally is confirmed when an up move attempt in the market has a 2% up day with an increase in volume 4-10 days after the up move started. Investors Business Daily tracks this every day. If the market is in distribution where the pros are selling, it is a good idea to be out of most longs and look to short.” That’s a savvy approach to buying. How about selling? “When a stock takes out support levels, it is time to sell longs and when it takes out resistance, it is time to cover shorts. On winning positions, I may sell when better risk reward situations come up or a trailing stop is broken,” Don replied. He also referenced trading expert Van Tharp as a guru of “exit strategies and money management.” Any thoughts on future market action? This astute investor stated that if the market does reach new highs with heavy volume, it will most likely keep moving higher. However, he was also quick to point out that he doesn’t see any value in predicting where the Dow may end up. Instead, the successful investor believes that it is much more useful to “prepare for whatever happens and act accordingly.” How about some advice for the newbies? Like several other top Simulator contestants, Don is a proponent of paper trading and recommends putting time and effort into education followed by experimentation with paper trading, utilizing testing labs such as the Zacks Simulator. The market player concluded by saying, “I would also stress education around system development rather than stock picking skills. Van Tharp is an excellent resource to understand money management, strategy development and position sizing. Each of these is far more important than figuring out how to enter stock picks.” 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 With many investors looking for safer plays in the market going forward, we sat down with senior medical devices analyst Greg Aurand, CFA in order to find out about traditional safe havens like health care stocks. He had some positive words for the group as a whole, but one main caveat in regards to Biomet, Inc. What’s the big news coming from the orthopedics group these days? That would be Biomet’s (BMET) disappointing earnings report from last week. Their fiscal quarter ends in August, so they report in September. Biomet missed both our top and bottom-line numbers, with the bigger miss coming from the revenue side. This is somewhat disturbing from a revenue perspective, as we had already lowered our revenue numbers previously. Now, things seem to be a bit worse than we thought, so we’ve recently lowered our numbers again, on both revenues and EPS. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Most of the company’s problems are contained in one of Biomet’s divisions – well, it’s actually been separated to Biomet Trauma and Biomet Spine groups, but it all used to be under the heading EBI. This division supplies fixation devices that fix and set bones, promote spine stimulation, as well as other spinal products. They serve those who have suffered traumatic events – accidents, dislocated spines, herniated discs, that sort of thing. These areas have been lagging tremendously over the last couple years, and things only seem to be getting worse. What are some of the issues there? Well, for one thing, Biomet acquired a company called Interpore a couple years ago, which was big in the spine area. At the time, it seemed a good fit for Biomet to expand its capabilities in that area, but the integration has proven to be very slow. In fact, it has just plain gone badly. Long story short, it’s led to Biomet falling behind competition to some extent on the spine side. One example is the case of DJO, Inc. (DJO), a competitor of Biomet’s that has done well in the spine stimulation space. This is where you stimulate the spine with electricity, which stimulates the regrowth of bone. You’ll see this treatment a lot with back problems, which are very prevalent, and also legs; this treatment works especially well with long bones. But DJO acquired new businesses, expanded their capabilities, and has begun promoting new products on the stimulation side. Its taking of market share has hurt Biomet over the last year or so, and may impact the company over the next several quarters. The total fixation group at Biomet is down 5%, and the spine group is down 6% – worse than we had expected. In prior quarters, it had been below market growth – only 2% in May for fixation and only 4% for spine – but our thinking was that things had stabilized. Now we’re targeting declines in both segments. So you’ve taken down your estimates going forward? Yes, by about six cents for each of the next two years. Potentially, we could see a longer turnaround than we had previously expected for these groups. But the other thing on Biomet I wanted to talk about was last April’s surprise announcement that Dane Miller – founder and long-time CEO of the company – was stepping down. Several months later, Biomet still does not have a permanent replacement for him. There have also been no updates from Heidrick & Struggles (HSII) – the firm looking to place a new CEO at the company – on when they might find a suitable replacement. Miller’s retirement caught a lot of people off guard. At first, the assumption was that the company might be putting itself up for sale, and the stock actually went up a bit on the resignation news. The stock has since fallen, and although I guess they might still sell at some point, that original theory has not proven to be valid. To us, it looks as if the company is not going up for sale but instead will attempt to fix its internal problems. To read the complete Analysts Interview, click here. Greg Aurand, CFA is a senior analyst covering the medical devices industry for Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Analyst Blog Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include CV Therapeutics (CVTX), Priceline.com (PCLN), U.S. Cellular (USM) and Acorda Therapeutics (ACOR). To see their latest posts, click here. eBay, Inc. (EBAY) - Strong Free Cash Flow. For full Zacks research report, click here. Hudson City Bancorp (HCBK) - Estimates Ticking Down. For full Zacks research report, click here. Growth Still Strong, but Revisions are Weakening Health Insurers Could Benefit from Generic Drugs 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: Upgrades and Revisions This strategy focuses primarily on Positive EPS Estimate Revisions and Brokerage Rating Upgrades. Over the last 20 years Zacks Investment Research has proven that earnings estimate revisions are the most powerful force driving stock prices. Studies have also shown that stocks receiving upward EPS revisions tend to receive additional upward revisions in the future. Then consider that stocks receiving these upward revisions generally have brokers upgrading their Ratings, which is also a proven mover of stock prices. There are other parameters to this strategy, but the Rating Upgrades and positive EPS Revisions are the two powerful active ingredients. Aleris International, Inc. (ARS) generated earnings per share growth of 127% over the past five years. In early August, the company announced that second-quarter adjusted earnings per share was a record $1.40. The result compares to last year's 96 cents and tops the consensus estimate by almost 13%. Aleris International mentioned that it is particularly pleased with the impact of the acquisitions it made in 2005 which are contributing substantially to its increased profitability. Continue your research on ARS now! Books-A-Million, Inc. (BAMM) is a Zacks #1 Rank (Strong Buy) company. Books-A-Million released second-quarter results in mid-August. Income from continuing operations of 15 cents per share outpaced the previous year's 10 cents and exceeded analysts’ expectations of 11 cents. BAMM satisfies the criteria for this Profit Track as evidenced by its earnings per share growth of 48% over the past five years. Continue your research on BAMM now! Benchmark Electronics, Inc. (BHE), which completed a 3-for-2 stock split in early April, posted second-quarter results in mid-July. Earnings per share increased year-over-year and came in 19% ahead of Wall Street expectations. The company stated that it experienced a strong second quarter with solid year-to-date growth in each of the industry sectors that it serves. Benchmark Electronics raised its full year earnings per share guidance to a range of $1.61 to $1.69. The current consensus forecast stands at $1.65 per share versus the three months-ago estimate of $1.47. BHE experienced earnings per share growth of 37% over the past five years. Continue your research on BHE now! Cascade Corp. (CAE), another Zacks #1 Rank (Strong Buy) name, recently reported fiscal second-quarter earnings per share of 91 cents. The result eclipsed the year-prior total of 84 cents and beat the consensus estimate by approximately 18%. Cascade Corp. topped analyst estimates four times out of the past five consecutive quarters. During the past five years, CAE’s earnings per share grew 25%. Continue your research on CAE 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”. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Using Common Sense to Manage Your Portfolio Kevin Matras explains why monitoring stocks is as important as picking them: 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...
Charlotte Russe Holdings, Inc. (CHIC) is a mall-based specialty apparel retailer, which carries both branded and private-label merchandise, targeting women in their teens and twenties. The retailer offers a broad assortment of fashionable merchandise. CHIC focuses on three main lifestyle presentations: casual clothing, wear-to-work clothing, and going-out clothing. The 360 Charlotte Russe stores offer fashionable, affordable apparel and accessories that have been tested and accepted by the marketplace, appealing to women who prefer established fashion trends. These stores are located predominantly in high-visibility, center court mall locations in spaces that average approximately 7,000 square feet. The stores are designed to create an environment that is exciting to shop and accentuates the fashion, breadth, and value of merchandise selection. Through fashion content, merchandise mix, store layout and design, and merchandise presentation, the company's stores project fashion attitudes that appeal to customers across age and socioeconomic boundaries, with a core emphasis on the fashion and lifestyle needs of young women. Zacks Equity Research Analyst Robert Plaza thinks that Charlotte Russe should continue to deliver strong growth due to its business strategy that includes smart product assortment, distinct brand images, and target a highly desirable market. Specifically, the company's stores offer a broad assortment of fashionable, quality merchandise at prices generally below most of its mall-based competitors. Its value-pricing strategy for both of its store concepts enables the company to offer affordable merchandise with quality that is comparable to higher priced specialty retailers and department stores. This helps lead to a broad and loyal base of customers. Moreover, Charlotte Russe has created focused and differentiated brand images based on fashion attitude, value pricing, and quality. The company communicates its brand images through merchandise assortments, in-store visual merchandising, and marketing materials. Its brand recognition is enhanced through selling about 80% of its merchandise under proprietary labels. The company has exceeded earnings estimates in each of the past three quarters, with two of them registering surprises above 44%. Six analysts have raised estimates for this year, while five have done so for next year. This year's earnings estimates have soared over the past 90 days from 90 cents per share to $1.41. Next year's numbers have jumped from $1.13 to $1.64 per share over the same time period. At 16.8x next year's estimates, the stock is attractively priced given its growth rate of 20.2%.
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. FREE PORTFOLIO TRACKER Do you believe that these events affect stock prices?
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Zacks #1 Stocks on the Move 05/24/2013
| Company Name | Symbol | %Change |
|---|---|---|
| INTEROIL COR | IOC | 6.90% |
| EAGLE BULK S | EGLE | 6.03% |
| A M R CP | AAMRQ | 4.11% |
| UNIVL TRUCKL | UACL | 2.74% |
| GRUPO AEROPO | OMAB | 2.17% |
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At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1986 it has nearly tripled the S&P 500 with an average gain of +26% per year. These returns cover a period from 1986-2011 and were examined and attested by Baker Tilly, an independent accounting firm.
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