Thursday - October 5, 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 – Meridian Bioscience (VIVO) Meridian Bioscience (VIVO) has exceeded analyst expectations for five consecutive quarters. Year-over-year growth has been consistently in the double digits over the past few years. Both analysts covering the stock have raised their estimates for next year. Over the past 60 days, next year's numbers have increased 7.9% to 82 cents per share. Read the full analysis on VIVO now! Infosys Technologies Limited (INFY) topped analysts’ earnings estimates in 10 out of the past 13 quarters by an average margin of 8.0%. Earnings per share are forecasted to grow 28% over the next 3-5 years. The company increased revenues, expanded gross margins and grew profits for the past six years. INFY has a current dividend yield of 1.0% and its return on equity crushes that of the industry average—36% compared to 13%. Read the full analysis on INFY now! More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum – Smart Modular Technologies (SMOD) On Sep 28, Smart Modular Technologies (SMOD) reported earnings per share of 19 cents, a 5.6% surprise over the consensus estimate of 18 cents. Sales were reported at $197 million and income was $11.95 million. Read the full analysis on SMOD now! Ceradyne, Inc. (CRDN), a Zacks #1 Rank stock, exceeded analysts’ earnings expectations in 14 out of the past 15 quarters by an average margin of 21.2%. The company reported record profits and revenues for the second quarter in early August, as well as for the first six months of 2006. As a result, CRDN upped its 2006 revenue and earnings per share guidance. The company has a price-to-book ratio of 3.4, compared to 5.3 for the market. CRDN’s PEG ratio is 0.63. Read the full analysis on CRDN 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. Java J Zacks extends a well-deserved congratulations to Jay Groot (aka: Java J) for claiming first prize in the Zacks 3rd Quarter Stock Challenge contest. Over the past three months, this astute momentum player watched his $100,000 Simulator portfolio more than as he finished the game with nearly $285,000. For his impressive performance, Jay can look forward to lifetime subscriptions of Zacks Advisor and Research Wizard. Jay is no stranger to the Simulator leader board. Zacks interviewed the successful investor in late May when he held fourth place in the 2nd Quarter Challenge. Zacks caught up Jay again in mid-July when his portfolio was once again competing among the top players. Impressed with such top-notch stock picking, we checked out the contestant’s transaction history. Some of his winning trades included positions in Acorda Therapeutics, Inc. (ACOR), BE Aerospace Inc. (BEAV), Research In Motion Ltd. (RIMM), Optimal Group Inc. (OPMR) and Medifast Inc. (MED). Click here to check out this participant’s complete trading history: Click here to check out this player’s current portfolio. How did he win it all? This contender did it with short-term momentum trading. Jay commented, “I trade based primarily upon short-term, intra-day technical chart patterns. I rely heavily on analysis of price/volume chart patterns. I use 5-minute and 1-minute intra-day bar charts almost exclusively for short-term trading. I strongly believe that the future direction of the price of any given stock is highly influenced by the recent price/volume activity on short-term intra-day bar charts.” Were there specific holdings that may have catapulted the portfolio to the top? While the savvy trader did cite some names that delivered healthy profits, such as Hi-Shear Technology Corp. (HSR), Key Tronic Corp. (KTCC) and Leading Brands Inc. (LBIX), he explained that momentum was the real fuel for his portfolio. “I constantly tell myself to not get ‘too comfortable’ with the same ticker symbols. I am a conservative guy in my personal life, but when trading stocks it is important to always be looking for the next big momentum movers, the goal is to be a ‘promiscuous stock picker’, said Jay. What kind of tactics did he employ? The stock picker does a lot of screening. He noted, “I rely heavily on stock screeners I have developed with parameters I feel will show me the most recent up/down momentum stocks. Screeners can be accessed by any trader/investor that has Internet access and a brokerage account or is a Zacks website client. These screeners display a dynamic ‘trading pick list’ of stocks that I may trade at any point during the day. I scan the list constantly to find stocks with attractive price/volume data. I then evaluate and analyze the intra-day charts of these stocks and then decide which ones I will add to my real-time quote/charting screen and probably trade at any point during the day.” Jay continued, “In short-term trading and to some degree in longer-term trading I have found that it saves considerable time and effort to let computers do the high-volume screening and then only focus on the screened stocks for the day. This technique is much more efficient and encourages me to focus on a few active momentum stocks. This technique also has the benefit of keeping me from getting stuck in a rut trading the same stocks every day.” Can you describe what characteristics you seek in a stock? This trader sees a stocks has having a chart pattern that is “fairly tight” with a “bid/ask spread should not be excessive relative to the volatility and the average trading volume.” Jay further explained, “This is a subjective conclusion that each trader/investor has to determine for themselves. I ignore low volume, wide spread stocks. I like stocks that will incur spikes of price/volume activity with subsequent periods of slow-down in activity. I emphasize the price/volume spikes could be either up or down, both represent potential profitable trades.” How does the Simulator compare to real-world investing? Jay explained while he employed a short-term momentum strategy for Simulator purposes, his trades are based on longer horizons when it comes to real money. As with most contestants, this market enthusiast was able to take away some lessons from the game. One thing the Simulator competition has thought him is to set tighter stop loss prices the real market. Any words of wisdom for the 4th quarter competitors? The chart-plotting trader suggested that focusing on stocks with up or down momentum. He mentioned that players should look for opportunities to short stocks on reversals or heavy volume breakdowns. Jay added that, “volume during any time frame is important, a decline to relatively low volume many times will signal impending reversals, breakouts or breakdowns.” In conclusion, this Simulator champion reminded everyone to be proactive and decisive in their trading. The Simulator is a terrific strategy testing lab and if an a player’s trade misses, he or she will still benefit by learning from it. It’s not as if real money is being lost. 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 Now that the Dow Industrials have reached a new high, is it a time for celebration or a time to think about getting out? To help us get a clearer perspective on the facts of this momentous occasion, we spoke with Charles Rotblut, CFA, senior market analyst for Zacks Equity Research. The Dow set another new high yesterday. What are your thoughts? There has been a change in investor psychology ever since the FOMC voted to hold rates steady at the Aug. 8 meeting. More specifically, after the July PPI numbers were released a week later, on Aug. 15, the Dow started to really climb upwards. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - During the summer months, there were concerns about market volatility. With the markets whipsawing and oil prices climbing, many investors were more concerned with capital preservation than they were with beating benchmarks such as the S&P 500. Now, there has been a change in attitude. Investors not only want to take part in the rally, but, more importantly, they want to outperform the benchmarks. Some analysts fear these highs won’t hold; others feel there are investors yet to buy in. Where do you stand on this issue? What’s notable about the recent rally is that it is not happening on good news. Rather, we are seeing signs of slowing growth. For example, the ISM’s manufacturing survey set a new 12-month low in September. The housing market is in a slump. And, most importantly, forecast growth rates for earnings are eroding. At the end of July, the average stock in the Zacks Rank universe was projected to generate profit growth of 24.5% this year, when outliers are excluded. At the end of September, this growth rate had declined to 21.3%. Not a huge drop, but nonetheless a decrease. What do you think is behind the drop in growth rates? The slowing economy is definitely playing a factor. Many economists have cut their projections for second-half GDP growth, and this is showing up in earnings growth. This said, there have not been many third-quarter warnings. In fact, there hasn’t been many earnings estimate revisions. Companies seem reluctant to issue guidance and brokerage analysts have not been actively adjusting their forecasts. For instance, using a four-week rolling period, there were a total of 10,430 estimate revisions at the end of August. At the end of September, this number had dropped to 3,202 estimate revisions. We are seeing the ratio of positive to negative revisions weaken. For stocks within the Zacks Rank universe, the ratio stood at 1.05 at the end of August. At the end of September, it stood at 0.80. Although the numbers are slightly different, the same trend exists if we just look at stocks in the S&P 500. Earnings estimates, in aggregate, are not being revised upwards. However, we are not seeing a spike in negative revisions either. To read the complete Analysts Interview, click here. Charles Rotblut, CFA is the senior market analyst for Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Analyst Blog Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include Dendreon Corporation (DNDN), DR Horton (DHI), Lubrizol (LZ) and ECI Telecom, Ltd. (ECIL). To see their latest posts, click here. aQuantive, Inc. (AQNT) - Opportunities for Growth. For full Zacks research report, click here. Digitas, Inc. (DTAS) - Expectations Too High. For full Zacks research report, click here. Revisions Will Tell Health of the Economy Lack of Storms Helping Property & Casualty Companies 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. Aspreva Pharmaceuticals Corporation (ASPV) reported second-quarter earnings of 78 cents per share in late July. The result soared past last year’s three cents and surpassed the consensus estimate by nearly 37%. The company mentioned that it believes it has an excellent foundation for future growth, adding that it anticipates filing three new drug applications in 2007. ASPV has a PEG ratio of 0.38. Continue your research on ASPV now! Axis Capital Holdings Ltd. (AXS), a Zacks #1 Rank (Strong Buy) company, will announce results for the third quarter at the end of this month. In early August, the company posted second-quarter earnings of $1.42 per share. The result eclipsed the year-prior total of $1.12 per share and outpaced the consensus estimate by about 16%. AXS stated that its quarterly results reflect strong and stable underwriting results, increasing investment income and low large loss activity. AXS offers a PEG ratio of 0.53. Continue your research on AXS now! Helmerich & Payne Inc. (HP) can be an attractive value investment as its PEG ratio currently stands at 0.12. In late July, the company released its fiscal third-quarter results. Earnings per share increased year-over-year while topping Wall Street estimates by 8%. The company noted that although it expects to continue to face production schedule and capital cost challenges, it anticipates its overall new build returns to remain strong. Continue your research on HP now! OMI Corp. (OMM) is also a Zacks #1 Rank (Strong Buy) company. OMM satisfies the criteria for this Profit Track as evidenced by its PEG ratio of 0.41. In late July, the company released its report for the second quarter, commenting that on both a net income and earnings per share basis the quarter was the best in OMI Corporation's history. Results for the third quarter will be available on October 24, 2006. Continue your research on OMM 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”. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Great Stocks Often Have Great Peers Kevin Matras looks at how to find winning stocks in the winningest sectors: 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...
Ralcorp Holdings, Inc. (RAH) engages in the manufacture, distribution, and marketing of store brand food products in the United States and Canada. It operates in four business segments: Cereals, Crackers, and Cookies; Dressings, Syrups, Jellies, and Sauces; Snack Nuts and Candy; and Frozen Bakery Products. In addition, Ralcorp holds an interest of approximately 20 percent in Vail Resorts, Inc., the leading mountain resort operator in the United States. The company’s products include ready-to-eat and hot cereal products; snack mixes and corn-based snacks; crackers and cookies; snack nuts and chocolate candy; wet-filled products, such as salad dressings, mayonnaise, peanut butter, syrups, jams and jellies, and sauces; frozen griddle products, such as pancakes, waffles, French toast, griddle products, and biscuits; and breads, rolls, and muffins. It serves retail chains, mass merchandisers, grocery wholesalers, warehouse club stores, drug stores, restaurant chains, and foodservice distributors. J.P. Morgan recently said the private-label cereal maker's fundamentals are improving and upgraded the stock. "Ralcorp benefits from a more favorable overall pricing environment, and management takes a more strategic approach to co-packing. RAH reported strong third-quarter earnings which rose 25.8 percent compared to last year's quarter. Earnings per share of $1.03 soundly beat the consensus estimate of 80 cents by almost 29%. Net sales for the quarter increased 14%, primarily as a result of business acquisitions, as well as improved pricing, favorable mix, and a slight volume increase. Total segment profit contribution was up 14% as a result of higher net sales, cost reduction efforts, and acquisitions, net of the effects of higher costs of raw materials, freight, and energy. Elevated energy prices are affecting the company, but management is clearly dealing with the situation in an efficient manner judging by the results. Ralcorp said higher freight rates inflated the cost of its products sold by about $1.8 million, due to the sharp rise in fuel prices. The company said it has made an effort to raise prices and cut costs elsewhere to offset those increased expenses. The price increases and increased margins were most evident in the Carriage House division, which includes the syrups and dressings. RAH has exceeded earnings estimates by an average of 19% over the past two quarters. Two analysts have raised their estimates for this year, while three have done so for next year. Over the past two months, this year's estimates have risen 15.2% to $2.50 per share, while next year's numbers have gone up over 16.1% to $2.95 per share. The stock is currently trading at 16.6x next year's estimate of $2.95 per share. This is definitely not unreasonable for a company whose fundamentals are strong and improving. If RAH's recent pricing power continues, these estimates could prove to be conservative.
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?
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 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 05/21/2013
| Company Name | Symbol | %Change |
|---|---|---|
| SCIENTIFIC L | SCIL | 8.00% |
| NATUS MEDICA | BABY | 6.11% |
| SUMMER INFAN | SUMR | 6.02% |
| RADIANT LOGI | RLGT | 5.32% |
| NEW ORIENTAL | EDU | 4.51% |
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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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