Thursday - October 19, 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 – MICROS (MCRS) MICROS (MCRS) is experiencing strong earnings momentum. As would be expected, earnings estimates have been on the rise after the company's impressive fiscal first-quarter earnings. Over the past 60 days, this year's numbers have increased 6.0% to $1.94 per share. There is only one analyst covering the stock at the moment. Read the full analysis on MCRS now! Harley-Davidson, Inc. (HOG) topped analysts’ earnings expectations in 14 out of the past 16 quarters, most recently by 9.1%. HOG increased revenues and grew profits for nine years running. The Board of Directors recently added 20 million shares to its repurchase program. The company has a current dividend yield of 1.3% and a five-year average dividend yield of 0.71%. Read the full analysis on HOG now! More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum – Chicago Board of Trade (BOT) Tuesday was a big, big day for Chicago Board of Trade (BOT). First, they announced September earnings and delivered a 16.5% positive surprise over analysts’ consensus estimates. EPS of 92 cents were up 130% from last year’s 40 cents. At the same time, the Chicago Mercantile Exchange announced plans to acquire BOT for approximately $8 billion. The transaction will be a stock swap and is expected to close in mid-2007. After the news was announced, BOT opened on Tuesday 18.6% higher. Read the full analysis on BOT now! Safeco Corporation (SAFC), which was first highlighted as a Value pick on Jun 1, continues to beat earnings estimates and trade at a discounted valuation. The company exceeded analysts’ expectations in 15 out of the past 16 quarters. The Board of Directors increased the company’s share repurchase authorization on Aug 11 and declared a quarterly cash dividend of 30 cents per common share of stock. This Zacks #1 Rank stock has a price-to-book ratio of 1.8, compared to 5.3 for the market. Read the full analysis on SAFC 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. RayBachar Ray Bachar a top 20 player in the Zacks 4th Quarter Stock Challenge is within reach of climbing into the top 10. Ray climbed his way toward the top by keeping his eye on both the technicals and fundamentals. The voracious reader, who holds a Masters in finance, relies on the web and magazines when it comes to investment homework. His research has led him to buy stocks like Applied Materials Inc. (AMAT), TASER International Inc. (TASR) and Foundry Networks, Inc. (FDRY). Click here to check out this participant’s complete trading history. “Applied Material (AMAT), I selected because it is the leader in its industry and has been driven down to what I consider highly undervalued. I believe that this final quarter will show how good they are and sales and earnings will show that. In addition, TASER (TASR) was selected because I believe in their product. It is used in controlled situations and their popularity will continue to grow domestically and internationally. This being done, sales and earnings will grow tremendously. Then the market will realize the potential and recommend the stock, however it will have grown substantially by then. We all know when they [Wall Street] are recommending strongly, it may be time to get out,” explained Ray. What does he look for in a stock? This Simulator contender considers several factors. Some of the issues that he believes to be important are the company’s business, its competition, financial structure and management. The market enthusiast commented, “you must first understand their business and the competition. In addition their financial structure, management and where they are strategically going. Then and only then can you make decisions that can make you money.” When is it time to sell? No tricks up his sleeve here. The astute investor carefully studies the charts and fundamental data before making a move to sell. Ray noted that he looks at technical factors such as support and resistance as well as analysis of quarterly performance. What about a market outlook? This stock picker is with the bulls. “I believe that we have another 6 - 9% upside and would not be surprised if it ended the year at 12700 – 12800,” said Ray. Any advice for those just starting out? The Simulator participant recommends learning the fundamentals and technicals as the foundation for picking winners. “Learn the fundamentals and technical aspects. Understand the business before you decide to commit any of your own money,” remarked Ray. 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 The number of estimate revisions is starting to increase, but remains relatively low. This is not surprising given the relative lack of earnings guidance provided in September and the fact that most companies have yet to report third-quarter earnings. In addition to the relatively low number of revisions, positive changes to earnings estimates are being spread among multiple industries as opposed to being concentrated in specific sectors. This said, there are still weak spots, such as Coal, and areas of strength such as property & casualty insurers. Two coal companies warned last week: Consol Energy (CNX) and Foundation Coal Holdings (FCL). CNX, a Zacks #4 Rank (“Sell”) stock, said it produced 15.3 million tons during the third quarter, below its July forecast for 16.1 to 17.1 million tons. The company now anticipates full-year production to total between 68.5 and 69.5 million tons instead of 69.3 to 71.3 million tons. The company blamed a variety of factors for the revised guidance including geological conditions and “soft market conditions”. FCL, a Zacks #5 Rank (“Sell”) stock, advised that third-quarter profits would be reduced by 17 cents per share because of non-cash charges related to debt refinancing. Analysts slashed their full-year profit projections on both companies for 2006 and 2007. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Coal prices have been dropping throughout this year. If forecasts for a mild winter prove to be correct and energy demand ends up being weaker than currently expected, the recent stabilization in prices could prove to be just a temporary reprieve. (I will point out that it did snow in parts of the Northern U.S. last week…) Furthermore, the weakness in heating oil has had a negative, psychological impact on coal prices. Conversely, sentiment, particularly brokerage analyst sentiment, towards property & casualty insurance companies is improving1. As I stated two weeks ago, the comparatively calm hurricane season (which is not over yet), the good premium environment and favorable financial market conditions are expected to help boost profits for insurers and reinsurers. And analysts are taking notice. Last week, one of the nine covering analysts raised his full-year forecast on Arch Capital Group (ACGL), causing the consensus estimate to rise by five cents to $7.99 per share. Cumulatively over the past 30 days, four analysts have adjusted their projections resulting in a 35-cent upward adjustment. Arch Capital Group will report on Thursday, Oct 26, after the close. ACGL is a Zacks #1 Rank (“Strong Buy”) stock. A similar trend exists with ACE Limited (ACE). One analyst raised his full-year forecast last week, bringing the total number of analysts to have revised their 2006 projections to nine over the past 30 days. The current 2006 consensus earnings estimate of $6.65 is 14 cents above the forecast of a month ago. ACE Limited will report third-quarter earnings on Wed, Oct 25, before the open of trading. ACE is a Zacks #2 (“Buy”) stock. There are 13 Zacks #1 Rank stocks and 34 Zacks #2 Rank stocks in the Insurance Property-Casualty group. 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 Yahoo! (YHOO), Intersil Corp. (ISIL), Rockwell Automation (ROK) and Qualcomm (QCOM). To see their latest posts, click here. Ride Out the Storm Altera Corp. - Accounting Issues Behind Them. For full Zacks research report, click here. Kimberly-Clark - Higher Costs & Pressures. For full Zacks research report, click here. Third-Quarter Profits: So Far, So Good Semis Looking for Late-Year Strength 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. CompuCredit Corp. (CCRT) will release financial results for the third quarter on November 6, 2006. In its second-quarter report, which was issued in early August, the company stated that the consumer credit environment within its sector continues to be favorable, and it continues to focus on delivering value to both its customers and shareholders. CompuCredit has a PEG ratio of 0.51. Continue your research on CCRT now! Houston Wire & Cable Company (HWCC) satisfies the criteria for this Profit Track as evidenced by its PEG ratio of 0.55. In mid-August, Houston Wire & Cable Company announced second-quarter earnings of 48 cents per share. The result more than doubled analysts’ expectations of 20 cents. Third-quarter earnings will be reported on November 6, 2006. Continue your research on HWCC now! ON Semiconductor Corp. (ONNN) 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 ONNN now! Tidewater Inc. (TDW) offers a PEG ratio of 0.25. The company report fiscal second-quarter earnings on October 25, 2006. In late July, Tidewater released first-quarter earnings of $1.23 per share, improving on the year-prior total of 50 cents. The result also eclipsed the consensus estimate by almost 14%. The company has been ahead of Wall Street estimate each time over the past five straight quarters. Continue your research on TDW 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”. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Kevin New Analyst Coverage Matras explains why stocks with new analyst coverage are stocks you want to own: 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...
Guess? Inc. (GES) designs, markets, distributes, and licenses casual apparel and accessories for men, women, and children. The apparel reflects what the company refers to as the American lifestyle and European fashion sensibilities. The lines include full collections of denim and cotton clothing, including jeans, pants, overalls, skirts, dresses, shorts, blouses, shirts, jackets, and knitwear. The company also grants licenses to manufacture and distribute products that complement its apparel lines, including eyewear, watches, handbags, footwear, children s apparel, and other fashion accessories. Guess products are sold through three primary distribution channels: the company's own stores, a network of wholesale accounts, and the Internet. Guess branded products, some of which are produced under license, are sold internationally through a series of licensees and distributors. The company identifies its core customer as a style-conscious consumer primarily between the ages of 15 and 30. According to Zacks Equity Research Analyst Robert Plaza, the investment case for Guess is based on the company's strong brand name, continued store expansion, and profit margin expansion opportunities. Guess remains a popular brand for customers seeking denim fashions and accessories. This is helping the company enjoy the favorable fashion cycle for denim and leading to strong sales growth. The company is also using its brand equity to promote and grow its new upscale Marciano brand, which is expected to drive the company s sales growth in the future. Guess is opening new stores under the Marciano name and intends to eventually sell the Marciano brand exclusively in the Marciano stores, where Guess and Marciano stores are in the same market. In addition, Guess continues to expand its store base. Guess ended the second quarter of 2006 with 320 total stores, up 6% year-over-year. This represents 1.57 million square feet of retail space, up 4% from the second quarter of last year. The stock chart of the company looks spectacular. GES has made a strong run from the $40 to the mid-$50's since early-September. The moving averages are all nicely supporting the stock. Earnings estimates have been increasing at an impressive rate. Over the past 90 days, this year's numbers have jumped 8.1% to $2.00 per share. The stock is trading at 23.4x next year's estimates of $2.32 per share, slightly above the long-term growth rate of 21.90%, giving the stock a PEG ratio of 1.07.
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 06/17/2013
| Company Name | Symbol | %Change |
|---|---|---|
| GLOBAL GEOPH | GGS | 7.79% |
| STAAR SURGIC | STAA | 6.23% |
| KAPSTONE PAP | KS | 6.14% |
| HORNBECK OFF | HOS | 5.99% |
| ANIKA THERAP | ANIK | 5.55% |
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