Tuesday - November 7, 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 - Electronic Arts (ERTS) More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum - Intevac, Inc. (IVAC) Intevac, Inc. (IVAC) will be added as a component to the S&P Small Cap 600 after the close of trading today. IVAC, which has gained over 70% since being a featured Zacks Momentum Stock of the Day on Dec 29, 2005 got a major boost to its fortunes last week when the company reported Sep 2006 EPS at 41 cents per share, a 242% positive surprise above analysts’ expectations. This stock isn’t done climbing yet. Read the full analysis on IVAC now! Cigna Corp. (CI) achieved a 15.4% positive earnings surprise for the third quarter when it announced profits of $2.48 per share. The result also was a 27.8% year-over-year improvement. The stock is up over 12% since it was first highlighted as a Value stock on Aug 8. Read the full analysis on CI now! Find out what the best-performing stocks within the Zacks #1 Rank list each week. Last week’s top performers included iMergent, Inc. (NYSE: IIG) with a 13.1% gain.
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 (ROE) 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. ROE = income / common equity One of the quickest ways to gauge whether a company is creating assets or gobbling up investor's cash is to look at their ROE. This fast moving Profit Track returned an impressive +19.1% in 2005. In the first five months of 2006, it continued to outperform the S&P 500, returning 18.5% versus the S&P 500 rise of 5.0%. AMN Healthcare Services Inc. (AHS), which has a ROE of 15.32 and a price to sales ratio of 0.85, recently announced third-quarter earnings of 28 cents per share. The result topped the consensus estimate by approximately 27% and outpaced last year's result. The company stated that it is most encouraged by the increase in traveler count in the nurse and allied healthcare staffing business, which grew by 7% from last quarter to 7,015, the highest volume level in the last 13 quarters. Read the full analysis on AHS now! General Cable Corp. (BGC) has a ROE of 36.61 and a price to sales ratio of 0.58. The company recently posted third-quarter earnings of 71 cents per share, surpassing the consensus estimate by 29% and exceeding the year-ago total. BGC noted that it expects earnings per share of between 55 cents and 60 cents per share for the fourth quarter. Analysts are in agreement as evidenced by current estimates of 59 cents, an increase of two cents from last week. Read the full analysis on BGC now! Teledyne Technologies Inc. (TDY) reported results for the third quarter in late October. The company said each of its business segments experienced double-digit sales growth, and overall organic growth was 13.6% during the quarter. Earnings per share and revenues grew year-over-year. TDY satisfies the criteria for this Profit Track with a ROE of 20.21. Read the full analysis on TDY now! Terex Corp. (TEX) released third-quarter results in late October. The company commented that it experienced a significant improvement in its gross margin over the prior year, driven by a combination of improved manufacturing leverage and pricing initiatives in excess of cost pressures. Both earnings per share and net sales improved from one year-ago levels. TEX’s ROE stands at 27.69, and its price to sales ratio is 0.70. Read the full analysis on TEX 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 for All Markets Kevin Matras goes over a Relative Price Strength strategy for finding winning stocks in all markets. More... 3. ZACKS EQUITY RESEARCH Among the Q3 earnings reports coming out in the technology sector, news that Microsoft’s Windows Vista and Sony’s PlayStation3 will soon be released made headlines. We spoke with senior technology analyst Steve Biggs, CFA to get his views on all of these issues. How has this quarter’s earnings season been for the technology industry? The broader tech market looks pretty strong; we’ve seen lots more upside surprises than downside. There have been a few disappointments, but with no real trends by space within the tech sector. It seems most industries are going pretty strong, but at the same time not strong enough to support every company. So while a company like Google (GOOG) posted good results in the Internet space, Yahoo! (YHOO) disappointed. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Are some of the bigger economic concerns making themselves felt in the tech industry these days? Most of the weakness we’ve seen in recent economic reports hasn’t yet transferred over to the technology sector. Everything I’ve been keeping an eye on – such as how long it takes for a company to close a deal – seems to be fairly strong. But as we look out to 2007, I think there is some risk that if the economy were to continue slowing or slow more than where we’re currently at, then some of that is likely to spill over into the tech sector. It is certainly one of the most economically sensitive sectors in the market. This is because it is very easy for enterprises to cut back on tech spending before they cut back in other areas of their operations. So are you seeing more of the risk on the enterprise side than the consumer side? Yes, I’d say there is more risk on the enterprise side, although the consumer side has been a little bit weak. If things continue to weaken across the board, the consumer could end up supporting the tech market, and in that case we’d look more toward consumer-oriented tech stocks as more of a safe haven. Microsoft’s long-awaited Windows Vista operating system is finally due to be released. But only the business version, though? The schedule is for the business version of Vista to come out this year, and early next year the consumer version is due to come out. It looks as if things are still on track for both of those things to happen. As far as what’s going to dominate the headlines for the next year in tech, Vista is going to be up there. In fact, this is the biggest Microsoft (MSFT) release since Windows 95, so it’s the biggest in the last 12 years. How are the preliminary reports about it? Do you expect they’ve worked all the bugs out ahead of its release? I think with any kind of new operating system, it still may take awhile to get all the bugs worked out. In fact, while Vista may be a big headline issue for 2007, financially it might not have a big impact until 2008, when people feel more comfortable rolling out the new system. So it may benefit more of the consumer market early and not really hit an enterprise cycle until maybe a year later. Are you expecting a big impact throughout the tech sector? Sure. In addition to Microsoft, this is likely to help anyone who sells PCs, such as Dell (DELL). Vista has much stronger graphics requirements than current Windows, which will help NVIDIA (NVDA). It also integrates search into the operating system, so we’ll have to see what kind of impact this has on Google and Yahoo!, as well. Click here to read the complete Analyst Interview. Steve Biggs, CFA is a senior analyst covering the technology sector for Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include CNOOC (CEO), HMS Holdings (HMSY), Whole Foods Market, Inc. (WFMI) and Alnylam Pharmaceuticals (ALNY). See their latest posts: click here. Sinopec (SNP) - Strength in Chinese Reforms. For full Zacks research report, click here. Whole Foods Market (WFMI) - Further Downside Ahead. For full Zacks research report, click here. The Week of Nov 6 – Nov 10 Earnings Still Looking Strong 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. 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. Zacks/Schaeffer’s Options Trading service. This week we want to look at the High Open Interest Call filter and try to find a bearish play. What exactly is this 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. We 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. Before we go any further, we want to talk briefly about our methodology here at Schaeffer's. We are contrarian-based investors, which means 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. On Thursday afternoon one name made the list several times - Internet giant Yahoo! (YHOO). The firm had a large build-up of calls in the January series at both the $27.50 strike and the $30 strike. Remember, with the shares currently trading near $26.50 – this build-up of calls could very well act as a strong layer of options related resistance going forward. Looking at the price action of YHOO, you can see the shares had a big drop back in September after issuing some cautious comments regarding advertising. Since then the shares have tried to bottom and are now coming up to potential resistance from their 80-day moving average – not to mention the options related resistance. Year-to-date the shares are down over 30%, greatly underperforming other Internet names. Remember, we want to see signs of optimism as a sign there could be 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, YHOO’s SOIR checks in at 0.51. That doesn't mean much unless you compare it to the other readings over the past year. Doing this shows that the current reading is lower than 78% of those taken during this timeframe, proving that short-term option players continue to love this lagging giant. 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 YHOO, we find that it would take just over two days for short sellers to buy back their positions. This low reading lowers that chance of a short covering rally on any good news. Another good way to get a gauge of sentiment is to look at what the analysts think. Given that the shares have been lagging recently, optimistic analysts leave the door open to some downgrades. According to Zacks, there are 14 "buys," eight "holds," and only one "sell." Should the shares continue to underperform, this will leave lots of room for potential downgrades from this group. Add it all up and the odds favor lower prices for YHOO over the coming months and thus we’d recommend looking to play some intermediate-term puts to benefit from this weakness. Please continue to use all of the filters at Zacks.com provided by Schaeffer's Investment Research 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; don't get discouraged when it comes to options: the beauty of options is the leverage they provide. It only takes a few winners out of every 10 trades to make you a very happy investor. Be sure to utilize all the filters from SchaeffersResearch.com found at Zacks.com - Good luck with your trading! To learn more about the Unusually High Option Volume filter, click here. Discover all the tools and commentary available from the Zacks.com Options Center. Leverage the timeliness of Zacks #1 Rank stocks with options trades that maximize profits and minimize risks. Learn more about our new Options Trading service. 5. FEATURED EXPERTS Here we cast the spotlight on a timely Featured Expert commentaries that recently appeared on Zacks.com. Dennis Slothower is keeping his powder dry before he starts buying. Read about two possible scenarios that he sees unfolding. More... Jack Schannep sees a bear market and recession before the market sets new highs. Benefit from his insight. More... 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. Or view the full list of Zacks #1 Rank FREE PORTFOLIO TRACKER Do you believe that these events affect stock prices?
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Zacks #1 Stocks on the Move 05/20/2013
| Company Name | Symbol | %Change |
|---|---|---|
| ORBOTECH LTD | ORBK | 10.86% |
| SONIC FOUNDR | SOFO | 9.45% |
| VIPSHOP HOLD | VIPS | 9.20% |
| RENEWABLE EN | REGI | 8.98% |
| EAGLE BULK S | EGLE | 7.84% |
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