Tuesday - December 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 31.8% 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 - Terex (TEX) More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum - Allegheny Technologies (ATI) Anyone doubting the power of positive earnings surprises would do well to study Allegheny Technologies (ATI). First featured as a Zacks Momentum Stock of the Day on Jan 31, 2006, ATI has enjoyed seven straight positive earnings surprise quarters and has not disappointed since the Jun 2004 quarter. The result of such stellar management? ATI is up 69% since our feature. ATI set a new 52-week high on Dec 11, 2006 and while it has sold off modestly in the last week, still looks like a winner at these levels. Read the full analysis on ATI now! Since we first highlighted Comtech Telecommunications Corp. (CMTL) as a Value pick on Jul 20, the stock is up 43%. On Dec 6, the company raised its fiscal 2007 earnings per share guidance to between $2.05 and $2.07. CMTL's previous outlook called for profits between $1.93 and $1.95 per share. Read the full analysis on CMTL now! Find the best-performing stocks within the Zacks #1 Rank list each week. Last week’s top performers include LodgeNet Entertainment (LNET) with an 18.3% 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: Growth and Income This Profit Track looks for stocks that are paying dividend yields of greater than 8% along with other attractive fundamental attributes. Although this screen is based on a long-term and lower risk approach to investing, it has consistently beaten the S&P 500. Crystal River Capital Inc. (CRZ) offers a current dividend yield of 9.54%. The company recently declared a quarterly dividend of 66 cents per share, up from the previous quarterly dividend of 60 cents. In early November, CRZ announced third-quarter results, stating that it continues to seek investment opportunities with a particular focus on commercial real estate debt that will allow it to achieve its targeted portfolio allocation and maximize value for shareholders. Read the full analysis on CRZ now! Deerfield Triarc Capital Corp. (DFR) reported third-quarter earnings of 38 cents per share in mid-November, surpassing last year's 27 cents and exceeding the consensus estimate by almost 3%. The company mentioned that solid growth in both the dividend and book value validate the momentum it sees in this business. In late October, DFR declared a third-quarter dividend of 40 cents per share, which represents the fourth consecutive increase in the quarterly dividend, or 33.3% over the third quarter of 2005. Read the full analysis on DFR now! Eagle Bulk Shipping Inc. (EGLE) meets the criteria for this Profit Track as evidenced by its current dividend yield of 12.41%. In early November, the company released its report for the third quarter, noting that its results highlight continued strong performance. Adjusted earnings per share totaled 34 cents, which matched the consensus estimate. The third-quarter report also stated that a dividend of 51 cents per share was paid on November 2, 2006 to shareholders of record as of October 30, 2006. Read the full analysis on EGLE now! Iowa Telecommunications Services, Inc. (IWA) recently declared a quarterly dividend of $0.405 per share. The company’s current dividend yield stands at 8.22%. In early November, Iowa Telecommunications Services posted third-quarter earnings of 25 cents per share, which was approximately 4% above Wall Street estimates. During the past five consecutive quarters, IWA exceeded analyst expectations three times. Read the full analysis on IWA 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”. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Three Days Up: Price and Volume Kevin Matras goes over a price and volume screen for finding stocks on the move. More... 3. ZACKS EQUITY RESEARCH With another healthy year passing in the energy sector – particularly regarding oil companies – we felt it was time to check in with senior oil & gas analyst Sheraz Mian to see if he still expects these companies to outperform the broader market in 2007. After a long, strong run with integrated oil stocks, is this group starting to look a little less attractive going forward? You are correct that the integrated oils have been some of the best performers over the broader sector over the last few years, as well as the best performers year-to-date. There are a number of contributing factors to this, which makes us think their positive momentum will continue in 2007, as well. They may not be able to beat their performance levels of 2006, but we feel the industry should still perform better than many of the other sub-sectors within the energy space. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Just briefly touching on some of these contributing factors, the intergrateds have going for them a number of cash-flow streams that some of the sub-sectors lack. They’re getting earnings from their upstream business, the refining and marketing ends of business, as well as from petrochemicals. So this provides a hedge, to some extent, within the business mix from relative fluctuations in commodities. Reserves are more relatively stable compared to some of the sub-groups. On top of that, they are distributing fairly stable and growing levels of cash to shareholders. So with uncertain times, when the broader direction of the economy is somewhat uncertain for market participants, investors tend to gravitate toward the safer, more stable names within the energy group. We think this trend should continue in 2007, as well. Let’s talk about some of these sub-groups. How is E&P doing, for instance? One differentiating factor between E&P companies and the large, integrated major oil companies is the difference between relative commodity exposures. The integrateds are more exposed to crude oil prices, natural gas prices, refining margins, marketing margins as well as chemical margins – not just in the U.S., but on a global level. The E&P companies, on the other hand, have a disproportionate exposure to U.S. natural gas prices. Developments in U.S. natural gas markets, in turn, have a strong impact on how stock prices of E&P companies perform – and of late, they have not been very good. Especially since last winter when we had a relatively mild January, and home heating demand was fairly weak. Compared to historical levels, we have had fairly steady above-average storage levels of natural gas. As a result, natural gas prices this year were significantly lower than compared to 2005. This has continued into the current heating season, as well. Depending on how this winter shapes up – and then subsequent to that, how the 2007 summer shapes up – this will determine how E&P companies will perform next year. Our hunch is that it’s going to be relatively weaker; in addition to facing commodity price pressures, this group is also dealing with fairly steady cost creep, both from the Drilling side and Oilfield Services. So margins are getting squeezed and commodity prices are weaker than they have been, and this should impact the E&P group. Click here to read the complete Analyst Interview. Sheraz Mian is a senior analyst covering the energy industry for Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include Wendy’s (WEN), National Semiconductor (NSM), C.H. Robinson Worldwide (CHRW) and Aon Corporation (AOC). See their latest posts: click here. Smith Micro (SMSI) - Strong Product Pipeline. For full Zacks research report, click here. Quilmes Industrial (Quinsa, LQU) - Buy-Out Priced In. For full Zacks research report, click here. The Week of Dec 18 – Dec 22 Materials and Industrials Expected to Lead Q4 Earnings 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. Given the strength in the market, as well as Bernie’s feel that we’ll continue moving higher; we’d like to take a look at one of our favorite filters today – the Put/Call Ratio Over 1.0 (Bullish filter). There’s no better way to show the power of the filter than to take a look at an actual pick and see how it’s done. In the second week of August, we used this filter and determined that playing retailer Guess? (GES) bullishly was a good play. Fortunately we were very right, as the shares have since gained over 32% and are technically positioned for even more gains. Now we’ll take a look at exactly what we said back in August regarding GES. Remember, one of the most important aspects of trading is to see what you did on winners and losers. Going back and examining what you looked at to drive a trade is priceless information and something that all traders and investors should do with every trade. Remember everything below is from August. “Today we want to look at one of our favorite bullish filters, the Put/Call Ratio Over 1.0 (Bullish filter). For a refresher of our methodology, please read on. If you already know this, please go to the next paragraph. We are contrarian-based investors, meaning 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. In most cases, we need to see some negative price action or a major catalyst for a downside move in order to pull the trigger. 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. Turning to the Put/Call Ratio Over 1.0 (Bullish) filter, the Schaeffer's put/call open interest ratio (SOIR) is simply the number of puts divided by the number of calls among near-term options. That being said, a ratio of 1.0 or greater means that there are more puts than calls in short-term trading. From our contrarian-based approach, we love to see a huge number of puts compared to calls levied against a strong-performing stock. If a stock can advance amid heavy bearish sentiment, there is still plenty of money left on the sidelines to help push the stock higher once that crowd begins to turn bullish. Simply because a stock has a high SOIR doesn't mean it is a good long play. But using a SOIR as an indicator is just one aspect of our Expectational Analysis® approach, as we also like to check in on analysts, media, and short interest as other indicators for investor sentiment. If you can find a potential trade that encompasses all of those areas of sentiment, then my friends, you could have a potential winner on your hands. Now back to the list. On Friday one name stood out to us and that was retailer Guess (GES), which has a SOIR of 1.17 (3,395 puts compared with 2,907 calls). So we know there are more bearish puts than bullish calls among short-term options, but let's look at the backdrop a little closer. To do this, let's see where that 1.17 stacks up with respect to all readings over the past year. After doing this, we see that this number is higher than 72% of the readings over the past year, suggesting the short-term crowd remains bearish, which is what we want to see. Next, technically and fundamentally things look solid as well. On the technical front, the shares have gained over 32% year-to-date and another 111% during the past 12 months. What we like about the technical picture right now is that the shares spiked above resistance in the $46/$47 area on huge volume. This area had held as resistance all calendar year long, so this breakout could be the real deal. Sparking the huge breakout in early August was a great earnings report. In fact, the company crushed earnings estimates and they increased their guidance as well. So fundamentally things appear to be clicking great. Shorting selling is a process where a trader sells shares of an equity that he/she borrowed from a broker with the intention of buying them back at a later date. In other words, you are betting the shares will go down. We love to see lots of shorts betting against a stock because this means that, should the shares continue to advance, those bearish investors will be forced to cover their bets, creating a short-squeeze situation. Turning back to GES, we find that over 12% of its float is sold short. This buildup is more than enough to spark a short-covering rally on any good news. Also, the shorts increased their bearish bets by over 33% last month - suggesting they are still trying to pick a top. Now for the analysts' ratings. If the brokerage firms are bearish on a stock that is a top performer, it means that the shares could benefit from any positive upgrades. This is the one potential problem area that I see with GES; the analysts are pretty bullish as there are six "buys" and two "holds" right now. Still, it is tough to get everything lined up perfectly and this is another example of that. With all of that said, GES really does look like a nice play and I'd recommend playing this one bullishly from current levels.” So there you go, exactly what we saw back then that lead to the nice winner. We’ll be back next week to look at another filter and try to find another money making idea. To learn more about the Put/Call Ratio over 1.0 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. Kelley Wright explains that the key to investing is understanding values. Check out his commentary and discover a few stocks. More... Dr. Edward highlights an option on a company that provides construction and financial services. 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 06/19/2013
| Company Name | Symbol | %Change |
|---|---|---|
| SONIC FOUNDR | SOFO | 4.40% |
| SUPPORTCOM I | SPRT | 3.75% |
| UNISYS CORP | UIS | 3.31% |
| SHORETEL INC | SHOR | 3.22% |
| GREEN MOUNTA | GMCR | 3.13% |
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