Tuesday - January 9, 2007
 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 - Garmin (GRMN) More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum - Opnet Technologies (OPNT) Since it was featured as a Momentum Stock of the Day on Jun 1, 2006 Opnet Technologies (OPNT) has gained more than 25%, compared to the S&P 500 which gained only 10.3% during the same period. In Jun we wrote that “evidence is beginning to mount that OPNT may well be moving out of its long slumber. As mentioned in the fundamental section, the company has delivered three straight large earnings surprises, evidence that the company is turning things around.” Read the full analysis on OPNT now! Since we first highlighted NBTY, Inc. (NTY) as a Value pick on Jun 2, the stock is up over 60%. Consensus estimates for this year and next continue to trend higher. The company exceeded analysts' earnings expectations for the past four quarters. Read the full analysis on NTY 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. Diana Shipping Inc. (DSX) released its report for the third quarter in early November. The company noted that its successful strategies to grow its fleet, while maintaining a flexible chartering policy that permits it to benefit from the dynamic of its marketplace, also have resulted in Diana Shipping being able to increase its dividend for the third quarter of 2006 to 40 cents per share. DSX has a current dividend yield of 9.83%. Read the full analysis on DSX now! General Maritime Corp. (GMR) offers a current dividend yield of 8.22%. In late October, the company declared a dividend of 71 cents per share in its report for the third quarter. Third-quarter earnings per share totaled 76 cents, soaring past the previous year’s 19 cents. The company commented that during the third quarter, it utilized its double-hull fleet to take advantage of a strong tanker market while at the same time continuing to provide value to shareholders through its dividend policy and share repurchase program. Read the full analysis on GMR now! MCG Capital Corporation (MCGC) satisfies the criteria for this Profit Track with a current dividend yield of 8.64%. In late October, the company reported third-quarter earnings of 42 cents per share, eclipsing the year-prior total of 34 cents and surpassing analysts' expectations of 37 cents. MCG Capital Corporation also declared a dividend of 42 cents per share for the fourth quarter. During the past four consecutive quarters, MCGC delivered earnings that were above Wall Street estimates. Read the full analysis on MCGC now! Trustreet Properties, Inc. (TSY) sports a current dividend yield of 23.47%. The company announced its financial results for the third quarter in early November, which included revenues of $54.9 million. The result was a year-over-year increase of 6.6% from last year's revenues of $51.5 million. TSY also declared a quarterly dividend of 33 cents per share in early November. Read the full analysis on TSY 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”. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - The Importance of Screening and Backtesting Kevin Matras explains the importance of Screening and Backtesting. Find out how to increase your odds for success. More... 3. ZACKS EQUITY RESEARCH Published reports now indicate that it’s questionable just how well retailers will have performed this holiday season. We brought in senior retail analyst Rob Plaza, CFA for his take on holiday sales figures for 2006. Retailers reported disappointing sales results recently. Was this a surprise to you? Not to me. To the market in general it was, but I had been looking for somewhere around 2 ½ - 3% growth during the holiday season. Preliminary sales results came in right around 3%, maybe a little bit more than that. So this wasn’t too surprising to me. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Is it common for Q4 projections in retail to overshoot actual sales figures? It depends on the year. Last Christmas, in 2005, we saw a really strong season with 5% growth, so it was really easy for retailers to beat expectations. But coming into this year, expectations were really high. That’s why the numbers were disappointing. What types of retailers performed best? We’re still seeing a lot of strength in the luxury end. There doesn’t seem to be too much of a slowdown there. Of the companies I cover, Nordstrom (JWN) would be in that group. Same-store sales were up about 9% for the holiday season, which was really strong. Are you changing your recommendations for any high-end companies like Nordstrom? I’ve had a Hold on Nordstrom for some time, and I’ve wanted to get in, but valuation has prevented me from putting an upgrade on the stock. I’ve been waiting for it to sell off, but it just hasn’t. I’ve been kind of kicking myself for not getting in sooner. But that’s definitely one to look at, especially if the stock price were to dip. Actually, any type of correction on that company would probably provide a good opportunity to upgrade Nordstrom to a Buy. What about the retailers who underperformed? Underperformance really went to apparel – anything that was away from the teen space had a tough time. Most blame the unseasonably warm weather, which left them with inventory like gloves, sweaters or coats that consumers really weren’t interested in buying. Using weather as a catch-all excuse for poor performance might be a little dicey, though. If a company struggles with weather issues, you probably don’t want to invest with them anyway. So which companies do you consider your top Buy recommendations going forward? I still like GameStop (GME) in the video game area. They had a blow-out holiday season, well above expectations. Guess? (GES) is probably my favorite apparel play – and, of course, they sell accessories beyond just apparel. Comps were close to 10%, with December sales near 15%. That’s a good, strong name right there. Click here to read the complete Analyst Interview. Rob Plaza, CFA is a senior analyst covering the retail industry for Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include aQuantive (AQNT), Omnicom Group (OMC), PMC-Sierra (PMCS) and Freddie Mac (FRE). See their latest posts: click here. VeriSign, Inc. (VRSN) - Poised for Growth. For full Zacks research report, click here. Snap-On, Inc. (SNA) - Valuation Too High. For full Zacks research report, click here. The Week of Jan 8 – Jan 12 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. The first few days of 2007 have been pretty volatile and tough to trade. Nonetheless, our job is to try to find solid trade ideas, use a sound process, and trade what looks good. Always remember though, this doesn’t mean to force a trade. If nothing looks good, don’t do anything. There’s an old saying, “Some of the best trades are the trades you don’t make”. With that out of the way, today we’ll take a look at the High Open Interest Call filter to find a bearish play for the coming months. What exactly is the High Open Interest Call 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, 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; 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. One more very important item we must touch upon regarding this filter is that the majority of the stocks it suggests are likely to be the big names that have lots of activity, such as the Nasdaq 100-Trust (QQQQ) , the Spyders (SPY) , or Microsoft (MSFT). These big names don't take away from the importance of this filter; they are just something to keep in mind. Looking at the list from Friday, one name that caught my eye was wireless giant QUALCOMM (QCOM), thanks to a huge build-up of calls at its January and February 40 strikes. Given all of the calls at the 40 strike, this level should be difficult for shares to break above over the coming months. Given that the shares are trading around $38.50 right now, this could make a good trade going forward. Technically, on a longer-term chart, the shares have had a rough time since May 2006, losing about 27%. And over the past twelve months the shares have shed over 14% – greatly underperforming the broader indexes. Also note that the shares are right on potential resistance from their 10-month moving average – making current levels very significant. Let's turn to a few sentiment indicators that we like to use. Remember, we're looking for optimism in the face of under-performance as a sign that most of the money that wants to move in and buy probably already has. Thus, more weakness is a high probability. 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, QCOM’s SOIR checks in at 0.44. That's all fine and dandy, but it only matters when you compare it to the other readings taken over the past year. Such comparison reveals that this number is lower than all but 3% of the readings taken during the past 12 months, suggesting short-term options players are very optimistic – exactly what we want to see. Shorting a stock means that you are selling it with the intention of buying it back later at a lower cost. In other words, you are betting 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 QCOM, we find that it would take just over a day for all of the shorts to cover – suggesting this crowd is confident in the shares. Another good way to get a gauge of sentiment is to look at what analysts think. Given that the shares have underperformed recently, optimistic analysts leave the door open to some downgrades. According to Zacks, there are 18 "buys," seven "holds," and no “sells”. Should the shares continue to underperform, this will leave lots of room for downgrades from this group. Add it all up and QCOM sports a Schaeffer’s Gold Score of 4.0 out of 10.0 – again indicating that further weakness could be in the cards. In conclusion, QCOM looks like a nice play for lower prices over the coming months and thus we’d suggest buying an intermediate-term put. Write it down and let’s see how it does, but everything does line up pretty nicely from our contrarian point of view. Please continue to use all of the filters on these pages 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 that when it comes to options, the majority of your trades are going to be losers. Don't get discouraged, because that's the beauty of the leverage that options provide. It takes only a few winners out of every 10 trades to make you a very happy investor. Good luck! To learn more about the High Open Interest 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. Gregory Spear discusses two investment themes: value-on-the-move and growth investing. Benefit from his insight. More... Charles Carlson sees a number of positive signs for the market. Read his commentary and discover some investment ideas for 2007. 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 06/18/2013
| Company Name | Symbol | %Change |
|---|---|---|
| STAAR SURGIC | STAA | 10.98% |
| LUMOS NETWOR | LMOS | 5.70% |
| INSTEEL INDS | IIIN | 5.28% |
| ERICKSON AIR | EAC | 5.10% |
| ASSURED GUAR | AGO | 4.98% |
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