Tuesday - January 16, 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 - Genentech (DNA) More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum - Standard Motor Products (SMP) Standard Motor Products (SMP) earned two mentions last year as a Zacks Momentum Stock of the Day, on Sep 6 and again on Oct 11, 2006. SMP has gained about 25% since it was featured and has made new 52 week highs in the process. The stock closed Friday at $15.04, very near its 52-week high of $15.70. The stock faces significant upside resistance between $16.00 and $16.25. Given its sharp climb from its Oct lows, there is very little nearby support. This is a Momentum stock that may well be losing its upside momentum. Read the full analysis on SMP now! Since we first highlighted Atlantic Tele-Network, Inc. (ATNI) as a Value pick on Nov 15, the stock is up nearly 21%. Consensus estimates for this year and next are up over the past two months. In early December, ATNI declared a quarterly dividend of 14 cents per share. Read the full analysis on ATNI 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: 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. AMN Healthcare Services, Inc. (AHS) reported third-quarter earnings of 28 cents per share in early November. The result outperformed the consensus estimate by approximately 27% and surpassed last year's result. AMN Healthcare Services’ earnings per share have been ahead analysts expectations for the past five straight quarters. AHS has a ROE of 15.32 and a price to sales ratio of 0.89. Read the full analysis on AHS now! Acuity Brands, Inc. (AYI), which has a ROE of 21.76 and a price to sales ratio of 0.98, recently announced record fiscal first-quarter results for net sales, net income, and earnings per diluted share. AYI’s First-quarter earnings per share totaled 77 cents, exceeding the consensus estimate by roughly 20% and improving on last year’s 48 cents per share. Read the full analysis on AYI now! Imperial Sugar Co. (IPSU) recently posted fiscal fourth-quarter financial results, stating that industry dynamics were very favorable to the company and enabled it to improve margins across all channels to very acceptable levels. Earnings per share totaled $1.34, reversing the previous year’s loss of 26 cents and topping the consensus estimate by approximately 52%. The company’s ROE stands at 30.37 and its price to sales ratio is 0.31. Read the full analysis on IPSU now! Wellcare Health Plans, Inc. (WCG) meets the criteria for this Profit Track with a ROE of 24.00 and a price to sales ratio of 0.98. The company will announce financial results for the fourth quarter and year-end 2006 on February 13, 2007. In early November, WCG released third-quarter earnings of $1.06 per share, beating analysts’ forecasts of 94 cents and more than doubling the year-ago result. Read the full analysis on WCG 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 explains the importance of Screening and Backtesting. Find out how to increase your odds for success. More... 3. ZACKS EQUITY RESEARCH In the first half of our rather lengthy discussion with senior banking and finance analyst Scott Jaggers, CFA, we wanted to grapple with some of the issues he will be paying close attention to as fourth quarter (Q4) numbers for companies within his coverage are released over the next few weeks. What besides margins – which we’ll save for a later discussion – will you be paying close attention to as fourth quarter banking numbers begin to come out? A couple other areas we’re watching closely are growth and credit quality. Loan growth is one area in particular, which is one area that clearly slowed for a lot of people in Q3. So this is something we are a little bit wary of; we are generally expecting some reacceleration there, but it’s something we’re going to need to watch for and see if this may continue to soften instead. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - There are a lot of pieces to this puzzle – a lot of different areas where people lend money, so it’s hard to get our arms around how it all impacts any particular company. We did note the Fed released its monthly consumer credit numbers a week ago Monday. These are a one-month lag, so we’re talking about November’s numbers. Data showed a really strong November after we had seen some weakness in September and October, so we see a little bit of optimism there. This was something on the order of $10 billion of additional credit from month-end October to month-end November, just in consumer non-real estate areas. That’s encouraging – but again, there are a lot of pieces here. Are you also keeping a close eye on things like deposit growth? Deposit growth was a big, big challenge in Q3, as well as one of the biggest surprises, I think. For most, deposits were flat or down in Q3, and even within that there was a huge negative mix shift; what was generally involved was losing money from savings and checking and other low-cost kinds of accounts, and adding into time deposits – CDs and things that pay more of a market rate. So that was very painful. Free and cheap deposits are really a positive for banks’ margins, and they’ve been a good source of holding margins up over the last year or so. But that really deteriorated in Q3, so we’re watching very closely to see if that continues. I think the bias is that it probably won’t, so much, due to the fact there hasn’t been any additional Fed tightening, and there hasn’t been an impetus for people to increase rates on CDs and so forth. But competition plays a big role in that, so it goes somewhat beyond what the Fed is doing. If competitors in the market are forcing the hand of individual banks, then they either raise rates or lose deposits. So that’s something we will need to watch. Don't we always come around to expectations on credit quality in these types of discussions? Sure, we’ve talked a lot about credit quality in past interviews. What has happened over most of 2006 and late 2005 was that we kept thinking credit quality was going to deteriorate, and it really didn’t. In fact, Q3 was the first time we really could say credit quality deteriorated at the margin for just about everybody. It wasn’t necessarily dramatic, but it was definitely downward. We are now assuming this was kind of a mental inflection point that is only going to get worse from here. This is definitely something to keep an eye on; if credit in Q4 deteriorated dramatically, then it could be a negative. Then again, if credit improves throughout the industry, that’s a positive that could serve as a catalyst for stocks to go up. Either way, we all think this is going to be something big in the next phase of the cycle. And the way accounting rules have played out, it looks like people’s reserves are a little bit thinner than they probably were the last time they went through the credit cycle. Click here to read the complete Analyst Interview. Scott Jaggers, CFA is a senior analyst covering the banking and finance sector for Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include UPS (UPS), Skyworks Solutions (SWKS), Pool Corporation (POOL) and Baxter Int’l (BAX). See their latest posts: click here. Skyworks Solutions (SWKS) - Growth Continues. For full Zacks research report, click here. Snap-on, Inc. (SNA) - Costs Rise, Growth Slows. For full Zacks research report, click here. The Week of Jan 15 – Jan 19 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. Last week we looked at the High Open Interest Call Filter and determined that wireless giant QUALCOMM (QCOM) looked like a nice bearish play over the coming months. Today we’ll take a look at the other side of this filter – the High Open Interest Put filter and try to find a bullish play. What exactly is the High Open Interest Put filter? First, let’s look at what a put is. Puts are simply a bet that the underlying stock is going to move lower. From our contrarian point of view, a large number of puts accumulated at a certain strike just below the stock's current level is a sign of potential options-related support. 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 puts at a certain strike have the potential to serve as a solid level of support. 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. Looking at the list of names on the filter from Friday, one name turned up more than any other and that was the iShares Russell 2000 Index Fund (IWM). Now obviously this is a little different than our normal pick – as this isn’t an individual equity but an index on small cap stocks. But given all of the heavy put open interest just below the IWM's current level of $78.50 – again this could hold as strong support going forward. Now glance at a chart of the IWM. Although it’s been lagging large caps the past few months, technically the IWM is still appealing and in a nice uptrend. Nothing wrong here. Also we’ve noticed that over the last half of 2006 as the month would move closer to expiration, more and more bearish puts would pile on – thus acting as strong support and an eventual expiration week rally. Bernie has noted this action several times on our website. Given that we’re seeing this same phenomenon this month - the odds do once again favor some type of strong price action expiration week. We’ll be back next week with another money-making idea using one of our filters. In the meantime, 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. Paul Tracy offers information on one of the most profitable industries on the planet. Benefit from his insight. More... Dr. Edward Olmstead highlights a play on a company in the aerospace/defense industry, along with one from the computer systems sector. 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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