Tuesday - January 30, 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 - Zoll Medical (ZOLL) More...
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Momentum - Deckers Outdoor (DECK) Deckers Outdoor (DECK) was a featured Zacks Momentum Stock of the Day on Aug 16, 2006. Since then the stock has gained 32% and set new historic highs on Dec 27 at $60.56. The stock has since fallen to a Zacks Rank #3 and had several failed attempts to move into new high ground. Currently this stock looks rather tired, with no real support until $35.00. Read the full analysis on DECK now! Tidewater Inc. (TDW) surprised to the upside by 4.6% when it reported third-quarter fiscal 2007 earnings per share of $1.61. Compared to the same period last year, earnings ballooned 54.8%. Revenues rose 22.7% to $287.9 million, versus $234.6 million last year. TDW topped the Street's estimate for nine straight quarters. Read the full analysis on TDW now! Find the best-performing stocks within the Zacks #1 Rank list each week. Last week's top performers include Universal Stainless & Alloy Products (USAP) with a 10.6% gain. Read the full article now!
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: High Rank Value High Rank Value is a strategy designed to find the true bargains among value stocks. By requiring a Zacks Rank of #1 ("Strong Buy") or #2 ("Buy"), this strategy restricts the pool of value stocks to only those with positive revisions in earnings estimates. In other words, profits are expected to improve in the future at a faster pace than originally anticipated. The combination of a low valuation and a high Zacks Rank is very profitable. This Profit Track has consistently topped the S&P 500 during the past five years. In 2005, High Rank Value generated an annualized return of +13.7%, more than double the 6.5% return for the S&P 500 (return data is through Dec 2). Aspen Insurance Holdings Ltd. (AHL) will announce fourth-quarter and year-end 2006 results on February 8, 2007. In early November, the Zacks #1 Rank (Strong Buy) company provided an outlook for 2007, stating that while it expects market conditions to remain generally attractive in 2007, it anticipates that rates will decline in some of its product lines. AHL offers a price-to-earnings (P/E) multiple of 8.67 and a price-to-book (P/B) multiple of 1.25. Read the full analysis on AHL now! American Home Mortgage Investment Corp. (AHM) recently reported fourth-quarter earnings of $1.21 per share, outperforming the previous year’s 27 cents and exceeding the consensus estimate by nearly 2%. AHM could be a good fit for a value-oriented portfolio as evidenced by its price-to-earnings (P/E) multiple is 6.7 and a price-to-book (P/B) multiple of 1.54. Read the full analysis on AHM now! Axis Capital Holdings Ltd. (AXS) satisfies the criteria of this Profit Track with a price-to-earnings (P/E) multiple is 5.85 and a price-to-book (P/B) multiple of 1.20. The company will announce financial results for the fourth quarter in early February. The third-quarter report was released in late October. Earnings per share were ahead of the consensus estimate by 12% and reversed the year-prior loss. Read the full analysis on AXS now! Diana Shipping Inc. (DSX) has a price-to-earnings (P/E) multiple is 13.3 and a price-to-book (P/B) multiple of 2.31. The company released its report for the third quarter in early November. DSX 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. Read the full analysis on DSX 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 explains the importance of Screening and Backtesting. Find out how to increase your odds for success. More... 3. ZACKS EQUITY RESEARCH With so much speculation surrounding the drug industry amid fourth quarter earnings season – dealing with everything from consolidation possibilities to changes in the federal government’s attitude toward Big Pharma – we thought we’d see how things look from the perspective of our senior pharmaceuticals and biotech analyst, Jason Napodano, CFA. Are you getting a sense so far of how Q4 is shaping up? Well, it’s still very early, but we have had the two big biotech companies – Amgen (Nasdaq: AMGN) and Genentech (NYSE: DNA) – report earnings already. In addition, Pfizer (NYSE: PFE), Abbott Labs (NYSE: ABT), Bristol Myers-Squibb (NYSE: BMY) and Johnson & Johnson (NYSE: JNJ) have already reported on the Big Pharma side. Generally, things have been coming in in-line, if not even a little better on the revenue side. The bottom lines have been pretty much coming in-line, which is good. Companies are generally guiding to within the range of consensus for 2007, so I’d say there have been no major surprises so far. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Amgen was down a bit after it reported, which was understandable – the company had a couple clinical trials that failed. Other than that, the revenues and earnings for Amgen look good. I think it’s just that some people got a little spooked by their clinical failures. Where do you see particular strength in the drug sector going forward? It’s kind of a mixed bag. Pfizer, for instance, had their conference call where they talked about massive restructuring and reorganization, cost-cutting and layoffs, and the company is clearly struggling in terms of top- and bottom-line growth. Whereas Abbott Labs reported pretty solid growth and are looking for very solid growth of the next couple years. The companies like Abbott and J&J, which are a little more diversified, are reporting better and more consistent results than some of the pure-plays like Pfizer. But it really just depends on how much generic exposure you have and what you’re able to do with the pipeline. If you’re a company like Genentech or Abbott that’s got a great pipeline, then the future looks very bright. If you’re a company like Pfizer, where the pipeline is a little bit challenged, then 2007 might be more of a build-up-the-base kind of year. Does this have much to do with product mix, such as over-the-counter offerings that a company like J&J has? J&J’s consumer division was very solid in 2006, and it’s even going to be better in 2007 with the acquisition of Pfizer’s consumer division. Abbott Labs reported strong results from its diagnostic division and nutrition division. Abbott is seeing very solid results from its vascular business, which is the drug-eluting stent business. This should a significant contributor to Abbott’s growth in the future. And then companies like Genentech and even Amgen with their most recent report are seeing positive trends from new products. Amgen’s got a new cancer drug on the market and Genentech has a new product to treat macular degeneration. So new products look good and medical diagnostic and consumer sides look good. But from Pfizer’s standpoint, some of the older, bigger pharmaceutical products maybe don’t look as good. Obviously, this is on an individual company basis, but right now it seems like the companies that are branching out beyond just those large-market, primary care pharmaceuticals are the companies that are doing well right now. Click here to read the complete Analyst Interview. Jason Napodano, CFA is a senior analyst covering the pharmaceutical and biotech sectors for Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include Hilton Hotels (HLT), Caterpillar (CAT), Coca-Cola (KO) and Frontier Financial (FTBK). See their latest posts: click here. Hilton Hotels (HLT) - Strength in Industry. For full Zacks research report, click here. Overstock.com (OSTK) - Expect Weakness. For full Zacks research report, click here. The Week of Jan 29 – Feb 2 Positive Surprises Picking Up 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 weeks of 2007 have been pretty volatile and rather difficult to trade. Nevertheless, we try to find solid trading ideas by using a sound process and trading what looks good. But remember; don’t force yourself into a trade. If nothing looks good, then don’t do anything. There’s an old saying, “Some of the best trades are the trades you don’t make.” Now, let’s take a look at the Put/Call Open Interest Ratio Filter to find a bullish play for the coming months. What is the Put/Call Open Interest Ratio Filter? Well, let’s first define a put and a call. Puts are simply a bet that the underlying stock is going to move lower, while calls are a bet that the underlying stock is going to move higher. According to our glossary, the Schaeffer’s put/call open interest ratio (SOIR) is a ratio of open puts to open calls among options set to expire within three months for a given underlying security. A SOIR greater than one indicates that more puts are open than calls, indicative of pessimism from the speculative options crowd. This filter focuses on stocks whose put/call ratios have exceeded 1.00. Furthermore, a SOIR greater than one indicates that an unwinding of the existing pessimism could serve to push the underlying stock higher. Before looking at a particular stock, let’s address our Schaeffer’s methodology. We are contrarian-based investors, which mean we want to see skepticism toward an outperforming stock. On the other hand, we want to see optimism toward an underperformer. In our eyes, too much optimism is a sign that nearly everyone who wants to invest in a particular stock already has. 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 we use to measure overall sentiment include short interest, magazine cover stories, media comments, and analyst ratings. Looking at Friday’s list, which I sorted in order of the highest ratio, several interesting bullish plays came to light. I have whittled that list down and intend to focus on Big Lots (BIG). It is a given that pessimism from the options pits runs high toward the discount retailer; its SOIR checks in at 1.94 and is at its 52-week high. So, is the pessimism warranted? Let’s take a look. One word could describe BIG’s technical performance: outstanding. However, let’s look at the technical evidence. Recently, the shares have consolidated slightly above the 25 level. This is nice, as 25 is the site of BIG’s 10-day moving average, which has helped buoy the shares since the middle of July. Now, this support hasn’t been rock-solid, but it has guided the stock higher nonetheless. Furthermore, this trendline bullishly crossed its 20-day counterpart. This technical formation is often the harbinger of a continued uptrend. The retailer’s weekly chart shows similar support at the 25 level. You will notice that the support of BIG’s intermediate-term, 10- and 20-unit moving averages are roughly 1.5 points lower than the stock’s current position. The shares may not have to wait long for this support, as the twin trendlines are in a steep ascending pattern. Moreover, this duo should put a floor on any pullback, as the equity has not finished a week below this duo since October 2005. Finally, let’s look at a monthly chart for the bargain beast. Since taking out resistance at the 20 level, it has been full steam ahead for the stock. Again, the 10-month and 20-month trendlines are situated well below BIG’s current position, but their support has not wavered since October 2005. The ascending pattern that this pair has assumed should bring them into the picture as support sooner rather than later. Now that we have looked at BIG’s technical prospects, let’s look at a few of the sentiment indicators we like to use. We already know that pessimism from the speculative options crowd is at a 52-week high. This is a big plus from our contrarian point of view; heavy pessimism toward an outperformer. Now let’s look at short interest for BIG. Shorting a stock means that you are selling it with the intention of buying it back later at a lower cost. Basically, you are betting that the shares will go down. I like to see more than 5% of a firm’s float sold short and more than four days to buy back an equity’s shorted shares at its average daily trading volume. An accumulation of this ilk suggests that there is more than enough fuel to push the stock higher should any good news cause the bears to scramble and cover their short bets. This is exactly what we have with BIG, despite the fact that short interest decreased during December. More than 18% of BIG’s float is sold short and it would take nearly eight days to buy back these shorted shares. This combination is another plus from our contrarian point of view. Another good way to gauge sentiment is to look at analysts’ opinions. According to Zacks, only three analysts follow BIG, and two of them rate it a “hold.” This configuration affords the chance for fresh positive coverage, which could propel the stock higher. Yet another plus from our contrarian perspective. The end result of the glut of pessimism toward an outstanding performer is a Schaeffer’s Equity Scorecard rating of 9.0 out of a possible 10. This high rating suggests that there is enough money waiting on the sidelines to push BIG higher as this apprehensive group is drawn into the investing game. I feel our stance on BIG is rather transparent, bullish. If you feel the same way, add BIG to your bullish watch list. We can revisit this position later and see how it has performed. That said, a bullish play on this retailer lines up rather nice from our contrarian point of view. Make sure to continue utilizing all of the valuable filters on these pages for more money-making ideas. Moreover, don't be afraid to make a few paper trades in order to see what strategy works best for you. 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. Thanks for reading, best of luck in your trading! 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. Jack Adamo ponders a few different market scenarios. Discover the possibilities and check out a few stock updates. More... Ian Wyatt highlights a developer of semiconductor controllers for digital media storage and mobile multimedia devices. Discover why he likes this company. 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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