Friday - February 16, 2007
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1. ZACKS RANK BUY STOCKS
Zacks #1 Rank 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 - Gentiva Health Services, Inc. (GTIV)
Gentiva Health Services, Inc. (GTIV) has met earnings estimates in each of the past three quarters. Six analysts have raised their forecasts for 2007. Over the past month, 2007 estimates have increased eight cents to $1.15 per share. The company's average broker rating has been steady at 2.89. Read the full analysis on GTIV at http://at.zacks.com/?id=2505
Growth & Income - AptarGroup, Inc. (ATR)
AptarGroup, Inc. (ATR) beat the consensus earnings estimate for the past five quarters. The company recently reported record results for the fourth quarter and full year of 2006. Consensus estimates are up for both this year and next. ATR has a current dividend yield of 1.3% and a five-year average dividend yield of 1.0%. This Zacks #1 Rank stock has also returned value to shareholders in the form of share buybacks. Read the full analysis on ATR at http://at.zacks.com/?id=2506
Momentum - General Cable (BGC)
On Feb 7, General Cable (BGC) announced fourth-quarter 2006 profits of 67 cents per share. The result marked a 131% year- over-year improvement and a 14% positive surprise above analysts' expectations. Revenues rose to $925.3 million from $617.5 million last year. It is significant to report that the fourth quarter was the eighth straight quarter in which BGC exceeded analysts' expectations. In fact, BGC has surpassed the consensus estimate in 15 of the last 16 quarters. Read the analysis of BGC at http://at.zacks.com/?id=2507
Value - SMART Modular Technologies (WWH), Inc. (SMOD)
SMART Modular Technologies (WWH), Inc. (SMOD), a Zacks #1 Rank stock, topped analysts' earnings expectations for the past four quarters by an average margin of 14.5%. Analysts have upped their profit forecasts for both this year and next. Earnings per share are projected to grow 15% over the next 3-5 years. SMOD's return on equity quadruples that of the industry average-32% compared to 8%. Its PEG ratio currently sits at 0.87. Read the full analysis on SMOD at http://at.zacks.com/?id=2508
Zacks Rank Resources
* Zacks Rank Homepage at http://at.zacks.com/?id=3104
* Zacks Elite: Discover Ben Zacks' hand picked #1 Rank stocks on his Timely Buys list at http://at.zacks.com/?id=2550
* Zacks Options Trader: Combine the timeliness of Zacks #1 Rank stocks with the explosive profit potential of options. Learn more at http://at.zacks.com/?id=2689
* Zacks Wealth Management: Own all the Zacks #1 Rank stocks in a portfolio managed by Zacks. Learn more at http://at.zacks.com/?id=2551
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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).
Here are four stocks that make the grade for the High Rank Value Profit Track:
First United Corporation (FUNC) satisfies the criteria for this Profit Track as evidenced by its price-to-earnings (P/E) multiple of 10.49 and a price-to-book (P/B) multiple of 1.42. In mid-December, FUNC declared a dividend of $0.195 per share. The company announced financial results for the third quarter in early November. Earnings per share totaled 53 cents, surpassing the year-prior total of 50 cents. Continue your research on FUNC at http://at.zacks.com/?id=2290
MCG Capital Corporation (MCGC) will announce fourth-quarter results on February 27, 2007. 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. During the past four consecutive quarters, MCGC delivered earnings that were above Wall Street estimates. MCGC offers a price-to-earnings (P/E) multiple of 11.65 and a price-to-book (P/B) multiple of 1.57. Continue your research on MCGC at http://at.zacks.com/?id=2291
United Online, Inc. (UNTD) recently reported fourth-quarter earnings of 29 cents per share, beating last year's 28 cents and exceeding the consensus estimate by 21%. The company noted that organic revenue growth in its Content & Media segment drove United Online's sequential revenue growth this quarter. UNTD has a price-to-earnings (P/E) multiple of 13.59 and a price-to-book (P/B) multiple of 2.52. Continue your research on UNTD at http://at.zacks.com/?id=2292
Newcastle Investment Corp. (NCT) will release financial results for the fourth quarter on February 22, 2007. In early November, the company posted third-quarter earnings of 68 cents per share, outpacing the previous year's 63 cents and surpassing the consensus estimate by a penny. Newcastle Investment Corp. has a price-to-earnings (P/E) multiple is 11.94 and a price-to-book (P/B) multiple of 1.64. Continue your research on NCT at http://at.zacks.com/?id=2293
To see the track details for this winning screen, go to http://at.zacks.com/?id=2294
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" at http://at.zacks.com/?id=2295
SCREEN OF THE WEEK
Price & Volume
Kevin Matras looks at how to use Price and Volume for locking in profits, cutting losses and spotting potential trend changes: http://at.zacks.com/?id=2289
3. ZACKS EQUITY RESEARCH
Though continuing to grow at impressive rates, the economies throughout Latin America have failed to garner headlines the same way East Asian economies have. To help sort through where the positive Latin American stories can be found, we conversed recently with senior analyst Claudio Freitas, CFA.
What do you expect from Brazilian interest rates in 2007?
In the last Brazilian Central Bank meeting, the rate decreased by 25 basis points. I believe this was a conservative decision; I think there is room for an additional 50-point cut. Inflation in 2006 reached 3.2% and the expected inflation for 2007 is now at 3.9%. The official inflation target is 4.5% and the nominal rate is currently at 13%. There is enough room for continued cuts throughout 2007.
Zacks Equity Research continued...
Additionally, the Central Bank has been increasing its daily buys in the exchange rate cash market in order to prevent a major appreciation of the Brazilian real. I strongly believe that in the very short-term the Central Bank will be forced to cut rates again by 50 basis points each time there is a new meeting. By the end of 2007, I expect a rate between 10% and 11%.
Do you feel Brazilian stocks will outperform the rest of Latin America, or do you see more strength elsewhere?
I believe the continued fall in the Brazilian interest rates will drive local stocks up; these seem to be the best investments in Latin America nowadays. Moreover, there is another important point that should be considered: Brazilian interest rates will keep on falling in the short-term, and local economic growth is expected to improve. In such a scenario, I expect Brazil to become investment grade within two years. Historically speaking, it is quite normal to expect a huge reaction of the stock market during the process of a country reaching investment grade. The Mexican case is a great example of this development.
Are Latin American markets in serious danger of socialist governments taking over and/or increasing their power?
The political situation in Latin America must be understood considering the historical background of the region. It is not fair to call Hugo Chavez, for instance, a Socialist; I would bet that he never read a line of Marx. He is just an old fashioned Latin American dictator (Caudillos, as they call them in Spanish) who is trying to increase his power using oil money. The Socialist rhetoric is just to attract external and internal sympathy.
A government like this could last for years, as long as oil prices remain high. Other less wealthy countries, like Bolivia, are already facing some internal problems. The president of Ecuador has just taken office, and he has used Socialist rhetoric in his campaign, but let's see what he will do now that he's in office. The bottom line is that only Venezuela can afford some radical steps; other countries will have to behave or face political and social unrest.
Read the complete ANALYST INTERVIEW article at http://at.zacks.com/?id=2306
Claudio Freitas, CFA is a senior analyst covering Latin American markets for Zacks Equity Research.
MORE FROM ZACKS EQUITY RESEARCH...
Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include UBS (UBS), DaimlerChrysler (DCX), Jones Lang LaSalle (JLL) and Blue Nile (NILE). See their latest posts at http://at.zacks.com/?id=2583
BULL OF THE DAY
Citi Trends (CTRN) - Poised for Growth. Full Zacks research report at http://at.zacks.com/?id=2281
BEAR OF THE DAY
UST, Inc. (UST) - Continually Losing Share. Full Zacks research report at http://at.zacks.com/?id=2282
ZACKS INDUSTRY RANK
Expectations for Networking Stocks
Cisco Systems (CSCO) delivered a bullish report last week, but did it change expectations for other networking stocks? http://at.zacks.com/?id=2362
Positives Maintaining Big Lead
With more than 75% of the reports in, it is clear that positive surprises will once again swamp disappointments: http://at.zacks.com/?id=2364
Rating Upgrades - New! (Premium)
Find out which stocks have been recently upgraded by Zacks Equity Research: http://at.zacks.com/?id=3007
Zacks Equity Research Buys - New! (Premium)
Read the reports on all of the stocks on the Zacks Equity Research Buy List: http://at.zacks.com/?id=3008
Learn More about Zacks Equity Research at http://at.zacks.com/?id=2287
Full access to Zacks Equity Research is now available on Zacks.com: http://at.zacks.com/?id=3009
Zacks Wealth Management: Own all the Zacks #1 Rank stocks in a portfolio managed by Zacks. Learn more at http://at.zacks.com/?id=2696
4. FEATURED EXPERTS
Here we cast the spotlight on timely Featured Expert commentaries that recently appeared on Zacks.com.
It's About Timing
Fed Hawks Circling Above
Economy on Solid Footing Entering 2007
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 Rank (Strong Buy) List has generated 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.
FREE PORTFOLIO TRACKER
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Regards and Happy Investing,
Charles Rotblut, CFA
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