Tuesday - April 10, 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 - O2Micro International (OIIM) Sotheby’s Holdings Inc. (BID) received favorable comments from an analyst on Apr 4. Favorable business conditions were cited, which should result in fourth-quarter and full-year results that exceed Wall Street expectations. Future revenue catalysts include the Sotheby’s May auction catalogues, which will likely be published in the next week or so. The analyst maintains a “Buy” rating on the stock and raised the price target to $50 from $45, due to higher revenue estimates. BID is up over 7% since being featured as a momentum stock on Mar 29. Read the full analysis on BID now! MKS Instruments, Inc. (MKSI), presented as a Value pick on Nov 17, has returned over 26%. MKSI exceeded analysts' earnings expectations in eight out of the past 10 quarters. Consensus earnings estimates continue to trend higher for MKSI. Read the full analysis on MKSI 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: Low Price Stocks Many investors prefer stocks priced below $20 because the low prices allow them to accumulate more shares. Fortunately, lower prices do not necessarily mean lower quality. This strategy identifies stocks priced below $20 that are trading at discount valuations and have a Zacks Rank of #1 ("Strong Buy") or #2 ("Buy"). The stocks identified by this search strategy trade at price-to-sales (P/S) multiples of 1.0 or below. The strong Zacks Rank is indicative of positive revisions in earnings estimates. Combining these characteristics can result in high-dollar returns Here are four stocks that make the grade for the Low Price Stocks Profit Track ArvinMeritor, Inc. (ARM), a Zacks #1 Rank (Strong Buy) company, posted fiscal first-quarter results in late January. Sales from continuing operations of $2.3 billion increased by 12% from the same period last year. While earnings per share of 16 cents, before special items, missed the consensus estimate by 36%, it was the first miss over the past five consecutive quarters. ARM’s price-to-sales ratio stands at 0.13, and the company experienced earnings per share profitability of $1.69 over the past 12 months. Results for the second quarter will available on May 1, 2007. Read the full analysis on ARM now! Books-A-Million, Inc. (BAMM) earned $1.12 per share during the past 12 months and sports a price-to-sales ratio of 0.58. The company announced fourth-quarter earnings of 90 cents per share in late March, outperforming the consensus estimate by 11%. BAMM noted that improvements in margin, better inventory management and discipline in cost control contributed to solid results. Read the full analysis on BAMM now! Goodman Global, Inc. (GGL) reported fourth-quarter earnings of 16 cents per share in early March, which matched the consensus estimate. "We delivered a strong finish to a very good year. We came close to matching our own industry-leading fourth-quarter 2005 sales performance, and, as a result, produced the best sales results in the industry, again," remarked Charles A. Carroll, president and chief executive officer. GGL offers a price-to-sales ratio of 0.69. The company earned $1.00 per share during the past 12 months. Read the full analysis on GGL now! Rush Enterprises, Inc. (RUSHA) has a price-to-sales ratio of 0.14. During the past 12 months, Rush Enterprises earned $1.94 per share. The company released its fourth-quarter and year-end results in mid-February. RUSHA mentioned that this was another record year, for the third year running. Gross revenue well exceeded the $2 billion mark for the first time in the company's history, and net income reached record levels as well. Read the full analysis on RUSHA 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”. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Kevin Matras goes over an exciting screening strategy called ‘Best Buys’ More... 3. ZACKS EQUITY RESEARCH Big-time buyouts in the real estate market have been grabbing headlines for weeks now, and we are wondering if hotels and resorts might be the next targets. Joining us is senior hotels analyst Sean P. Smith. Among companies in your coverage, are any considered to be good buyout candidates? Well, we’ve actually already seen a couple that have received buyout offers and accepted – everything from large hotel chains such as Four Seasons FS to smaller real estate investment trusts [REITs] such as Winston Hotels WXH. Currently, there is a lot of speculation on the Street concerning Starwood Hotels HOT due to the recent departure of their CEO. It was announced last week that the CEO was stepping down, which took a lot of the Street by surprise. He had only been there about two and a half years. The company just cited difficulty in management style – really more of a personality clash. More. . .
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - One of the interesting things is that the CEO left without any kind of severance package, and left some money on the table there. So that left some people kind of wondering. Over the weekend, The Wall Street Journal said that it was prompted by an anonymous letter from an employee regarding potential personal conflict issues; the CEO denies anything inappropriate. The company hasn’t come out with any real details, but the main point is, with that CEO being gone, a lot of people on the Street have considered that Starwood could be a more likely buyout candidate as they’re looking for a full-time CEO right now. The stock price went up after last week’s news, I believe. Yes it did. It actually moved from around $64 before the announcement was made to trade up around $70 to close the week last week. It’s down a little bit after the weekend article, but that upswing was the initial reaction. Has the market already priced in a lot of the buyout possibilities for these companies? To an extent, but I don’t think fully. I think when new news develops, even the speculation of a buyout – like we just saw with Starwood – pushes the price up higher. It really depends on the company, too. When Four Seasons announced last fall that it was being taken private it was at a pretty substantial premium. But when Winston Hotels had originally accepted an offer that was just a few percentage points higher than what the stock was trading at, in that case we actually saw another bidder come in with a superior offer. Just last week, the company announced that it has accepted the higher offer. Across the board, there may be a small premium priced in on lodging companies. But as for actual offers that are occurring, we’re still seeing them come in at a premium to the current trading price. What does mean for the valuations of these companies? They are running somewhat higher than the recent historical averages. But you also have to take into account the fact that the fundamentals and the outlook are stronger right now than they have been in recent years, as well. In the lodging sector, we saw from really the beginning of the Recession in 2000 all the way to 2003-2004, the sector was in a pronounced slump, as far as operating fundamentals go. 2004 was more of a stabilization year, and then from about 2005 on, we’ve seen those fundamentals strengthening. So the higher valuations now as compared to that earlier time period are certainly warranted. And I think the outlook is pretty strong. You had seen somewhat of a moderation in occupancy gains for the hotel companies that are out there, but there is still significant strength in the ability to push the average daily room rates higher. Here’s something that’s good to remember: it’s always good to fill up the hotel with additional occupancy, but with additional occupancy comes additional expenses, as well. When you push the room rate higher, the vast majority of that actually falls to the bottom line, so it can have a big impact on a company’s actual earnings. To read the complete Analyst Interview, click here Sean P. Smith, CFA is a senior analyst covering the lodging and leisure sectors for Zacks Equity Research. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include Conseco (CNO), Norfolk Southern (NSC), Chunghwa Telecom (CHT) and CarMax (KMX). Get their latest posts: click here. Kenexa Corp. (KNXA) - Bolstered by M&A. For full Zacks research report, click here. Affordable Residential (ARC) - Negative Affects. For full Zacks research report, click here. The Week of Apr 9 – Apr 13 Revisions Ratio for 2007 Drops to 0.80 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 Most Active Calls filter on Zacks. This week we’ll switch gears and check out the Put/Call Open Interest Ratio Above 1.0 filter. A put/call open interest ratio is simply the ratio of total put open interest to total call open interest. We compute Schaeffer's put/call open interest ratio (SOIR) based on open interest in the front three months only. These near-term options tend to attract a more speculative crowd, the sentiment of which is more useful for shorter-term trading. Before looking at a particular stock, let’s address our Schaeffer’s methodology. We are contrarian-based investors, indicating that we want to see skepticism toward an outperforming stock. On the other hand, we typically like 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 that 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 over the list of stocks with SOIRs above 1.0, I noticed Kohl’s (KSS). The security’s SOIR rests at 1.64, as put open interest easily outweighs call open interest among options with fewer than three months until expiration. What’s more, this reading sits at an annual high. In other words, at no time during the past year have options speculators been more bearishly aligned against the shares. Options players aren’t the only ones who have their doubts about the retailer. The number of KSS shares sold short has risen to 10.4 million, resulting in a respectable short-interest ratio of 3.7. An unwinding of these bearish bets could supply the security with some short-covering support. Meanwhile, Wall Street is split on the firm’s prospects. Zacks reports that KSS has earned eight “buy” ratings, seven “holds,” and one “strong sell.” This configuration leaves ample room for potential upgrades, which could supply the shares with a nice boost. From a technical perspective, KSS has been a stellar performer. The equity has easily outpaced both the S&P 500 Index (SPX) and its peers in the S&P Retail Index (RLX) on a monthly basis since January 2006. What’s more, the stock is currently sitting on a year-to-date gain of 11%, while the SPX has tacked on less than 0.2%. Last week, the equity broke through staunch resistance in the 74-75 region, which had capped KSS on a number of occasions since late October. The stock hit its highest level since May 2002, and is now less than 4% away from its all-time high of $78.83. Furthermore, the security has been in a strong uptrend along the support of its 10-week and 20-week moving averages since mid-February 2006. During this time frame, the equity has suffered only four weekly closes below both of these trendlines. Overall, this combination of growing pessimism against the stock’s strong technical backdrop has bullish implications from a contrarian perspective. As traders shed their short positions and jump on the stock’s bandwagon, the equity should enjoy a nice boost in buying pressure. With options players seemingly unwilling to relent in their pursuit of bullishly oriented calls, and room for things to degrade even further on the analyst front, MOT finds itself in a spot of trouble. Add to this the equity's failing health on the technical front, and you have the makings for a nice short position that could make a nice addition to your portfolio. 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. 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 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. Best of the Zacks $100,000 Challenge Zacks is conducting a nationwide talent search to find the very best stock pickers. The winner gets a $100,000 dream job with Zacks! . Sign up for free to join the competition, or just read what stocks the leading players are trading on the Zacks Challenge Player Blogs. Best of the Zacks Challenge Player Blogs Here's what the leading players are saying lately: Java J (Rank #373 with $111,174) MEMORY PHARMA… UP 50% TODAY… PROGRESS ON ALZHEIMERS DRUG… (MEMY) Read More or Comment on this post. Beris (Rank #16 with $144,362) FRONTEER ROARING AGAIN! (FRG) Read More or Comment on this post. MightyMo STRONG SECTOR: THE UTILITIES #6 Read More or Comment on this post. Read all the Player Blog posts. 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 05/17/2013
| Company Name | Symbol | %Change |
|---|---|---|
| VIASAT INC | VSAT | 19.35% |
| OLD SECOND B | OSBC | 5.76% |
| GAMCO INVEST | GBL | 4.61% |
| CORNING INC | GLW | 4.47% |
| SYNCHRONOSS | SNCR | 4.23% |
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