Wednesday - June 27, 2007
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1. ZACKS RANK BUY STOCKS
Zacks #1 Rank stocks average a 31.9% 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 – General Cable (BGC)
General Cable (BGC) is a company on a roll. The company has significantly exceeded analyst expectations in nine straight quarters. Year-over-year growth has exceeded 125% in each of the past six quarters. Three of the four analysts covering the stock have raised their forecasts for this year. Over the past 60 days, this year's estimates have increased $1.05 to $4.27 per share. The stock has an impressive 39% ROE to boot. Read the analysis of BGC now!
Growth & Income – Deere & Company (DE)
Deere & Company (DE) has exceeded earnings estimates in seven straight quarters, with five of them posting double-digit positive surprises. Six analysts have raised their forecasts for this year. Over the past 60 days, this year's estimates have increased 35 cents to $6.95 per share. Analysts predict that the company can grow earnings at a 15.49% annualized rate for the next three to five years. The stock also has an impressive 21% ROE. Read the analysis of DE now!
Momentum – JA Solar Holdings Co. Ltd. (JASO)
JA Solar Holdings Co. Ltd. (JASO) is currently trading at record highs and has returned over 65% since its IPO in February of this year. The company’s first quarter earnings surprise, along with increasing trends in 2007 and 2008 estimates, should support the stock in the near future. Read the full analysis on JASO now!
Value – Deutsche Bank AG (DB)
Deutsche Bank AG (DB) is currently trading at an attractive discount to both the overall market and its investment banking peer group. Furthermore, the company’s strong financial performance is supporting the stock’s year-to-date gain of 10.1%. Read the full analysis on DB now!
2. SCREEN OF THE WEEK
Zacks.com offers three unique weekly commentaries that all
further our mission to help you Profit from the Pros. Today is
the latest installment of Screen of the Week from Kevin Matras.
Each week, Kevin shares with you another winning screen he has
discovered using the Research Wizard software from Zacks
Investment Research. Click here to learn more about the Research Wizard.
"Price & Volume: Pulling Profits and Cutting Losses"
This week, I want to talk about using price and volume to pull profits and cut losses. And I’ll go over three ways to do this.
First, take a look at your stocks. Are they moving higher convincingly on growing volume? Or are they marking higher prices on diminishing volume?
This is important since volume is expected to follow price.
If the stocks on your radar are moving higher, but without greater investor interest, it can often mean a pullback is in the near offing.
An analogy that someone told me illustrates this clearly:
Imagine you have a water hose and a ball. If you placed the ball on top of the water hose and sprayed it upwards, the ball would be lifted by the stream of water. The more water pressure you give it, the higher the ball will go. But once you start easing up on the water pressure, the ball will stop moving higher and eventually start falling as the water pressure diminishes.
And that’s kind of what happens with stocks. The more buying pressure there is, the higher it’ll go. But once the buying pressure eases up, it often means a pullback is in store. The pullback can be an ordinary retracement as new buyers catch their breath, or it could be a trend-changing event. So pay attention to what the volume is telling you and be alert.
A screen for helping you weed out the weak from the strong can be as simple as looking for three days (or more) of higher prices while each day it’s registering less buying pressure (lower volume).
The parameters are:
If your stocks show up on this list, pay close attention. They could be in store for a direction change.
You can also look for three days down (or unchanged) with increasing volume. Lots of action with no upside progress can often be a sign of distribution (people selling off their stock), or people getting short.
The parameters are:
Here are two stocks that fit this screen for Monday, June 25, 2007):
You may even want to check for stocks with big price drops on much larger-than-average volume. If the price falls by 6%, for example, on 20% more volume than average, that can also be your cue that things may be changing. Again, since volume in general should follow the price, a big price drop on increasing volume could be foreshadowing even lower prices to come.
The parameters are:
Such as (for Monday, June 25, 2007):
There are many other ways to use price and volume as an indicator of a stock’s possible future direction, including on the way up. By simply applying these screens to your stocks, you could avoid ‘suckers rallies’, exit major tops sooner, and lock in hard-earned profits before the market takes them away.
(By the way, these strategies and many more come loaded with the Research Wizard program.)
See for yourself and put your own stocks to the test.
Historical daily volumes (and even prices) aren’t available in all screeners, but they are available in the Research Wizard. (Not to mention 650 other items as well). Sign up now for your two-week FREE trial to the Research Wizard and see how easy it is to make better trading decisions today.
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
3. ZACKS EQUITY RESEARCH
With the heart of “hurricane season” just a couple months away, we were interested in how insurance companies were prepared for a heavier-than-usual hurricane season, especially considering the reasonably light season last summer. Zacks senior insurance analyst Eric Rothmann was on hand for his perspective.
As we head into another hurricane season, are insurance companies in your coverage relatively well-prepared?
The quick answer would be that the industry is in relatively good shape. However, the severity of this hurricane season will be the ultimate determiner.
More. . .
Last year’s hurricane season was lighter than expected. Was this helpful with regard to companies building up capital?
While capital levels have been increasing, if you get three or four [hurricanes] at half the power of Katrina’s making landfall, to not expect capital levels to be impacted would be erroneous.
Are you expecting some price softening in the near future? What levels are you currently anticipating?
Competition has definitely become more pronounced, which we do not see moderating any time soon.
What would be your top property/casualty Buy recommendations at this time? The usual suspects, or any newcomers?
Given the benign hurricane season so far, and with 2Q07 results starting to be released in less than three weeks, at this point in time, we’re keeping our list short. We still like names like ACE Ltd (ACE), W.R. Berkley (BER).
For investors who may be looking to diversify into insurance stocks, what advice would you give them going forward?
We continue to think that we are close to experiencing price-to-perfection levels for the majority of the industry. Part of the reason for the continuation is lack of catastrophic events. In addition, while it many not appear to be a straight-line connection, we think the U.S. housing market also continues to aid in higher stock prices.
Eric Rothmann is a senior analyst covering the insurance industry for Zacks Equity Research.
Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include Anheuser-Busch (BUD), Aftermarket Technology (ATAC), Schering-Plough (SGP) and DJO, Inc. (DJO). To see their latest posts, click here.
Listen to the audio podcast of the Earnings Preview through Zacks' NEW Audio Feature
4. ZACKS WEALTH MANAGEMENT
Every week, Zacks Wealth Management provides informative articles on how to build and protect wealth. Today’s topic is:
A few weeks ago we discussed the importance and simplicity of passing wealth down to our loved ones through the use of IRA beneficiary designations. I want to focus more on this topic and discuss the optimal use of this simple tool to pass assets down to multiple generations. The goal is simply to maximize the tax-deferred growth provided by an IRA or in the case of a Roth IRA, tax-free growth. Imagine being able to provide a stream of lifetime distributions to your children or grandchildren tax free!
In my case, I have been converting assets from a Traditional IRA into a Roth IRA over time (starting in 2010 everyone will be able to do this). My spouse is my primary beneficiary (100%) and then the assets are divided equally among our children as contingent beneficiaries. I recommend a trust if minors are involved. The game plan, if my wife cooperates, is for us to determine how much she will need/want during her life expectancy. When I kick the bucket, she will have the option to disregard our previous planning and keep all the assets for herself or heed my wise advice to disclaim any of the assets she does not need/want so they pass to the children. These assets would then be distributed based upon their life expectancies and stretch out the “income stream” over their lives tax free.
In a different scenario, there may be children from a second marriage. If the IRA owner is currently married, what they can do is specify the primary beneficiaries to receive specific portions or shares of the IRA, (i.e. Spouse 50%, Child (1) 25%, and Child (2) 25%), essentially allowing the IRA owner to steer assets to whom he or she desires. Assuming the beneficiaries are different ages, each will have a different distribution schedule based on their life expectancy.
In the case of estate tax exposure, the spouse could disclaim all or part of the IRA to a Credit Shelter Trust to fully utilize their estate tax exemption to avoid double taxation (once at distribution and second at death). Whatever the spouse does not take or control will not be included in the IRA owner’s estate and can be passed down directly to children and/or grandchildren. The only other reason to utilize a Trust as a beneficiary, except for the purpose stated above, pertains to cases involving minors or spendthrifts. Otherwise, you are better off designating individuals as beneficiaries in order to take advantage of the varying life expectancies.
Why not give the primary beneficiary options rather than force them into a situation that may be tax disadvantageous? The best thing to do initially when the IRA owner passes away is to do nothing! Take your time. The inheritor has nine months to determine if disclaiming any of the assets makes sense. Keep in mind, if any portion of the assets are taken during this period, the option to disclaim is voided.
If you have any questions pertaining to disclaiming and maximizing the Life Expectancy Tables, do not hesitate to contact me at 888-600-2783 x 9251.
Fritz Fiebig is a Certified Financial Planner™ professional
This article is provided for informational purposes only and does not constitute legal or tax advice. Zacks Investment Management, Inc. is not engaged in rendering legal, tax, accounting or other professional services. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel.
CFP Board, a nonprofit regulatory organization, fosters professional standards in personal financial planning so that the public values, has access to and benefits from competent and ethical financial planning. CFP Board owns the certification marks CFP®, Certified Financial Planner™ and federally registered CFP (with flame logo), which it awards to individuals who successfully complete initial and ongoing certification requirements. CFP Board currently authorizes more than 50,000 individuals to use these marks in the United States. For more about CFP Board, visit www.CFP.net.
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.
Here's what the leading players are saying lately:
THE SUMMER IS A GOOD TIME TO PICK SOME MO (MO)
DIVINING THE FUTURES, KINDA, SORTA (DIG, DUG)
>> JAVA’S MARKET MUSINGS #81 <<
OTHER TOOLS FROM ZACKS
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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 Ranked stocks.
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