Monday - July 30, 2007
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1. ZACKS RANK BUY STOCKS
Zacks #1 Rank stocks average a 32.2% 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 - MGI Pharma (MOGN)
MGI Pharma (MOGN) is in a hyper-growth phase. The company has exceeded analyst expectations by an average of 245% over the past two quarters. Earnings are expected to grow 251% from last year to this year, and jump another 81.7% next year. Over the past 60 days, this year's earnings estimates have risen 13 cents to 38 cents per share. Analysts project that the company will grow 32.33% over the long term. Read the full analysis on MOGN now!
Growth & Income - Snap-on Incorporated (SNA)
Snap-on Incorporated (SNA) topped the consensus earnings estimate for the past 12 quarters and in 14 out of the past 16. It most recently surprised by 20% when it posted second- quarter profits of 90 cents per share. Consensus earnings estimates are up for both this year and next year over the past 30 days. Earnings per share are projected to grow 10% over the next 3-5 years. SNA has a current dividend yield of 1.94%. Read the full analysis on SNA now!
Momentum - Intuitive Surgical Inc. (ISRG)
Intuitive Surgical Inc. (ISRG) reported another blow-out quarter, beating estimates by more than 17% and further fueling the stock's 108% year-to-date return. Furthermore, the medical innovator revised its full-year revenue growth projections, adding more fire to this textbook momentum play. Read the full analysis on ISRG now!
Value - Lehman Brothers Holdings, Inc. (LEH)
Lehman Brothers Holdings, Inc. (LEH), a Zacks #1 Rank stock, exceeded analysts' earnings expectations in 15 out of the past 16 quarters. In mid June, the company reported solid second- quarter and year-to-date results. Consensus earnings estimates have risen over the past two months. LEH has a price-to-book ratio of 1.8 compared to 4.6 for the market and 2.0 for the industry. Read the full analysis on LEH now!
Zacks Rank Resources
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
Profit Tracks: Growth and Income
This screen looks for stocks that are paying dividend yields of greater than 8% along with other attractive fundamental attributes. Although this screen is based on a long-term and lower risk approach to investing, it has a history of outperforming the S&P 500.
Here are four stocks that make the grade for the Growth and Income Profit Track:
Anthracite Cap Inc. (AHR) declared a second-quarter dividend of 30 cents per share in late May. The dividend was up from the prior dividend level of 29 cents. In early May, the company reported operating earnings of 32 cents per share, which was equal to the one year-ago total. The company mentioned that it is looking to international markets for almost 50% of its new investments due to the increasing leverage and fewer structural protection for lenders in the U.S. AHR sports a current dividend yield of 11.73%. Continue your research on AHR now!
Centerline Holding Co. (CHC) will announce second-quarter results on August 9, 2007. The company declared a second-quarter dividend of 42 cents per share in mid-June. Centerline Holding Co. meets the requirements for this Profit Track as evidenced by its current dividend yield of 13.13%. Continue your research on CHC now!
Deerfield Triarc Capital Corp. (DFR) satisfies the criteria for this Profit Track with a current dividend yield of 14.21%. The company will report results for the second quarter on August 7, 2007 after the market closes. DFR declared a second-quarter dividend of 42 cents per share in late July. The company noted that the record date for the dividend is August 7, 2007, and the payment date will be August 28, 2007. Continue your research on DFR now!
MCG Capital Corporation (MCGC) will release results for the second quarter on July 31, 2007. The company announced first-quarter results in mid-April. Earnings per share of 52 cents topped the year-prior 50 cents and eclipsed the consensus estimate 18%. MCG Capital Corporation offers a current dividend yield of 13.22%. Continue your research on MCGC 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 looks at how to use Price and Volume for locking in profits, cutting losses and spotting potential trend changes. Read more...
3. ZACKS EQUITY RESEARCH
The market's fear about a potential credit meltdown is overshadowing what is turning out a pretty good earnings season. Through the close of trading on Thursday, Jul 26, positive surprises are outnumbering negative surprises by a ratio of 3.7:1 among companies within the S&P 500. (On Thursday, the day of the Dow's 311-point plunge, positive surprises outnumbered negative surprises by a ratio of 37:6.) Median company growth is running at 12.8%, which is better than the first-quarter. (With a similar number of reports, first quarter growth was running at 10.5%).
Extending the universe out to the S&P 1500 (S&P 500, S&P MidCap 400 and the S&P SmallCap 600), a similar story exists.
Positive surprises are outnumbering negative surprises by a margin of 2.65:1 (versus 2.3:1 in the first quarter). Median company growth is running at 9.4% (versus 8.8% in the first quarter). The slower growth rates for the smaller capitalization companies may partially be explained by the simple fact that larger companies have more exposure overseas, which provide the double benefit of faster economic growth and favorable currency translations. (A euro dollar of profits is worth about $1.35 in American dollars.).
More. . .
So when will investors' focus shift back to the bullish earnings news? It's hard to say because the subprime mortgage hole is not only getting deeper, but also wider. (Risky corporate debt is starting to get sucked into it). Plus, the earnings calendar contains 129 financial companies for the week of Jul 30 - Aug 3. Fortunately, about a third of these companies are insurance companies. REITs and other real estate companies account for 49 companies in the group, but many of these have exposure to commercial properties, which are not experiencing the same problems as residential properties are.
There are 13 banks and eight investment banking firms, however, so there will still be a focus on the health of debt markets.
Overall, we have confirmed scheduled earnings reports from 810 companies for the week of Jul 30 - Aug 3. Included in this group are 97 S&P 500 members and Dow components General Motors (GM), Proctor & Gamble (PG) and Verizon Communications (VZ).
On the economic front, Tuesday features June personal income and spending, June construction spending, the Conference Board's July consumer confidence survey and the July Chicago PMI. Wednesday features June pending home sales and the July ISM manufacturing index. June factory orders will be released on Thursday. Friday will feature July employment data and the July ISM services index.
Companies That Could Issue Positive Earnings Surprises during the Week of July 30 - Aug 3
Activision (ATVI) recently said that it expects to exceed its previous fiscal first-quarter guidance for revenues of $425 million and earnings of three cents per share. The video game maker has shipped more than eight million units of Spider-Man3, Shrek the Third, Transformers and Guitar Hero II. Two of the 13 covering brokerage analysts adjusted their projections in response, sending the consensus estimate up by a penny to five cents per share. The Most Recent Consensus is more bullish at six cents per share. ATVI has exceeded expectations twice during the past four quarters. Activision is scheduled to report on Thursday, Aug 2, after the close of trading.
A few weeks ago, CommScope (CTV) raised its guidance for second-quarter earnings. The wire and cable maker expects sales to have totaled between $500 and $510 million and for operating margins to be in the range of 15-16%. Previously, the company had forecast revenues of between $490 and $510 million and operating margins of 14.5-15.5%. (Strong demand has been allowing cable makers to enjoy pricing power for the past several quarters.) Nearly all of the covering brokerage analysts raised their forecasts in response, causing the second-quarter consensus estimate to rise by three cents to 76 cents per share. The Most Recent Consensus is more bullish at 77 cents per share. CTV has topped expectations for 12 consecutive quarters. CommScope is scheduled to report on Monday, Jul 30, after the close of trading.
Charles Rotblut, CFA, is the senior market analyst for Zacks.com. He can be reached at firstname.lastname@example.org.
Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include Crocs (CROX), D.R. Horton (DHI), Tenneco (TEN) and Rackable Systems (RACK). To see their latest posts, click here.
4. FEATURED EXPERTS
Here we cast the spotlight on timely Featured Expert commentaries that recently appeared on Zacks.com.
Moving in the Right Direction
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 Ranked stocks at.
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Regards and Happy Investing,
Charles Rotblut, CFA
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Zacks Rank performance is the total return (price changes + dividends) of equal weighted portfolios, consisting of those stocks with the indicated Zacks Rank, assuming zero transaction costs. These returns are not the result of a backtest; these are actual returns since 1988. The stocks in the Zacks Rank portfolios were available to Zacks clients before the beginning of each month (monthly rebalancing). Performance results from 1988 through September 2006 are based on a subset of all Zacks Rank stocks that excludes stocks covered by only one analyst and ADR's.
The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor's. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. An investor cannot invest directly in an index.
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
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