Monday - August 20, 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 - Wynn Resorts, Ltd. (WYNN)
Wynn Resorts, Ltd. (WYNN) clearly holds the house advantage. The company is rapidly expanding its operations in Macau which is giving it a huge boost to the bottom line. Over the past month, this year's earnings estimates have jumped 43 cents to $2.65 per share. WYNN has blown away estimates in each of the past three quarters, including a 52% positive surprise in the latest quarter. Analysts project a robust 40% long-term earnings growth rate. Read the full analysis on WYNN now!
Growth & Income - Harris Corporation (HRS)
Harris Corporation (HRS) exceeded analysts' earnings expectations in 10 consecutive quarters and in 14 out of the last 16. The company recently raised its full-year 2008 profit guidance. Consensus earnings estimates for this year and next year are up over the past 30 days. HRS has returned value to its shareholders through both dividend payments and share buybacks. The company has a current dividend yield of 0.79%. Read the full analysis on HRS now!
Momentum - Koppers Holdings Inc. (KOP)
Listen to the audio podcast on KOP through Zacks' NEW Audio Feature.
Koppers Holdings Inc. (KOP) has bucked the overall market for the month of August, returning 8.5% versus a 3.3.% decline in the S&P 500. While momentum appears to be to the upside, investors should have predefined entry and exit points to manage both profits and losses. Read the full analysis on KOPnow!
Value - Trinity Industries, Inc. (TRN)
Trinity Industries, Inc. (TRN) , a Zacks #1 Rank stock, has beaten the consensus earnings estimate in 10 consecutive quarters. The company recently reported the best quarterly revenues in its history. Consensus earnings estimates for this year and next are up over the past month.
Earnings per share are projected to grow 22% over the next 3-5 years.
TRN 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 TRN 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:
Ashford Hospitality Trust Inc. (AHT)recently reported second-quarter adjusted funds from operations (AFFO), not including an item, of 44 cents per share, beating last year's 34 cents and exceeding the consensus estimate by 16%. Total revenue soared 205% to $350.3 million from the previous year's $114.8 million. AHT sports a current dividend yield of 8.27%. Continue your research on AHT now!
CapitalSource Inc. (CSE) offers a current dividend yield of 11.92%. The company recently announced second-quarter earnings of 68 cents per share, topping the consensus estimate by 5% and outperforming the year-prior result. CSE noted that a regular quarterly dividend of 60 cents per share was paid on June 29, 2007. The dividend was 3.4% higher than the 58 cents paid in the previous quarter. Continue your research on PNX now!
Gramercy Capital Corp. (GKK) posted second-quarter funds from operations (FFO) of 82 cents per share, eclipsing the year-ago total of 58 cents and surpassing the consensus estimate by 21%. Total revenues of $78.3 million increased from last year's second-quarter result of $43.5 million. The company declared a second-quarter dividend of 63 cents per share, a 12.5% increase from the prior quarter's dividend of 56 cents. GKK's current dividend yield stands at 11.05%. Continue your research on RJET now!
Ship Finance International Limited (SFL) satisfies the criteria for this Profit Track with a current dividend yield of 8.35%. The company will report results for the second quarter on August 22, 2007 In late May, SFL released results for the first quarter. Earnings per share were ahead of the consensus estimate by 10%. The first-quarter dividend was 55 cents per share, an increase from 54 cents for the previous quarter. Continue your research on SFL 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 a Relative Price Strength strategy for finding winning stocks in all markets. Read more...
3. ZACKS EQUITY RESEARCH
Last week, I advised investors to keep Dramamine by their side. This advice continues to hold.
Here's why. Fear about the credit crisis has worsened to the point that the Fed was forced to abandon its hawkish stance on inflation and cut the discount rate. Although the move was intended to reassure lenders that the Federal Reserve will do what is necessary to ensure that the banking system remains liquid, it also creates concerns about how bad the crisis really is. The fear about the credit crisis seems to be worse than the actual problem itself, but fear is a powerful force.
Unfortunately, there isn't much in the way of scheduled releases to alleviate fears over the next five trading days. The earnings calendar is limited to just 97 companies, 13 of which are members of the S&P 500. Retailers will again be front and center with the likes of Abercrombie (ANF), GAP (GPS), Limited (LTD), Lowe's (LOW) and Target (TGT) reporting. (Approximately half of the 97 companies scheduled to report earnings will be retailers.) The economic calendar has July Leading Economic Indicators being published on Monday and July durable goods orders and new home sales data slotted for Friday.
More. . .
Simply put, at a time when investors could really use some reassuring news, there won't be much. The number of earnings estimate revisions will be on the decline as companies pass mid-quarter and are not likely to give much in the way of revised guidance. (This is neither a positive nor a negative, but rather just a factor of the calendar.) Deal volume tends to be lower in August simply because so many people are on vacation and/or getting kids ready for school. Even the Stock Trader's Almanac has nothing to say other than Wednesday and Friday should be bullish days, based on past trends.
Besides keeping Dramamine by their side, investors should use this period of time to research stocks. When markets get volatile, the natural tendency is to move money into money market funds and think about anything, but investing. Rather, investors would be well served to double-up their research efforts and find fundamentally strong stocks with rising earnings estimates that are trading at reasonable valuations. A disciplined dollar-cost averaging strategy now can result in notable profits being realized in the future. In other words, buy fear.
Companies That Could Issue Positive Earnings Surprises during the Week of Aug 20 - 24
All of the covering brokerage analysts raised their full-year forecasts on Gap (GPS) after the company said that it would probably report second-quarter profits within a range of 19 to 20 cents per share. Prior to the new guidance, the consensus estimate had called for profits of 13 cents per share; now it calls for profits of 19 cents per share. GPS' revised guidance comes after the company achieved a 2% rise in July same-store sales for its namesake stores and a 1% increase at Banana Republic stores. (Old Navy same-store sales plunged 18%, however). The company also noted that it was also able to achieve higher margins. GPS has exceeded expectations for six consecutive quarters. Gap is scheduled to report on Thursday, Aug 23, after the close of trading.
Gymboree (GYMB) reaffirmed its raised EPS guidance of 13 to 15 cents per share earlier this month. The reaffirmation occurred as the company said July same-store sales rose a respectable 5%. Brokerage analysts held their profit forecasts steady at 15 cents per share in response to the July numbers, though the consensus estimate is three cents above the average forecast of 30 days ago. GYMB has exceeded expectations for three consecutive quarters. Gymboree is scheduled to report on Wednesday, Aug 22, after the close of trading.
Charles Rotblut, CFA, is the senior market analyst for Zacks.com. He can be reached at email@example.com.
Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include Edison International (EIX), URS Corporation (URS), VeriSign (VRSN) and Acusphere (ACUS). To see their latest posts, click here.
Listen to the audio podcast of Earnings Trends through Zacks' NEW Audio Feature.
4. FEATURED EXPERTS
Here we cast the spotlight on timely Featured Expert commentaries that recently appeared on Zacks.com.
Profit Alongside Activist Shareholders
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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