Friday - August 24, 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 - Stanley Inc. (SXE)
Stanley Inc. (SXE) is taking advantage of strong defense spending. The company recently reported a strong quarter and guided higher going forward. Over the past month, this year's estimates have increased nine cents to 95 cents per share. SXE has posted two positive surprises in a row by an average margin of 13.5%. Analysts project that the company will generate earnings growth of 22.33% over the long term. Read the full analysis on SXE now!
The Boeing Company (BA) exceeded analysts' earnings expectations in 15 out of the past 16 quarters. After posting strong second-quarter results, the company boosted its full-year profit forecast to between $4.80 and $4.95 per share. Consensus earnings estimates for both this year and next year have risen over the past month. Earnings per share are projected to grow 14% over the next 3-5 years. BA has a current dividend yield of 1.4%. Read the full analysis on BA now!
02Micro International, Ltd. (OIIM) has seen its earnings estimates climb 22 cents to 54 cents per share over the past month. The company has blown away estimates by at least 100% for each of the past four quarters. OIIM's chart pattern is extremely bullish with hardly any overhead resistance holding it back. It's full-speed ahead for this stock. Read the full analysis on OIIM now!
Consensus earnings estimates have been on the rise for Stone Energy Corporation (SGY), a Zacks #1 Rank stock. Earnings per share are projected to grow 10% over the next 3-5 years. The company recently reported strong second-quarter profits and revenues. SGY has a price-to-book ratio of 1.1, compared to 4.6 for the market and 2.2 for the industry. Read the full analysis on SGY 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: Discounted Fundamental Strength
This Profit Track identifies stocks with strong underlying fundamentals and low valuations. These are companies with solid balance sheets and a history of profitability that are reasonably priced. Although conservative in approach, this strategy has generated double-digit returns for five consecutive years.
Here are four stocks that make the grade for the Discounted Fundamental Strength Profit Track:
CBIZ, Inc. (CBZ) recently posted second-quarter earnings of 10 cents per share, eclipsing the previous year's eight cents and matching the consensus estimate. Revenue of $156.9 million increased by 7.3% year-over-year. The company mentioned that this was the sixteenth consecutive quarter of same-unit revenue growth. CBZ has a debt to equity level of 0.49 and its current ratio stands at 1.57. Continue your research on CBZ now!
United America Indemnity, Ltd (INDM) satisfies the criteria of this Profit Track with a PEG ratio of 0.72 and a price to sales multiple of 0.85. INDM's debt to equity level is 0.12 and its current ratio is 3.58. The company reported second-quarter earnings of 67 cents per share in late July. The result topped the consensus estimate by nearly 14% and exceeded the year-ago total of 55 cents. Continue your research on INDM now!
Kforce, Inc. (KFRC) announced second-quarter earnings of 25 cents per share in late July, outperforming last year's 20 cents and beating the consensus estimate by 4%. Revenues for the quarter were an all time quarterly high of $259.9 million, versus the year-prior $234.4 million. The company said it believes the environment for professional staffing and government solutions remains positive, particularly in the skilled niches it serves. KFRC's debt/equity level is 0.26 and its current ratio is 1.83. Continue your research on KFRC now!
TechTeam Global, Inc. (TEAM) recently released financial results for the second quarter. Earnings per share of 14 cents jumped ahead of the consensus estimate by almost 56% and outpaced the year-prior result. Total revenue increased 28.6% on a year-over-year basis. The company stated that its financial metrics are moving in the right direction, and TechTeam remains well positioned to realize low double digit organic growth for 2007. TEAM's debt to equity level is a low 0.03 and its current ratio stands at 2.47. Continue your research on TEAM 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”.
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Kevin Matras talks about having the right tools for the right job: More...
3. ZACKS EQUITY RESEARCH
With credit market problems affecting seemingly all areas having to do with real estate, we wanted to ask senior hotels & leisure analyst Sean P. Smith if the same was true in the hotels space. We also got in a couple questions about the state of cruise lines.
Do you expect, with recent events in the credit market, that we may have seen the last of the big hotel private equity buyouts for awhile? Why or why not?
At least in the near term, it is likely that the transaction volume in the hotel space will moderate somewhat, especially as it pertains to the private equity firms. Over the last year, transaction volume in the industry has been at record levels. Nearly every company in the sector has been fair game, from brands such as Four Seasons and Hilton (HLT), to hotel real estate investment trusts (REITs) - where we've seen a number of companies agree to be taken private just in the last six months.
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Much of this buyout activity has been fueled by the cheap debt to which private equity firms have had easy access. Being privately held, these buyers have been able to employ significantly more leverage than we would typically see in a publicly traded company. With a lower cost of capital, these firms have been able to generate attractive rates of return on the acquisitions of publicly-held companies.
Given the turmoil in the credit markets over the last several weeks, however, the cost and availability of that debt has changed substantially. As a result, we will probably see a bit of a cooling-off period in that regard.
Over all, how were Q2 earnings for hotels? About what you'd expected, better or worse?
In general, the second quarter earnings were about as expected. Importantly, the full-year outlook for most firms remained intact. In some cases, companies revised their projections for full-year revenue per available room (RevPAR) growth downward slightly, and that seemed to worry the market somewhat. For example, Marriott (MAR) revised its full-year RevPAR growth guidance to a range of 6% - 7% from a range of 6% - 8%. In the grand scheme of things, however, we consider the quarter to be approximately inline with expectations.
We haven't heard much from cruise lines lately. Any noteworthy items in that group?
Both Royal Caribbean (RCL) and Carnival (CCL/CUK) reported second quarter results that were largely inline with our expectations. The stocks have traded in a range over the last six months. Both stocks have been hampered somewhat by the impact of rising fuel prices.
Currently, we are waiting to learn the extent of the damage caused by Hurricane Dean to Costa Maya, Mexico, a port used by both companies. While it is not a major port for either company, each will need to make alternative arrangements while the port undergoes repairs.
Sean P. Smith is a senior analyst covering hotels and cruise lines for Zacks Equity Research.
Real-time market insights from Zacks Equity Research Analysts. Stocks featured recently include Yum! Brands (YUM), Zumiez (ZUMZ), DRDGOLD (DROOY) and Allied Irish Bank (AIB). To see their latest posts, click here.
Listen to the audio podcast of Earnings Trends through Zacks' NEW Audio Feature.
4. INVESTMENT IDEAS
The editors at Zacks.com constantly analyze the universe of stocks to find the best investment ideas. Today, learn how you can profit from dividend-paying stocks:
If the market continues to weaken, dividend-paying stocks could offer significant advantages. During market downturns, stocks that distribute dividends offer shareholders a nice payout to alleviate some of the pain. Also, during market upturns, a consistent dividend along with an increasing stock price can prove to be quite a lucrative combination.
Moreover, the longer a company has been paying dividends, the more likely it will continue to do so going forward. Investors have come to expect this cash flow and if terminated, the company runs the risk of upsetting or even losing its investor base. Furthermore, a solid, dividend-paying company may increase its yield each year. That is music to investors' ears.
So, how does one go about uncovering fundamentally-sound, dividend-paying companies? This simple, yet effective screen outlined below can be run on Zacks.com by utilizing the Custom Screener. However, please keep in mind that only Premium subscribers can screen using the Zacks Rank. However, there are close to 100 screening parameters that we currently offer free of charge.
Zacks Rank: <= 2
Dividend Yield: >= 4%
Market Capitalization: >= $1 billion
EPS Growth: >= 10%
Return on Equity (ROE): >= 10%
AllianceBernstein Holding L.P. (AB)
AllianceBernstein Holding L.P. is a leading global investment management firm with $786 billion in assets under management as of Jul 31, 2007. On Jul 25, AB reported second-quarter profits of $1.16 per share, surpassing the consensus estimate by eight cents. The year-over-year improvement equated to 30.3% when compared to earnings 89 cents per share in the second quarter of 2006. Net revenues came in at $1.16 billion, compared to $933 million in the prior-year period. Also, the company boosted its full-year profit guidance to between $4.90 and $5.25 per unit. Its previous outlook called for earnings between $4.65 and $5.00 per unit.
In addition to posting solid second-quarter results, AB announced that is distribution per unit for the second quarter of 2007 will be $1.16, marking a 30.3% increase when compared to the 89 cents per unit distributed for the same period in 2006. AB has a current dividend yield of 5.8%. The company's return on equity of 24% tops the industry average of 15%. Earnings per share are projected to grow 16% over the next 3-5 years, with the industry expected to grow by 15%. AB is a Zacks #1 Rank stock (strong buy).
Vector Group, Ltd. (VGR)
Vector Group, Ltd., through our subsidiaries, Liggett Group Inc. and Vector Tobacco Inc., manufactures and markets high quality cigarette products to adult smokers in the United States. Furthermore, the company engages in the real estate business; offers residential brokerage services; and holds interests in various spas, resorts and hotels.
On Aug 6, VGR posted second-quarter profits of 27 cents per share. With analysts expecting 24 cents per share, the company surprised to the upside by 12.5%. The result represented a 35% year-over-year improvement when compared to the 20 cents posted in the second quarter of 2006. Revenues climbed 23.8% to $140.4 million from $113.4 million last year. On Jun 7, the Board of Directors declared a regular quarterly cash dividend of 40 cents per share of common stock. VGR has a very impressive current dividend yield of 7.1%.
5. FEATURED EXPERTS
Here we cast the spotlight on timely Featured Expert commentaries that recently appeared on Zacks.com.
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.
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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.
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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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